The Internet has revolutionized the way shoppers interact with brands and retailers. We browse, shop, compare product features and pricing — and we’re buying more online every year. Naturally, brands and retailers continue to shift a greater portion of their marketing dollars online to capitalize on this trend. I could reference and quote numerous studies, stats and research demonstrating this shift, but I won’t because you’ve already seen them and you probably have another alert about e-Commerce growth hitting your inbox right now.
We’re now seeing a similar evolution and revolution with mobile. Smartphones and tablets have put computers into our pockets, purses and messenger bags. We’re always on the go, and now mobile commerce is the hottest trend. A wave of new studies and research point to the growing importance of the mobile channel for shoppers, brands and retailers – not only in the U.S., but across the globe.
This is all very exciting, but in the rush to capture online and mobile commerce revenue, many marketers forget the fact that the majority of shoppers today still walk into local stores and buy offline. Take a look at these stats:
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- As of Q4 2012, e-Commerce accounted for only 5.4% of total retail sales (US Census Bureau).
- 75% percent of consumer spending occurs within 15 miles of the average American’s front door (U.S. Census)
- By 2016 more than half of the $3.5 trillion spent in U.S. retail offline will be influenced by the web. (Forrester’s U.S. Cross-Channel Retail Forecast, 2011 To 2016.)
Brands and retailers investing marketing dollars to drive online and mobile sales are doing the right thing, but if they’re neglecting the online-to-offline opportunity, they’re missing out on a share of more than a trillion dollars in sales. That’s a lot of revenue to leave on the table.
Online-To-Offline Defined
Why are brands and retailers leaving so much money on the table? One explanation could be lack of understanding of the online-to-offline (O2O) opportunity. O2O refers to any and all activity that originates online yet eventually results in a shopper going to a physical store. And as the Forrester report and other stats above demonstrate, the O2O revenue opportunity is much larger than e-Commerce. Nonetheless, the O2O opportunity has been overshadowed by the e-Commerce boom with the rise of the online giants such as Amazon and eBay. Brands and retailers have rushed to develop e-Commerce and marketing platform integrations and technologies to take advantage of the growing online revenue opportunities. But for many marketers the O2O opportunity has been overlooked due to e-Commerce myopia.
Technology has been another barrier. Mobile’s promise is and always has been rooted in the O2O opportunity, but bringing all of the pieces together has been a challenge. The good news is that mobile, targeting, and location technologies have taken a great leap forward in recent years, bringing the promise of O2O within reach.
Technology Fulfills the Promise of O2O
Rapid consumer adoption of smartphones and tablets has driven the mobile revolution we’re all familiar with. All we need is a signal and we can search, browse, find, and zero in on almost any product, place or need at anytime and anywhere we happen to be at the moment. There has also been an explosion of mobile apps like ShopSavvy, Product Finder and ShopAdvisor that help consumers find the brands and products they need through their mobile devices. According to the Neustar Localeze Local Search Usage Study conducted by comScore, 48% of mobile phone users, and 32% of tablet users visited a business after a successful local search.
The rise of hyperlocal targeting has also played a role in enabling O2O marketing. Hyperlocal targeting leverages an IP address to estimate the location of online users as they searched and browsed on their PCs and laptops. Marketers have been using this technology for nearly a decade to target consumers with localized content. Then came smartphones and tablets, introducing the third screen for brands and retailers to target consumers locally.
Geo fencing takes hyperlocal a step further by leveraging the users’ mobile device and embedded GPS technology to create a perimeter which dynamically targets consumers and serves relevant ads as they come into range. Imagine a consumer walking down a busy shopping thoroughfare and getting an alert through her mobile app that the designer handbag she has on her wish list is on sale, in stock and available at the boutique retailer just steps away. Geo fencing also has applications for public transit and taxis in the form of electronic signage that presents dynamic hyperlocal brand ads and offers with nearby retail locations where consumers can easily buy from.
Real-time product data ties it altogether. Consumers on the go want to know the most convenient retailer to buy from, but they’ll be frustrated if they take the time to go in store and then find the specific brand, color or size they want isn’t in stock. That’s where product and inventory data comes in. Present shoppers on the go with hyperlocal offers that not only include purchase location information, but also specific product details and inventory availability and you now have reached the holy grail , nirvana, the promised land (Whatever your aspiration may be.) of O2O marketing. According to a 2012 IAB study, 32% of respondents who have used their mobile device while shopping said they have made an unplanned purchase in-store, compared to just 7% of respondents who don’t use their device.
So how can brands and retailers stop leaving revenue on the table and start getting their share of the O2O revenue opportunity? It’s a huge opportunity that no brand or retailer can afford to overlook without the risk of losing sales and customer loyalty to your competitors. The first step is to make O2O marketing part of your marketing planning. Investigate O2O technologies. Chances are you’re already using hyperlocal and data-driven targeting technologies. Now it’s time to harness these technologies by implementing an O2O marketing strategy.
Jeremy Geiger is CEO & Founder of Retailigence (www.retailigence.com), an Online-to-Offline (O2O) local marketing and commerce platform that utilizes brick-and-mortar inventory data obtained directly from retailers to turn online consumers into offline shoppers. Jeremy is a seasoned global executive with a proven track record of quickly building new businesses and entering new markets while establishing measurable results. As Managing Director and Board Member of Real-Time Technology Asia-Pacific (subsidiary of RTT) Jeremy built the organization up to 50 employees and grew revenue tenfold in less than four years.
