Blog / OMO Business Model

What is the meaning of OMO?How to apply OMO to business models and brands?

During the epidemic, people spend more time on WFH and online consumption. Indeed, for a long time in the past, the "O2O" (Online to Offline) model has been a major strategy for many brands in digital transformation. By offering discounts online and selling promotional coupons, many businesses were able to attract customers and bring them to the brick-and-mortar channel. However, as people have gradually adoped to the new normal, OMO which is the integration of online and offline busienss model, has brought the brands even more advantages when comparing to O2O. What exactly is OMO then?

The decline of customer traffic in physical stores leads to the rise of OMO

As people's consumption trends change and the competition in e-commerce becomes fierce, how can brick-and-mortar stores take advantage? The concept of "OMO" was first proposed by Dr. Kai-Fu Lee, founder and CEO of Innovation Works, in 2018. He pointed out that OMO means integrating online and offline, and using data to drive consumption. OMO is the abbreviation of "Online Merge Offline", which means the fusion of virtual and reality. Through the OMO brand, customers can go to the store to experience, place an order online, wait for delivery or choose to pick up at the store. With the CRM (Customer Relationship Management) customer relationship management system, the brand can collect customers' consumption habits, cycles and preferences as it provides more personalized sales services and re-targeting while helping to study consumer behavior by conducting grouping and segmentation to achieve precision marketing.

Customer hesitation has lengthened. OMO helps to increase order transaction

It is already a daily routine for consumers to search for user reviews on the Internet and compare the discounts of different e-commerce platforms before making purchases. With the increasing popularity of smartphones among different age groups, the channels through which consumers can obtain product information have increased, and consumers have become more and more savvy. They will not immediately make purchases in stores. Many people will search online again on which platform to buy to enjoy more discounts. Consumers’ hesitation period has lengthened, and consumption patterns and brand touchpoints have become more complex.

Take Uniqlo, a Japanese chain casual clothing brand as an example. When a customer arrives at the checkout counter, the salesperson will ask the customer whether they have registered as a member of its online platform. In addition, in case customers are hesitant to buy a certain piece of clothing, they can also add the product to the favourites list on the app first, and then they can purchase it on the official website when they are finished considering or there are online promotions. From this example, it can be found that the distinction between online and offline consumption is no longer so clear. In the end, this order seems to come from the online platform, but if the customer has not experienced the try-on experience in the store, the order may not be successfully completed.

CRM system helps brands achieve OMO business model and comprehensively integrate consumer information

Data integration is the key to transforming to OMO. Taking the huge consumer consumption patterns as data is extremely important for brand marketing and development. Only by centrally classifying them through the CRM platform, mastering the information of past customers or customers who have clicked on advertisements, and integrating the information of customers who have consumed online and offline at the same time, can brands understand the customer profile and their consumer journey. According to the interests of different customers in various types of products, consumers are divided into groups, so that accurate marketing can be achieved in future marketing activities. With an effective CRM membership system, after a customer joins a membership, the information can be identified both online and offline such that they can accumulate consumption or upgrade points in either way. Members' rights and interests, such as member consumption discounts, birthday coupons, etc. can be used online and in stores. In addition to effectively improving marketing and customer service efficiency, CRM systems also play an indispensable role in OMO integration.

OMO opens up all channels for consumers to collect product information across online and offline

According to the "2022 Smart Consumption Key Report" published by Google, more than 50% of the consumers in the survey will collect information about the products online and offline before shopping. This means that consumers will use more time to contact the brands through multiple channels in order to repeatedly confirm their purchase needs and compare the advantages of different brands. There will be a higher chance for them to suspend their consumption in case something comes up during the process.

The OMO allows brands to integrate online and offline systems and consumer data. The OMO business model means the integration of services and marketing strategies between different channels to provide customers with a smooth omni-channel shopping experience, so that consumers do not need to choose between electronic platforms or physical stores, but switch between online and offline naturally according to their current needs and preferences.

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