From offline to online (O2O): Tackling every retailer’s big challenge

How can retailers overcome the challenges of bringing their businesses offline to online?

This is Part 2 of a two-part series. In Part 1, we talk about how retailers bring their offline businesses online through the lens of Starbucks. In Part 2 of this series, we outline the steps you’ll need to take to bring your business offline to online.

In this article, we first talk about what your company’s data infrastructure needs to look like to operate effectively as an omnichannel, customer-centered business. Then, we’ll talk about a few specific considerations around online product selection, personalization and how to drive online sales.

Enjoy!

Contents

1. Data architecture

2. Product selection

a. Understanding personas

b. Screen by best sellers and price point

c. Identify traffic drivers

3. Personalisation

4. Driving online sales

a. Drive your loyalty program customers online

b. Online advertising

c. Distribution

5. Conclusion

1. Data architecture

There are two key components to the software architecture you’re looking for in an omnichannel retail business:

  1. Big Data: Single view of customer for your business
  2. Predictive Actions: Predictive technology that learns from past marketing actions and applies them to future ones consistently across channels.

Your data warehouse and customer relationship management (CRM) software are at the center of this architecture. It centralizes and organizes the information you have about your customers and business so that predictive technology has the necessary big data it needs to run its algorithms

A common pitfall here is to try to get all data into your data warehouse at once. This approach usually leads to a lot of time and capital investment with no business result.

The implementation of data warehousing and marketing actions based on that data must go hand in hand. This allows your business to see returns on your investment in weeks rather than months. It also helps your team prioritize what to work on next.

2. Product selection

You sell a lot of products offline. Which of them should you select to include in your online store?

a. Understanding personas

Answering this questions starts with understanding your online customer personas.

According to software blog Hubspot, a customer persona is a “semi-fictional representation of your ideal customer based on market research and real data about your existing customers”. By grouping customers with similar buying patterns and interests, companies can focus their marketing efforts on retaining and attracting the highest value customers. Using customer personas as part of a business strategy can have a direct impact on sales. Intel found that its use of buyer personas surpassed expected results by 75% and were more cost effective than average outreach campaigns by 48%.

Below are some of the other benefits of using personas:

The traditional approach to coming up with personas involves understanding your customer. This means having conversations, stepping into their shoes and understanding what makes them tick and love your brand.

This can be combined with Metisa’s Customer Personas, which helps you identify customer personas in a mathematical way. By using a machine learning method called clustering, you can group your customers with similar buying patterns. From this, you can see which groups to target and what kinds of customers are most valuable to you.

b. Screen by best sellers and price point

Next, you should screen products by best sellers and price point. Best sellers are products with proven attraction to your existing customers. A mix of differently priced products will help you get a spread of products that appeals to any customer visiting your online store. Screening products using these two determinants should produce a list of products that will generate the most sales for your online store.

c. Identify traffic drivers

In addition, you should also select products that will act as traffic drivers for your site. These should be products either priced at little to no markup or novelty items. Cheaper items are products that will likely make up the most of your sales - about 60% of online sales are $10 USD or less.

3. Personalisation

Once you have started collecting sales data, you can use Metisa to personalize your online store for each customer. In addition to using your sales data to find customer personas, Metisa can also analyze your data to find the best products to recommend to your customers. These recommendations are updated in real-time to reflect the changing purchasing history of your consumers. Recommendations are a valuable form of one-to-one marketing because they enable you to appeal to individual customers based on their interests and behaviors. They can be inserted into sections of an online shop or email in order to target your consumers.

Example: Personalizing entire home pages on your online store

Example: Personalization on mobile web

Example: Personalization in emails and reviews



4. Driving online sales

a. Drive your loyalty program customers online

Loyalty programs and mailing lists are a great way to jumpstart your online sales. For example, auto-signups for your online store can be set up for whenever a customer signs up for your loyalty program. They are also avenues to introduce your offline customers to your online business: it costs businesses about 5-10x more to acquire a new customer than it does to sell to an existing one.

In-store advertising and word-of-mouth can also be tremendously successful in moving customers online. A Nielsen survey found that 92% of respondents said they trusted recommendations from friends and family more than all other forms of marketing.

Example: This Starbucks email newsletter is driving customers to three different purchasing channels: the rewards card, retail locations, and online store

b. Online advertising

Online advertising channels are most useful in targeting your customer personas. The goal here is to find keywords or demographics that can generate positive ROI. Programmatically experimenting and testing new keywords and demographics is a smart way to identify the best way to spend your marketing buck.

c. Distribution

Product feeds are how product information is distributed from a retailer’s website to other marketing and distribution platforms. Each feed is a data stream containing all your products listings and descriptions. These streams are linked to your e-commerce platforms (price comparison websites, affiliate networks, online marketplace etc) so that other platforms can recognize what your products are. For example, platforms input product feed information into their search engines so that your product will come up during relevant searches on their site.

If your product feeds are not comprehensive and up-to-date, then your product information is displayed on other distribution platforms will be inaccurate. That is why automating your product feeds directly into distribution channels is important. Automation circumvents potential human error by updating and syncing inventory updates in real-time.

Distribution channels like Amazon, Lazada, Tmall and JD all offer services that automate sellers product feeds but usually only for online stores on their channels. Which product feed automation tool you use will most likely be tied to your distribution channel or platform. Amazon is dominant in North America, Germany, and the United Kingdom while Lazada is used primarily in Southeast Asia. Tmall and JD are e-commerce giants in China.

5. Conclusion

Bringing your offline retail business online can seem like a lengthy and challenging process. But as long as you keep in mind the following key principles, you should find the process relatively straightforward.

Data Architecture

  • Getting to the right data architecture for your business is hard, but will yield huge results in the long run
  • CRM / data warehouse needs to go hand in hand with actionable predictive marketing capabilities

    Product Selection
  • Understand your online customer personas
  • Screen products by best sellers and at price points that are popular online
  • Find novelty or little to no markup products that can act as traffic drivers for your site

Personalization

  • Recommendations are a powerful form of one-to-one marketing that can be applied to your website, mobile apps, and marketing channels

Driving Online Sales

  • Loyalty programs and mailing lists are convenient ways to introduce offline customers to your online store
  • Target customer personas through online advertising (Google, Facebook etc) and experiment programmatically to find positive ROI keywords, demographics, and channels
  • Distribute your products across platforms with automated product feeds

Over to you

This is the end of our two-part series on bringing a store from offline to online. Thanks for reading! If you have any questions about what we covered today, please leave a comment below.