CHAPTER 2: ONLINE TO OFFLINE (O2O) BUSINESS MODEL
2.7 O2O I MPLEMENTATION
The purpose of this study is to provide guidance to practitioners in planning and monitoring an O2O implementation. More importantly, it provides companies with information about how to succeed with O2O projects. Because of the lack of literature discussing the CSFs of O2O implementation, this study identifies the CSFs of O2O implementation from practical cases and previous, related research (Rose, Clark, Samouel and Hair, 2012).
Previous books about management information systems (Laudon & Laudon, 2011.
Tung-Ching, L., 2010) address a similar overview of fundamental MIS concepts using an integrated framework for analyzing and examining information systems.
That framework shows that information systems are composed of management, organization, and technology. In contrast, this study applies the framework to O2O implementation and then discusses case studies to illustrate how technology, management and organization work together to create an O2O solution to business challenges and to identify the CSFs within the 3 dimensions of a business’s O2O implementation.
Table 4 Technologies adopted in O2O strategy
Technology Resource Role Play Description Practical Case Goal
QR code, codes. Shoppers can scan QRcodes, barcodes, RFID on smartphones (in store) or leaflets (offline) and obtain product information (online), which is used to identify goods or make payments online.
Yahoo Taiwan, chaoji shangcheng ecommerce app Enables customers to buy online effectively when scanning a product’s barcode while visiting an online site’s physical
Kiosks are now relatively common machines in physical stores operated by retailers; the kiosks feature various products from which shoppers can make their selections. Kiosks provide an option for retail sales to provide broad types of services, including paying, ordering, printing and so on (offline).
Taishin International Bank Co. & Family Mart
The bank has installed an online bank system on FamiPort, a kiosk at the Family Mart convenience store. The system provides a service of so-called reward points, which allow customers of Taishin International Bank Co to exchange points for real items or services at the Family Mart. create a signal area. A shopper's mobile device connects with Beacon when he or she walks into one of those locations (offline).
Beacon then triggers
USA, Walmart
When a shopper steps into Walmart, his/her shopping list transfers to a
personalized map, showing the item's accurate position in the store.
To experience a personalized shopping experience.
personalized information to be sent to shopper's device while he or she is “on the go”
One technology that has been gaining popularity on online apparel shopping sites is Virtual Try-on. This technology enables enhanced product viewing and reduces shopper’s perceived risk (online).
Japan, iButterfly app iButterfly is a gamified location-based service app in Japan that enables users to enjoy the feeling of catching ”butterflies” in an AR world via smartphone and subsequently obtaining
The growing prevalence of location-based services on mobile devices is another critical enabler that can present optimal information and services (online) to users based on their location (offline).
USA, Walgreens
Walgreens cooperates with Foursquare, a location-based social networking website, to offer customers electronic coupons on their mobile devices from the moment that they enter a Walgreens store.
To find out the place where the product locates.
Social media Bradner (2007) rely not only on marketing efforts from firms but also on online blogger reviews and friends’ ratings or recommendations on social networks such as Facebook and Twitter (online).
Procter & Gamble (P&G), BeingGirl.com The site provides health content, product information, and community to teenage girls.
P&G satisfies teenage girls’
needs by interacting with them and has increased sales.
(1) Technology: Technology is a useful tool for managers to address changeable challenges. It primarily consists of IT infrastructure (software, hardware, networking, databases, etc.) and IT application (ERP, POS, CRM, etc.). The O2O business model is a combination of ecommerce platforms and physical channels.
As this paper mentions above, enterprises rely on systems to connect their front platforms and central systems, thus improving their business operations in an efficient and flexible manner.
(2) Management: Management's job is to understand their organization’s situation, to make decisions and to formulate solutions to organizational problems.
When managers sense business challenges in the market environment, they should plan a strategy for responding to the organizational problem and to allocate resources (e.g., financial, labor, knowledge and so on) to coordinate their projects.
(3) Organization: In the present era, there can be no business without information systems. An organization’s key elements include its people, structure, business processes, politics, and culture. Tung-Ching (2010) notes the effects of digital strategies, human resources, organizational structure, business processes, and a digital-strategy-based business model on an organization.
The framework of critical success factors:
(1) Technology
Ease-of-use application
Users prefer to use applications that make it seem as though the computer understands them. Such applications allow consumers to easily shop for what they want. The interface and operation should be simple, concise and self-explanatory for people who are even not techies.
Flow connectedness
Website load time has always been an important factor in website success. The longer a website’s load time, the lower the customers’ patience levels. Load time greatly influences customers' mood when there is a wait between the action of a customers and the response of the website or other application.
Table 5 Critical success factors for O2O implementation
Factor Reference Description
Technology 1. Ease-of-use application concise and self-exploratory for both business-side users and market-side users. online websites or smartphone apps.
3. The aesthetics of website or app
Rose, Clark, Samouel and Hair (2012)
The look and feel of the website and app should be consistent with user's perception of the company.
4. Stronger IT bone Roberts and Zahay (2012)
Integrate the subsystem of the online platform and offline stores and standardize the operation process.
5. Accurately
located function
Brynjolfsson, Hu, and Rahman (2013) Rigby (2011)
Maps should update real-time, and navigation is quick and accurate when shoppers are on the go.
