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November 09, 2017

The Future Adoption of Online to Offline Service (O2O) in E-Commerce

O2O will develop into an omnichannel retailing service and can serve as an alternative solution in solving the logistics problems of e-commerce services in the world. The adoption of the service is often a hot topic within the e-commerce industry and the concept is considered to have great potential if cultivated.


Adoption of O2O by startups

The concept of O2O is, in fact, not really new, although there is a new term that refers to the same definition. According to some marketing experts, O2O includes a suite of services purchased online but consumed offline. Classic examples of O2O services are like daily deals services. We can’t rely on just pure online paths to meet our daily needs.

Explaining the concept of O2O
When talking about O2O in the context of e-commerce or retail, people usually refer to online ordering and pick-up at a physical location. Another busy segment using O2O is on-demand services in the transport sector, food and grocery messaging services, and accommodation. While on the logistics side, O2O manifestation comes from smart locker services. The PopBox startup that just received initial funding is one of the pioneers.

The potential and future of O2O
Currently, the adoption of O2O is still very limited but the rapid growth of e-commerce gives it potential and many marketing experts believe it has a real future in the e-commerce industry and, specifically, in omnichannel retailing. Customers can order from anywhere (online, mobile, offline, social, etc.) and ordered products can be delivered via any channel, anytime.

These needs will emerge, regardless of cultural diversity. For instance, Hudson & Marshall offers auction houses online, but helps its customers buy the houses conventionally.

The level of maturity of e-commerce infrastructure and logistics will impact adoption of the omnichannel model. As e-commerce is still very new in some countries, although business growth is rapid, the logistics infrastructure still needs improvement in order to meet market demand. Thus, the challenge that must be addressed is market fragmentation. That is, there is still no single dominating platform like Alibaba in China.

When such a platform exists that will make it easier to drive single inventory into all third-party marketplaces and channels, the adoption of omnichannel retail will be more expansive.

Edited by Erik Linask
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