Why The New ‘Hybrid’ Offline And Online Shopping Model Will Supercharge Retail In 2021

When it comes to the future of retail, those that can combine their online and offline channels will be the winners, argues Shopify Plus APAC director Shaun Broughton in this piece. 

Over the last five years, the traditional physical ‘bricks & mortar’ shopping experience has been usurped by mobile and online shopping, particularly during the mandatory closures in 2020.

Retailers could now be forgiven for thinking online and bricks & mortar is an ‘either/or’ proposition. However, the fact is, integrating the online and offline shopping experience can make for an even more powerful overall experience than either of these two channels standing alone.

Bricks & mortar still hold the majority share of sales

It’s surprising to note the majority of retail purchases still occur in-store, and it’s a worldwide trend. While 2020 may have skewed this a little and prompted more people to go online, research shows 82.5 per cent of all retail sales still happened inside physical stores up to and including 2020.

Reports also show e-retail sales accounted for 14.1 per cent of all retail sales worldwide earlier this year, and these figures are expected to reach 22 per cent in 2023. Some say this will reach 95 per cent by 2040, but this is speculation this early on in the journey.

One thing is clear: preaching the death of physical stores is premature, and they still make up an important part of a healthy retail journey. This is for a variety of reasons, not the least of which is customer experience (CX). 

Customers are tactile, they like connectivity and to see, smell, try and touch what they are buying. They like to talk to a real person if they have a problem, and let’s face it, after this year they like to get out of the house.

Digital touchpoints are vital

However, it is also true to say in store purchases are significantly influenced by digital touchpoints, and vice versa. Studies show 81 per cent of shoppers research a product online before buying it in a physical store. 

Consumers research a product online to find the best price, they research to find out more about it, and they research to read other customer’s reviews. 

If the online experience doesn’t match the in-store experience, this leads to consumer confusion, disappointment, cognitive dissonance, and customers will be less likely to purchase a product from that brand or retailer on any channel.

O2O is the way to go

Online-to-offline (O2O) commerce is the smart strategy of integrating online and offline for a cohesive, complementary customer experience.

O2O means acknowledging and taking advantage of the fact there will be multiple online and offline touchpoints on the customer journey, and making them work together, rather than as separate entities, can facilitate better profitability through more sales.

Strategies such as customers visiting a physical store to try on an item, and yet ordering the item online while they are in store, and then enjoying delivery, is a good example of an O2O strategy. Similar is allowing online purchases to be returned or exchanged in store, click and collect, virtual consultations, pushing online purchase history to salespeople in store. Another groundbreaking new example is using AR-enabled mirrors to show a customer what an outfit might look like in-store based on their online preferences.

Essentially, an O2O strategy comes down to a personalised, surprise and delight experience. No two customer journeys are going to be the same to purchase. Therefore having a cohesive omnichannel CX strategy increases a brand’s likelihood to attract and retain customers. It does this by offering them various pathways to awareness, discovery and purchase in the way that is most convenient for them – the actual purchase point is secondary so long as a purchase is facilitated.

The benefits of this more united experience could be in the trillions for clever brands. Businesses adopting omni-channel strategies achieve 91 per cent greater year-over-year customer retention rates compared to businesses who don’t, according to a survey conducted by Aspect Software, 55 per cent of companies have no cross-channel strategy in place, and 90 per cent of customers expect consistent interactions across channels.

Importantly, companies with extremely strong omnichannel customer engagement see a 9.5 per cent year-over-year increase in annual revenue, and strong omnichannel companies see a 7.5 per cent year-over-year decrease in cost per contact.

This is a lot of consumer dollars which have not yet been leveraged by the majority of brands who still see physical and online as separate.

How are leading retailers achieving O2O?

The above examples are just a few ways to link the online and offline shopping experience. More brands and linking online and offline to offer the same feel regardless of channel. Leading retailers have ensured personalised online experiences with ideas like virtual appointments using video to give fashion consultation, much like they might do in person.

Retailers are also evolving the purpose of bricks and mortar stores. Culture Kings is a fantastic example of this. The physical store is there to offer a customer experience, without the expectation of sale at that point. 

When Culture Kings needed to mimic its trademark in-store experience, online, to achieve better brand synergy so the feeling and vibe on its website felt the same as its famous in-store experience, they needed to make their site unique.

With the help of Shopify Plus, the brand overhauled its ecommerce strategy, posted weekly lifestyle photo and video shoots online, which led quickly to a Shop The Look page, where Culture Kings’ in-house team could curate outfits on the web the way staff might make personal recommendations in-store.

Its online business — which featured four global storefronts selling in three major global currencies — leapt ahead of its in-store sales and has never looked back. Today, 60 per cent of Culture Kings’ revenue comes from ecommerce. Culture Kings can now spend its energy on what it does best – customer experience, with the aim of opening a store in most major cities around the world, true destination shopping experiences complete with DJs, barber shops, and celebrity clientele.

In this way, permanent and pop up stores create immersive experiences to drive foot traffic and educate consumers on product offerings, reinforce their brand’s positioning, and support e-commerce sales. 

Magnolia Market is a destination shopping location in the US, and a great example of O2O. In 2015 Magnolia Market opened at the Silos in Waco, which has become as much a tourist destination as point of transaction. 

Translating the feeling of shopping at the Silos into an online experience was never going to be a light task. The answer was augmented reality (AR).

The company partnered with Shopify’s AR team to create an app to revolutionise the Magnolia Market shopping experience. Select products would be rendered using the highest-possible 3D photo-realism through Apple’s ARKit. Users of the app could visit a product page, then hold up their phone to watch the item appear in the customers’ own homes. 

They knew well that not everyone could visit Waco, nor could they handle Magnolia Market’s goods in their hands before buying. But augmented reality helped bridge that gap, to simulate the personal experience of the Silos as if shoppers were really there. Purchases, whether online or not flowed from the experience.

Moving into 2021, a united online and offline customer experience will only become more important as customers embark on a purchase journey in the way to best suit them. Brands taking advantage of this are bound to prosper in new and exciting ways.

Click here to find out more about how to create a cohesive, memorable and consistent shopping experience.