Why Brands Should Optimize for Online-to-Offline Shopping
The vast majority of shoppers do product research online before they make a purchase. But, even after decades of prognostications of e-commerce taking over retail, a substantial majority of sales still take place in local retail stores. Plainly, while most shoppers prefer the convenience of doing research on their device, an overwhelming percentage of shoppers are still completing their purchases at local shops. That trend is expected to accelerate.
Shoppers are increasingly using devices to make decisions before they make purchases nearby.
The emerging consensus is that phygital experiences, where immersive in-store experiences are designed to leverage the efficiency of the digital world, are here to stay. Not only did this consumer behavior spike during Covid, but it has continued to grow. Some major retailers now report that the majority of their online sales are for in-store pickup.
Obviously, retailers with physical locations care deeply about the “o2o” (online-to-offline) shopping journey, but why should their suppliers, brands, and manufacturers?
The answer is simple; the most loyal customers tend to shop across all channels: online, nearby, marketplaces, company-owned, wholesale, destination, etc… And, building loyalty or brand affinity with a customer requires that the shopper have a positive shopping experience no matter which channel they choose.
“Creating Channel Conflict is not Omnichannel Marketing”
Patagonia, for example, one of the first true omnichannel brands, spent years investigating the optimal channel strategy and ultimately decided to employ a loyalty strategy rather than facilitating channel conflict. They recognized that it was more important for the shopper’s needs to be served on each purchase rather than their own more narrow needs of boosting sales in a single channel (against all others). They wanted shoppers to make MANY purchases over many years.
They found - after years of careful study - that shopper loyalty was far more indicative of sales success (both as a whole and in each channel) than optimizing one channel against another.
Craig Wilson, ex-pat Patagonia brand architect and “Compass and Nail” author, covers the topic of customer loyalty as a marketing strategy extensively.
On the other hand, an ineffective online-to-offline strategy typically breaks or blocks the customer’s cross-channel journey— frequently leading to disadvantageous results like a referred shopper purchasing a competing brand’s products.
As an example, let’s imagine a brand’s marketing team has successfully gained the interest of a shopper, but then makes a clumsy hand-off to the shopper’s preferred purchase method: in-store, nearby. The shopper is directed to a local store that doesn’t carry what the shopper wants and they end up buying a competing brand’s product. The opportunity to foster a new relationship, reinforce loyalty, or create affinity is lost, and a competitor creates loyalty with that customer.
This is a simple example, but the lifetime of a customer relationship is really long and quite meandering, so describing online-to-offline hand-offs can become complicated. To simplify, I’ll use an analogy: movie-goers doing online research before going to a theater.
Let’s look at different types of hand-offs, or referrals, and how effective they are.
Destination Referral
This is like sending people to the address of a theater without showtime information.
This analogy sounds ridiculous simply because it is such an ineffective way to make a referral to a movie. No one would get in their car and drive to a physical location with nothing more than an address. Are they expected to find out if the movie they want is playing only when they arrive?
And yet, this is exactly how most brands refer shoppers to nearby stores for their products.
(Locally vastly improves this experience by providing much more store data in our store locator)
Selection Referral
This is like sending people to a specific theater, for a specific movie, at a specific time.
Showing people that a specific brand is in-stock or that a store carries specific types of products really boosts ROI (even Google is working on this now). Even better, showing shoppers that the exact size, color, or model is available at a nearby store is far more likely to result in a purchase.
Locally sees these types of referrals resulting in up to a 50% in-store conversion rate.
(Our product locator ensures shoppers find the products they want at over 20,000 local stores)
Transaction Referral
This is like sending people to a specific theater, for a specific movie, at a specific time, with a ticket already purchased.
The only way to improve an in-stock referral is with a confirmed purchase. Shoppers simply expect a pick-up in-store option now. They want a confirmation that the item they are looking to buy is either waiting for them at a nearby store or being quickly delivered by a local retailer. Locally sees these referrals result in a nearly 100% conversion rate (a few are abandoned or returned).
This shopper also buys more (3 items vs the normal 1.1 items that e-commerce orders contain) and the sale is usually for a higher total dollar amount.
(Buy It Locally enables any retailer to accept BOPIS, ROPIS, Delivery, or Buy-Online-Ship-to-Store transactions)
The Solution
If you decide that optimizing for online-to-offline shopping is the key to maintaining long and loyal customer relationships (it is), then there are really only two solutions:
Be like Apple. Become vertically AND horizontally integrated. Open a global network of stores that can serve customers who do their research online before getting in their car and driving to your nearest store. This is a tall order for all but the largest companies.
Leverage your authorized dealer network to serve as your distribution and service sites. Empower shoppers to seamlessly switch between channels. But, be sure that when there is a hand-off, the shopper stays immersed in your brand and products all the way through to purchase.
