Online-to-Offline (O2O): learning from China – Tom Doctoroff

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Tom Doctoroff

Blending online and offline operations has become an art in China, where the West can learn from, argues marketing expert Tom Doctoroff, on his LinkedIn Page. In Europe and America are offline retail operation declining, while that is not needed, he things.

Tom Doctoroff

In America and Europe, O2O delivers largely functional benefits such as convenience. In China, however, O2O is one of the most dynamic – and, for consumers, satisfying — areas of commercial innovation.   Offline and online blend into holistic, rewarding experiences.

Outstanding examples abound.

Suning, the appliance retailer, has partnered with Alibaba, combining the latter’s online retailing assets with the former’s physical stores and distribution facilities to turn purchasing of consumer electronics into themed experiential “zones” – for example, “gaming command centers” and “kitchens for fine cuisine.” And “cloud stores” merge e-retailing with brick-and-mortar shops. Large screens display and sell products unavailable on-site.

Ping’an Insurance Group’s “Good Doctor” app liberates citizens from China’s sclerotic medical system. Seventy million have downloaded the service that provides diagnosis and treatment support, appointment booking, and consultations with doctors through text, pictures and video.

China’s embrace of online-to-offline is partly driven by the country’s unique commercial landscape. Characteristics include: a non-responsive and oligopolistic service sector that fuels demand for innovative O2O solutions; low credit card penetration that catalyzes development of online payment systems; cheap labor costs for inexpensive delivery; ubiquity of quick response (QR) codes – thanks, WeChat! – that propel “retail-tainment”; and the Communist Party’s active push of growth through digital transformation of an “Internet Plus” economy.

Chinese psychology is also a critical factor in the spread of O2O.

Most fundamentally, O2O provides reassurance to China’s safety-seeking population. Non-individualism militates against institutional protection of economic interests. There are no impartial commercial courts or consumer protection bureaus. So the ability to “kick the tires” before virtual transactions are finalized is comforting.

In China, a country that reveres the concrete, anything nebulous is suspect. Operational scale, on the other hand, buoys spirits. Aversion to virtual transactions was mitigated only after Alipay, the payment system operated by Alibaba, became universally accepted.

The flip side of self-protection is the need to feel in control. That’s why dao jia (door-to-door) – even more consumer-centric than O2O because service is “whenever, wherever” — is so popular. The tracking capabilities of Ele.me, a food delivery service, makes the America’s order-and-pray Seamless app feel prehistoric.  Pizza delivery crews riding GPS-enabled bicycles minimize China’s national trust deficit.

Finally, the Chinese are shrewd bargain hunters who demand value, not just low price.  Wei Long, an online spicy snack retailer, recently opened high-tech, screen-enabled restaurants inspired by Apple stores. Vivo, China’s third largest online mobile phone brand, now operates hundreds offline stores with “selfie centers.” Celebrity photo ops can be broadcast to the world on social media platforms.

Yes, O2O is “strategy with Chinese characteristics.” But, as Western brand builders elevate transactional efficiency into multi-dimensional experience, it’s finally time to look to China for new ideas.

More in Tom Doctoroff’s LinkedIn page.

Tom Doctoroff is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers’ request form.

Are you looking for more e-commerce experts at the China Speakers Bureau? Do check out this list.