“The online retail market in China has grown very rapidly, and has caught many retailers off guard. Yet the online retail market still struggles to be profitable, and continues to be regarded as a means to get cheap products.
The online retail advantage of lower prices, more choice and more convenience vie with the in-store advantage of intimate product contact, direct staff advice and the immediate thrill of direct purchase. Stores can also provide a pleasant shopping environment and entertainments that websites cannot.
Yet multi-channel can bring the best of both online and offline together, and provide real competitive advantages to retailers and consumers. Online retail sites can become more appealing, entertaining and with faster home delivery. Physical stores can provide online more product information and use location-based marketing through mobile devices.
Integrating the benefits of the online and offline worlds can also foster better engagement with their shoppers, to build trust and loyalty, and to learn from and respond to shoppers’ changing needs.”
Definition
Online-to-offline (O2O) retailing (also known as Internet+ or Omni-channel retailing) can be defined most simply as the integration of online retailing with traditional bricks-and-mortar retailing.
However, it covers a wide range of commercial and consumer activities, and aims to focus those online and offline activities into coordinated strategies as an integrated, multi-channel business plan designed to utilise online assets to re-establish in-store value, with a view to increasing overall retail revenue (both online and offline). This multi-channel approach is more two-way, from online-to-offline, and from offline-to-online.
It can also be seen as a business strategy that simply draws potential customers from online channels into physical stores, by identifying customers in the online space, via email, social media, online gaming, online retail channels and internet advertising, using a variety of marketing tools (both online and offline) to guide customers from those online spaces into the physical retail spaces. This approach is more one-way, from online-to-offline only.
Methodology
This is a marketing intelligence report published by Mintel. The consumer research exclusively commissioned for this report was conducted by a Chinese licensed market survey agent (see Research Methodology China for more information).
For the purpose of this report, Mintel commissioned a quantitative research survey carried out online to explore online-to-offline shopping and spending habits among consumers aged 20-49.
Fieldwork was conducted in April 2015, in four tier one cities, three tier two cities and three tier three cities of 3,000 consumers aged 20-49. The tier one cities are Beijing, Shanghai, Guangzhou and Chengdu. The tier two and three cities are Tianjin, Handan, Xuzhou, Hefei, Zhanjiang and Chongqing.
Abbreviations
| AR | Augmented reality |
| B2C | Business-to-consumer online retail |
| C2C | Consumer-to-consumer online retail |
| CAGR | Compound Annual Growth Rate |
| CEO | Chief Executive Officer |
| CNNIC | China Internet Network Information Centre |
| COPA | China Online Pharmacies Alliance |
| CSN | China Smart Logistics Network |
| : | : |
| : | : |
