March 2018
Text by Alberto Ferreira

Image: © Witthaya Prasongsin/

A multidisciplinarian with a wide background in linguistics, cognitive psychology and user experience, Alberto Ferreira is a Lead UX researcher at Travel Republic. A regular speaker at international conferences, he recently published Universal UX: Building Multicultural Research and is pursuing his PhD in communication studies.

Twitter: @SententiaWorld
Linkedin: alberto.viralhadas.ferreira

O2O and the next generation of e-commerce

When Amazon opened its first physical stores in 2017, the retail giant countered a decade-long trend that has seen online trade rise and rise while traditional shops were brought to their knees. Is the return to offline the next step on the journey towards a customer-focused, omnichannel strategy?

Almost 20 years ago, Amazon founder Jeff Bezos was laughed at by some of the most experienced Wall Street investors when he took Amazon public. The prevalent view was that online sales would never become more than a niche market. Today, Bezos’ characteristic quirky laugh is the only one still sounding: Last year, he was declared the richest man on earth.

Amazon's rise to a shopping behemoth over the past 15 years has been nothing short of spectacular. Eschewing many of the traps that left competitors by the wayside, the company has adapted to new technologies seamlessly, and in the process become the largest e-commerce company in the West.

It is hard to believe that e-commerce was once considered a risky venture. Instead, it has become an essential component of everyday life, accounting for over 30 percent of all sales worldwide and up to 70 percent in certain markets. From groceries to medicine, clicking on the checkout button has become a natural action for consumers across Europe, Asia and the U.S. Online shopping has delivered an alternative to lengthy searches through supermarket aisles and long lines at the cashier, and it is set to continue expanding in the future. Traditional supermarkets (like Tesco and Waitrose in the UK, or Walmart and FreshDirect in the U.S.), have expanded their delivery services to include up-and-coming digital-first alternatives. Alibaba recently opened over 20 hybrid grocery stores in China which allow consumers to buy, pick up, and consume online orders in a physical space.

This is only one of the ways in which the online experience is reaching into the physical world. Other examples of so-called Online to Offline (O2O) services include hailing a cab, ordering a massage, and buying concert tickets. Just like consumer habits, such services have evolved from pure offline experiences. O2O services are a reminder of how the virtual and the real world are intertwined and the border between them is becoming ever more blurry.

From physical stores to online shops... and back

Online to Offline (or Offline to Online) is a broad concept, and it is often used with businesses aiming to provide a seamless and holistic customer experience. O2O might appear such an essential component of e-commerce that it doesn’t even warrant a specific acronym in the wider scheme of goods and services purchasing. From a consumer point of view, buying and selling online has been a key part of the shopping experience for many years. And this trend is not bound to stop any time soon – by 2020, eighty percent of retail sales in the U.S. are expected to be done online and the trend in Europe follows suit.

However, digital retailing is not a universal part of all businesses: According to a 2016 U.S. business census, nearly 75 percent of businesses do not even have a website. Nine out of ten U.S. retailers are still brick-and-mortar companies. For these businesses, the heat is on to update their offers and touchpoints to accommodate a more customer-centric view, both online and offline.

Brands such as IKEA have harnessed the potential of an “Online to Offline” model, where users can check availability and stock of items in a comprehensive catalog and pick it up at the brand’s stores.

Image 1: IKEA practices a true O2O business model. The company emphasizes self-service, promoting a sense of autonomy and achievement as part of their customer experience.
Source: WikiCommons


But despite these developments, there is still a tremendous difference between how much money is spent online and offline. While consumer habits take time to evolve, certain industries are more prone to a quick transition than others. For instance, while groceries and assorted goods can be bought with minimal "trying out", 60 percent of the consumers still prefer to browse for clothes and souvenirs in high street stores rather than online.

There are also particular items that demand a more careful evaluation and are therefore not suitable for online retailing. Companies such as Blue Nile (for jewelry) and (for furniture) strongly rely on their physical stores ("webrooms") to allow consumers to look through their assortment before making a choice.

Then there are the customers for whom the tangible experience – seeing and feeling the actual item before the purchase – still rates highly. Today, several retailers are reversing the O2O journey and use brick-and-mortar facilities as showrooms for their online shops. This practice has its roots in China, where up to 86 percent of consumers head to the shop before they actually complete a purchase online. This is primarily driven by the lower prices and attractive propositions of online channels.

