With Chinese e-commerce projected to account for up to 50 percent of global retail within ten years, brick-and-mortar retailers in China are looking to omni-channel retailing (O2O or online to offline integration) to attract new customers.
Companies in China have been very creative in integrating the online and in-store experiences. Lane Crawford’s “Future: Play” campaign turned its Shanghai flagship store into a futuristic arcade that allowed customers to view exclusive videos on their smartphones while shopping in the store. The retailer has also begun to use WeChat to tell fans about in-store events and the brand’s history.
Similarly, TopShop recently teamed up with Shangpin.com to launch digitally in China. However, for the brand’s launch on Shangpin, the companies partnered with The Place mall in Beijing to hold “The Mobile Adventure” in which over 5,000 participants could scan QR codes around the mall to virtually select TopShop outfits, share the looks on social media, and order clothes for next-day delivery.
With China’s massive, and growing, internet population, consumers want integration across a variety of channels so that they can buy products more conveniently and learn more about the brands they are buying.
According to Fung Group, the most common O2O strategies involve launching mobile apps with location-based marketing capabilities, offering in-store mobile payment options, using QR codes, creating shared customer databases and luxury programs, implementing “click and collect” capabilities in which customers can order online and pickup in-store, integrating inventory and logistics systems with e-commerce, and unifying online and offline pricing.
Of the traditional retailers surveyed by Fung Group, 43 percent have launched O2O initiatives, and the rest said they would be open to implementing O2O strategies in the future. Of the retailers that are integrating their online and offline business, 65 percent launched their O2O initiatives on their own. The others used companies such as Tencent, Alibaba, and JD.com to help them with their O2O implementations.
With the rise of O2O initiatives, department stores and specialty retailers such as consumer electronic retailers have been the hardest hit. While many brick-and-mortar retailers, such as the previously mentioned Lane Crawford, have embraced O2O, others are moving away from the concessionary model of most department stores toward a direct sales approach in which revenue is made from merchandise markup rather than commission.
As Chinese consumers become more technologically savvy, brick-and-mortar retailers that don’t change will be left in the dust.
image source: polycart, fung group