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O2O has a bright future in Asia

Online to Offline (O2O) is no longer about search online and purchase offline or buying online and picking up in-store.

The exponential growth of e-commerce in China, fueled by Alibaba Group’s Taobao Marketplace and, has led a number of brick-and-mortar retailers to reevaluate their e-commerce strategy.

O2O has been growing rapidly in US and Europe, where the division between online and offline purchase channels become blurry. From more traditional O2O concepts such as Groupon and electronic in-store coupons, O2O has evolved into a blended model of online and offline commerce.

In China, traditional retailers are trying to retain their market share in the midst of heavy competition from online stores.  Similarly, online stores have also been looking for ways to extend their competitiveness in product categories that normally requires a personal touch-and-feel experience, and drive people to purchase the products online.

In May 2001, Alibaba Group’s opened a furniture store in Beijing to allow customers to physically try out their furniture before buying online.

In 2013, before the Single Day, November 11, in China, many stores ran showroom previews in their physical locations, encouraging users to try on their products and add them to their online ecommerce website’s wish list. Customers would then receive automatic notification with the deep discount information on November 11 to persuade them to complete the purchase.

While O2O is still not prevalent in Hong Kong and other Southeast Asian countries, a few ecommerce retailers are taking small steps to address this.

An example is luxury department store, Lane Crawford, which allows people to make the purchase on their online store and pick up their items in any physical store the next day.  This reduces the wait-time for many Hong Kongers, who are impatient to wait for mail delivery and reluctant to pay for shipping cost, to enjoy almost-immediate gratifications.

With the increasing popularity of online and mobile payments in Asia, it will be interesting to see how physical retailers and e-commerce sites respond to the changing dynamic of consumer purchase journey.

Antony Yiu is head of search and performance at MEC Asia Pacific.

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