The golden age of the customer

Multichannel shopping today is associated with mobile experiences and an abundance of options. But according to a 2016 McKinsey survey, it is prompt service and a quick response that mainly attracts people to online services. When shopping on a website or an app, a contact link is usually no more than two clicks away.

Powered by viral content and immediate gratification, a new generation of consumers has grown to expect these conveniences when shopping. This was one of the earliest selling points of Amazon, and the company has focused on customer service and experience ever since. Amazon and other successful services heralded the golden age of the customer, in which the client is at the center of the shopping experience.

The newfangled "digital economy" is a good representative of this. Didi in China, and Uber in the West, are making inroads in dominating the private transportation industry. According to Uber, over 600 cities in 83 countries currently use the service, with a yearly total of around two billion taxi trips. This, despite the fact that this service warrants no physical counter and does not even own its car fleet. Until the user actually gets into the car, every interaction with the service happens through the app.

In a perfect O2O world, the entire physical representation of a service is the product or the actual purchase. Booking, customer support, catalog browsing are all services that can be guaranteed through digital channels.

In the West, services like BookMyTable and FourSquare have served millions of customers in finding the perfect seat for their meals. Diners can have quality food delivered to their doorstep without the need to actually visit the establishment, thanks to delivery services such as Deliveroo, Just Eat, and Delivery Hero. This has transformed the restaurant industry, as it allows restaurants to serve more customers without the need for further seating and dining areas.

O2O has helped to redefine the traditional takeaway and shopping experiences by focusing on mobile channels and having the ease of a delivery service replace the richness of an in-person experience. Changing habits and a focus on comfort are quickly becoming the centerpieces of the modern eating experience: Over 26 percent of all delivery orders are made online, according to a 2016 McKinsey report.

In this O2O logic, information is the main currency of the customer experience. Catalogs, product information, and support articles should be kept in line with the users’ ever-mounting expectations on information quality and availability. With chatbots, natural language processing, and search engines, it is essential that content is generated in a granular and metadata-enriched manner. Plus, procedural writing needs to have a more human and accessible tone: As more users are going online to get information even on the "best" brand of toothpaste, SEO becomes more important than ever.

The information from the distribution and marketing channels must be leveraged in a manner that respects the differences between the markets, yet keeps the consistency between channels and touchpoints intact. Luxury brands like Burberry and Michael Kors are already using social media like WeChat (in China) and Whatsapp to allow users to order items or book special appointments in stores, using these apps as their first point of contact with the company. How to integrate social media successfully in customer-centric content is the next biggest challenge of the industry.

Customized, omnichannel services

An omnichannel approach is essential in the modern customer experience. Starbucks, for instance, transformed the traditional coffee ordering experience by allowing orders through their app and pickups at the time and the coffeehouse of choice. This allowed customers to bypass queues and awkward exchanges about their milk of choice in their cappuccino, and just focus on enjoying their coffee. The company also implemented a loyalty scheme that relies on their apps, which encourages users to keep the Starbucks app on their phones, and uses the order history to promote recommendations for new orders and products.

This individual customization allows brands to address the most sensitive pressure points of customers, by allowing their apps and websites to show more relevant options, serve appropriate content in the form of notifications and messages, and facilitate the path to purchase before the user has made a single click or tap. Given the breadth of today’s choices, the average user does not have time to reflect on or wade through waves of products that do not suit his or her needs. Therefore, personalization is a key component of a successful customer experience, with a direct impact on a number of levels:

  • The website and app can feature key popular products in addition to recommendations based on past purchases and browsing history.
  • CRM newsletters can leverage browsing and shopping history in order to recommend relevant items or advertise discounts on related items.
  • Apps can send out notifications on recommended items.
  • Users can subscribe to alerts on flash sales and new product releases (e.g. a new iPhone release).
  • Specific push notifications and messages can be sent out for campaigns or retargeting.

All of these actions require a deep analysis of the audience and market. Companies like Acorn, Mosaic and Experian have collected a deep knowledge set that has allowed them to develop segmentation models based on geo-demographic factors like income level, media exposure, and age. This type of segmentation is useful for marketing purposes, as it helps to focus campaigns and actions meant for larger audiences.

Image 2: A typical O2O flow includes several stages of discovery and inspiration.
Source: Alberto Ferreira


Rather than a demographically-based personalization strategy, you can achieve this personalization with big data, leveraging behavioral factors such as time on site, purchases, and click history to segment customers. However, the most successful personalization strategy is a hybrid between these two models: analyzing the behaviors of the different segments, but also complementing it with qualitative information like psychometric factors and consumer values. You can also rely on the production of customer personas using a process called clustering, which groups customers by behavior, purchases, and other factors.

