What is O2O? - Meaning & Model

Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

How do you appeal to online customers and get them into your retail store? By using the O2O business model. In this lesson, we'll define what this model is, what it means, and look at a couple brands implementing it.

Cartwheels and Coffee

When Target needed a way to connect its mobile customers to its in-store shopping experience, the brand started doing cartwheels. Well, not literally. Rather, they launched a new feature - a mobile application called ''Cartwheel By Target,'' that offers downloadable coupons and offers through the app that users can then use in-store at the checkout counter. The idea? To get mobile users into Target's brick-and-mortar locations.

Another famous brand that found a way to merge its online fans with its coffeehouse visitors is Starbucks. Thanks to the company's website, as well as its mobile application, coffee lovers can pre-order their favorite drinks and have them ready for pick-up at their favorite local Starbucks location.

So, what's the point of this omnichannel strategy, an approach that creates a smooth transition between online and offline brand experiences? It's a business concept that more brands are working to incorporate, called O2O.

What is O2O?

O2O isn't some scientific term from the periodic table. Instead, it's an approach to reaching customers that entices them in an online environment and then compels them to visit a retail location.

The O2O model works by merging online and offline consumer behaviors.
O2O, online, offline, online-to-offline

In fact, the acronym is an easy way to remember what O2O really means: Online-to-Offline, as in moving customers from interacting online (through websites, emails, advertisements and mobile apps) to engaging offline (by getting in a car and heading to a store).

The Big Deal of O2O

So, what's the point? Well, since customers rely more and more on mobile devices to research products and gather more details before making a purchase, marketers know they have to reach people where they are - and that's online. In fact, some research suggests that more than 60 percent of shoppers dig for information on products online before making a purchase. But, rather than simply providing content that online users need to make a buying decision, the O2O model takes it one step further by encouraging those same online users to follow-through with a business and visit its store to buy what they need.

For example, Target's Cartwheel program allows mobile users of the app to get discounts and details about products ranging from laundry detergent to diapers, stash coupons in their cart (that's where the online portion of the O2O model ends) and then apply the discounts when they visit the store to make a purchase (the offline portion of the O2O model).

There are other methods of course. Maybe you log on to a retailer's website to check the stock of a new office chair in your local store, make the purchase and opt for in-store pickup.

Turning online researchers into offline customers is the ultimate goal, and the O2O model allows brands to capture new business.

Marketing with the O2O Model

We've already established that the true purpose of the O2O model is to move buyers from online interactions to retail visits. For marketers, this omnichannel approach helps with brand awareness, loyalty and more opportunities to reach their audience, by combining online and offline marketing strategies. How?

1. Brand awareness can be developed by providing channels for consumers to learn more about products. Whether it's an email newsletter delivered to their inbox or a mobile app that shows where products appear in your store, increased interactions with customers brings more opportunities for people to learn about your brand.

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