Selling to China: Five Rules for O2O

Just about every retail brand we see in China is pursuing an O2O strategy.  Whether online-to-offline or offline-to-online, the logic is the same.  Brands want to make sure their sales channels reinforce each other, provide for a better customer experience, and respect the trend of consumers migrating to e-commerce without undermining a profitable store-based business.

The emphasis international brands place on China e-commerce is not a surprise, given the size of the market and the rapid rates of growth.  But what are the o2o guidelines to drive sales and increase engagement and retention?  There are five rules to keep in mind….

  1. Love all your channels

The moment a customer encounters your brand is the moment he or she starts to determine its value. Therefore the first step in using O2O effectively is to maximize performance within each channel.  A low-growth channel might have high absolute numbers.  A transaction through one channel might be the result of unknown interactions through another channel.  So it’s essential to bring a strong brand image and well-trained customer service team to each channel.  Love your channels, because those channels allow your customer to love your brand.

 Look at Starbucks (not a client): It complements its 800 store locations in China with coupons, mobile payment options, and loyalty programs available on the Starbucks app as well as its WeChat account and its Tmall store.  Customers not only encounter knowledgeable staff at the stores, but can also reach out to the brand digitally, receiving a response within seconds. Starbucks knows that although the transactions take place in stores, brand identity and consumer engagement is overwhelmingly digital.
  1. Stay consistent — Do no harm

Maintain consistent communications, pricing, and customer service across channels. The online and offline experience has to offer the same brand image and transaction possibilities.  Same identity, message, and pricing.  Pricing consistency will avoid internal and external conflict, as your store managers and e-commerce teams won’t be competing against each other and customers won’t feel like they missed out by not shopping on a specific channel.

Similarly, train customer service teams on each aspect of the brand using standardized material. In addition, give your online merchandising and graphic design the same look and feel of your physical store.

Reading a magazine on a business trip to London and out falls a “blow-in“ card for Charles Tyrwhitt (not a client), a prominent shirt-maker, good for £10 off any purchase, online or offline.  I can bring the card into any store, or I can use the card online because it has a serial number that I can key in.  Lovely.  Tyrwhitt understands the consistency principle (and a whole lot more, we assume).

  1. The easy cross-sell: cross-promotion

It is not enough merely to be consistent.  You must also use your channels to cross-sell.  Make sure that each channel promotes and validates the other.  All printed and in-store material should act as a gateway to the brand’s digital realm (think QR code or hashtag).  All online purchases should insert material with store locations with the shipments.  The online store should offer a locator map for offline stores.  Check your receipt next time you shop.  If a URL or QR code is printed at the bottom, this brand understands cross-promotion.

  1. The harder cross-sell: one window to the customer

Regardless of what the customer is doing with the merchant, regardless of where, and regardless of what channel – the store has one aggregate view of the customer and the customer has one aggregate view of the store.  So the customer can purchase online and return at a store.  The customer can visit a store and then order online.  Harder to do than it sounds.  And harder still across multiple markets.  Yet I can use my Citibank ATM card in Shanghai or Washington DC, or I can go into a Citibank branch in Singapore and they immediately identify me.  What kind of loyalty program does your store have and how does it function across borders?

  1. The trend is your friend.

Let’s not pretend that O2O is a static situation and we are discussing coordination among equal channels.  Indeed, perhaps the strongest trend in retail today is the move away from stores to e-commerce.  We see this in every market in the world and across every demographic.  Some areas (like China) are moving faster than others, but everybody is moving.  No surprise here.  Consumers have better selection and better discovery mechanisms.  On-line merchants have lower costs and can more easily experiment.  But how do you play into this trend?

The most important lesson here for merchants and brand owners is that you will be better off if you run your e-commerce program directly.  As we discussed in an earlier post, do not lay this off on your distributor.  Your net will improve.  You will retain control of your brand.  And you will drive offline improvement through online improvement.  Bring in outside expertise as needed.  But the smarter brands will seek to run their China e-commerce operations aggressively, purposefully and directly.

Frank Lavin is the CEO of Export Now, operator of China e-commerce stores for international brands. He previously worked on China issues in government, finance, and communications.