Getting to know your customers

As content necessarily becomes more targeted, there is no blanket approach that can ensure success. It is not enough to design a great-looking website or app; these should instead be considered a touchpoint in the wider user journey. Adapting to the user’s needs at every stage requires careful research and planning. Thinking about the user journey from a more holistic perspective involves communication teams to a great extent, and relies on a number of key steps:

  1. Research qualitatively on customer habits with interviews and focus groups: Find out where your users actually come into contact with your brand and what they are looking for. For example, do they use websites or apps for inspiration, and if so, when and which ones? What is the motivating factor that will make them buy a product? What makes them abandon a purchase? From just a few interviews you can collect a mine of data.
  2. Acquire quantitative data: Learn about key behaviors in between search and purchase, visit and conversion. What are the most common keywords that lead customers to your site and how can multilingual SEO leverage this? When do customers leave the checkout flow?
  3. Design a user journey that accurately supports these touchpoints by mapping out touchpoints and moments of truth that match the user’s actual needs and requirements with their interactions with different channels (or even your competitors). Map out each step of their purchase trip, and look into their emotional journey.
  4. Strategize your decisions in line with the actual customer journey you have researched. While it will not serve as a complete diagram for segmentation and other more complex patterning, it will be essential in keeping a view on the wider user journey that your product or service is a part of, and how to leverage it.
  5. Devise a content strategy that ensures the content on all of these platforms is consistent in tone of voice and style. The user should be able to access the company directly and conveniently on all channels, and to count on the same quality of reference material and support messaging regardless of location or channel.

Technical writers should bear in mind the challenges that come with omni-channel communication. Keep in mind that the physical and digital are part of the same journey, and will influence each other in the experience. From an infrastructure point of view, it is important that both your website and apps are ready to cope with the demand for information and trafic.

Customizing our world with VR and AR

The expansion of O2O services is far from restricted to the e-commerce arena. Instead, it applies to virtually every field of digital interaction. Geocaching, for instance, is a playful example of how online communities can grow by scavenging the physical world: This remarkable activity has participants from all over the world hiding items in "caches" located in random places, which can only be found by following a certain set of instructions.

As Virtual Reality (VR) and Augmented Reality (AR) grow to become standards of mediated digital reality for the average consumer, so does their market, projected to have a revenue of $692 billion by 2025, according to GPS. Elements of these technologies have even seeped into cultural arenas, with the launch of AR apps that allow users to see content such as a time-lapse of a given area through their phone screen.

However, AR is also assisting a new wave of contextual marketing and O2O in the realm of e-commerce, helping to tailor experiences to specific situations. Thanks to this, the confusion of walking down a supermarket aisle, feeling overwhelmed by the number of tomato sauce brands on display, will soon be a thing of the past. AR can enable users to effectively filter the noise of choices. For example, by using an app or specialized glasses, AR can remove all irrelevant items and shelves from a supermarket, guiding you to the retail products you need, simplifying your path. It could guide you to the ingredients for a recipe you particularly liked from Facebook, and even check your pantry to find out whether you already had these items. Producing content for AR apps is a challenge and an opportunity, as it has to be flexible enough so that it can be used in a real-world scenario while still remaining consistent. And this is why communication should start with the tasks performed and the actual needs of the user, and be as platform-neutral as possible.

Although AR and VR might not be truly mainstream experiences yet, the costs are going down year after year, and will eventually become the norm. This will turn the O2O world on its head. The biggest e-retailers are plainly aware of the importance of a strong offline experience in order to stand above the crowd. Startups can be more specialized and sophisticated in their approach, and they often feature the best omnichannel experience, but the price war that impacted O2O companies in the Chinese market has already expanded to Europe and the U.S. This has prompted a new perspective in users: that online-only might pale in trustworthiness, solidity, and interest next to a business that successfully merges O2O in its business model. This omnichannel diversity prompted Amazon’s move into brick-and-mortar shops like the bookstore at Seattle’s University Village and the acquisition of Whole Foods. The company knows that an outpost in the local shopping mall is as important as a successful app.

In the end, O2O reflects itself to addressing the dilemma of contemporary times: that, despite our increasingly immaterial and intangible digital surroundings, we are still tactile creatures, much more easily persuaded by having somewhere to go and something to touch beyond our phone screens. Our senses and physicality are not lost in a distant past of human evolution. They are here to stay, just like technology is.