Brands in China are going beyond their regular online marketing efforts by implementing creative and innovative online to offline (O2O) strategies to capitalize on the Chinese consumer’s mobile-first approach to shopping. The Chinese O2O market is more than US $150 billion in size with just 4% internet penetration. According to iResearch, the value of China’s O2O ecommerce sales has grown from US $335 million in 2015 to US $626 million in 2018. China has seen unprecedented growth in its economy and O2O is becoming a more popular term in the Chinese digital economy.
What exactly is O2O Marketing?
O2O marketing isn’t new, but the presence of mobile phones has vastly expanded what brands can do with it. O2O is an approach to reaching customers that attracts them through an online environment and then compels them to visit a retail location or vice versa; it aims to blend all shopping channels to create a seamless customer experience.
With the right applications, you can search for most services and products and pre-purchase them: call a cab, have a meal delivery, book a spa nearby, etc. Businesses can see the complete consumer journey and use better tools to judge the full impact of O2O sales.
What is the value of O2O in China?
China is spearheading the O2O category with 98% of Chinese consumers connecting to the internet via a mobile device. China has more than 695 million social media users and millions of consumers shop online using sites such as TaoBao, Tmall, and JD. Mobile payment systems like Wechat Wallet and Alipay make online shopping even more convenient.
Along with mobile internet usage, China has the highest rate of QR code adoption, mobile commerce, and mobile payment. 59% of Chinese shoppers use their mobile device to check or compare prices in-store, and retailers adjust to this trend by integrating QR codes in their price tags or by giving out free Wi-Fi access. Millennials make up a sizable portion of O2O consumers who have the highest income level and the highest willingness to spend. Females are embracing O2O, making up 73% of the O2O restaurant and dinning users, and are 38% more likely to use O2O travel related services. China’s O2O start-ups are also are using their investment capital to subsidize and incentivize Chinese consumers to join their services, which creates a lot market potential in the industry.
What does it mean for brands moving to China?
Increase in Brand Reputation
O2O is a great method for keeping customers engaged without seeming too assertive. Brands build personalized relationships with customers by encouraging them to visit physical stores rather than only through a virtual channel. Customers enjoy receiving both online and offline benefits and develop a sense of belongingness. This contributes to an increase in the brand’s credibility and an improved customer experience as a whole.
Improved Business Strategy
The convergence of offline and online channels leads to a massive database of customer information, which further helps businesses understand user behavior and create an engagement strategy that converts to sales. The supermarket chain 99 Ranch Market took advantage of the “Shake – Nearby” feature on WeChat, which allows mobile users to connect with offline retailers nearby by shaking their phones. 99 Ranch Market developed a beacon-based shake game to allow shoppers to win a range of prizes and discount coupons.
Increase in Offline Presence
It’s important to remember that O2O works both ways. Most online customers already know how to find a brand digitally, so it’s vital to ensure that offline customers do, too. Brands that engage in social media have to make sure to promote their various channels to their in-person audience. By participating in tradeshows, seminars, or pop-up shops, businesses can offer incentives to users who share products they bought. Encouraging customers to post pictures or creative hashtags using a product they bought is a great way to increase offline to online sales.
Innovative Market for Growth
The use of geo-targeting by brands in China to engage offline consumers is a promising gateway to augmented and virtual reality technologies, which will add a completely new dimension to O2O. Allowing users to experience realistic environments will make it ideal for brands to showcase their products right in their customer’s own home. This allows VR and AR to span beyond initial O2O sales functions and potentially lead to a new standard of commerce.
A seamless and convenient customer experience is always important to consumers, whether you sell online or offline. Understanding Chinese consumers’ rational and emotional drivers will allow brands to ensure that the customer is engaged. By introducing creative O2O initiatives brands will have a much easier time engaging with the customer, which will ultimately lead to a larger consumer base and another creative gateway for driving sales.