Management 6. Management
Support
Parr and Shanks (2003)
Top management advocacy,
provision of adequate resources, and commitment to project
7. Promotion
channel
Rigby (2011) Zhang (2008)
Find the suited channel to reach the target (demography) customers.
8. Accurate content promotion
Rigby (2011) Retailers should send the
information that consumers feel really useful to them.
9. Good CRM system Roberts and Zahay (2012)
Heckmann,
Kesteloo, and
Schmaus (2012)
Constantly collect and analyze data
from customer's buying behavior,
buying history and membership to
build up a solid relationship.
10. Effective logistic mechanism
Heckmann,
Kesteloo, and
Schmaus (2012)
E-commerce businesses deliver the items to customers with a speedy logistic.
11. Integral content delivered
Rigby (2011) The information of products/
services is integral for customer to quickly understand.
Organization 12. Complete Staff training
Jacob (2014) Sales staff should understand the feature of product and conflict with consumer's problems, so they can response to consumers, assist campaign process and operate systems.
13. Balanced team Parr and Shanks (2003)
Rigby (2011)
Right mix of technical experts, data analyst, project planners, users and external working partners. and the customer experience should be consistent.
Companies should constantly adopt new business models, make improvement and examine itself.
16. Commitment to change
Parr and Shanks (2003)
Perseverance and determination in
the face of inevitable problems.
Website and app aesthetics
The aesthetics of any application’s interface influence customer perceptions of the brand. When consumers enter a website or mobile app to engage in Internet shopping, the look and feel of the website and/or app are important. This is particularly true for entertainment applications, which all need fantastic technologies—e.g., VR, AR and animation—to present users with a beautiful, appealing interaction interface.
Stronger IT bone
If a company's multiple channels want to be truly integrated, they must be linked to an IT bone with a dedicated multiple-channel integration layer. The purpose is to provide a seamless process for the company's operation and consumers’
purchase-related actions. For instance, a customer might reserve a desired product online and want to pick up the product at the particular retail store. The store’s staff should ensure adequate inventory to fulfill the transaction.
Accurately located function
LBS technology helps companies not only to promote information to targeted customers' smartphones but also to locate customers and then navigate them to the offline store. Therefore, the application should accurately locate the customer so that the promotional strategy is effective and useful.
(2) Management
Management support
Management support can take several different forms, such as demonstrating commitment, helping teams overcome obstacles, increasing team coherence and providing team encouragement. Management also provides sufficient resource support. These things will encourage team members' willingness to improve their performance.
Promotional channel
Different customer segments have completely different preferences and demands.
Marketers should understand each customer segment’s need and find a suitable reach point for each one. This promotional strategy becomes effective if
companies find the appropriate channel to reach the appropriate customers.
Accurate content promotion
Customers dislike receiving useless information. Garbage pop-up information jumps onto the screen on mobile devices, causing consumers to experience “noise”.
Companies now rely on data analysis to target customers and promote information that is useful for them.
Effective CRM system
Due to a highly competitive market environment, a good relationship with customers becomes highly important for companies. Companies should collect integral data, including customer behavior, transaction records, preferences and so on, and should analyze that data to improve their marketing strategy.
Effective logistic mechanism
To satisfy increasing customer expectations related to product delivery, companies can increase their delivery options and speed up their delivery time.
This project is challenging because of the interplay among many companies' logistic mechanisms. For instance, Amazon has introduced same-day delivery in select urban areas; therefore, competitors will improve their own delivery services to win customers.
Integral content delivered
Customers prefer to search for product information prior to making a purchase.
Companies provide all product information satisfying to customers. Moreover, product guides are also important for customers to know about before making a purchase decision. The information should be clear to avoid a conflict between businesses and customers.
(3) Organization
Complete staff training
Companies also invest in staff training in the area of offline store conversion. Staff members familiar with both online and offline service can provide better responses to sudden problems. Moreover, knowledgeable and enthusiastic staff
members can offer useful product information to help consumers evaluate the pros and cons of specific products.
Balanced team
Because of firms’ operations across both online and offline channels, the O2O business model is a difficult and important task for companies. Understanding teams’ interpersonal dynamics can help managers identify the optimal arrangement of individuals to ensure team success and high performance. Firms need an appropriate mix of technical experts to develop useful IT, data analysts to analyze customer profiles, and project planners to manage O2O projects, users and external working partners.
Make the process of online and offline channels seamless
Inconsistent processes for online and offline are the enemy of O2O business models. For instance, retailers should not have different price policies for the same product in offline and online channels. Likewise, problems can occur when a customer stops at a firm’s offline store to retrieve a product ordered online, but the wrong product has been delivered to the store. Therefore, the process of multiple channels should be seamless and the customer experience should be consistent.
Reinvent the company's future
The imperative of offering an O2O experience represents the largest transformation that many retail leaders have ever faced. Companies should be willing to accept this dramatic organizational change and to constantly improve their technology, management and organization policies.
Commitment to change
When companies are confronted by an inevitable challenge, they should have the capability to engage in introspection and to rethink their strategies. Most importantly, they should constantly incorporate new knowledge and improve the problematic process or policy.