What is OMO? Explaining the difference between omni-channel and O2O and success stories

With the household ownership of smartphones reaching about 80% and the spread of IoT products and online services, the boundaries between analog and digital are becoming blurred. In such an era, the key word to keep in mind when thinking about business is “OMO”.

In this article, we will introduce the concept of OMO in the first place, and introduce the benefits and examples of incorporating the OMO concept into business.


Table of Contents

  1. What is the definition of OMO?
  2. What is the difference between omni-channel, O2O, and OMO?
  3. The purpose of OMO, the concept of “customer’s point of view”, and its merits
  4. OMO success stories in China, the United States, and Japan
  5. Keys to OMO success are data integration and thorough customer experience (UX) thinking

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What is the definition of OMO?

OMO (Online Merges with Offline) is a “society where online and offline merge”, and it may also refer to business advantages and strategies based on it. Until now, it was common to think that online and offline were separate worlds.

However, in the OMO worldview, people are always online through sensors built into their devices and the cloud, and completely offline no longer exists. If you are using a smartphone or smartwatch, it should be easy to imagine.

In addition to such mobile devices, the evolution of technology, such as self-driving cars equipped with IoT technology, smart home appliances, and AR, is accelerating the movement of online penetration into offline spaces in various fields.

Many companies will need to consider how they can provide advanced customer experiences based on OMO.

The concept of OMO was first proposed by Li Kaifu, former CEO of Google China, and became widely recognized after it was published in The Economist magazine in December 2017. As examples of OMO, Mr. Li introduces the business models that are already popular in China, such as bicycle sharing, taxi dispatch, and delivery food, and lists the following four conditions for the occurrence of OMO.

  1. Spread of smartphones and mobile networks. We can get data anytime, anywhere, bringing us ubiquitous connectivity.
  2. Rise in mobile payment penetration. Mobile payments can be used anywhere, even in small amounts.
  3. A wide variety of sensors are high quality, inexpensive, and ubiquitous. Real-world actions can be digitized in real time and utilized.
  4. The spread of automated robots and artificial intelligence. Ultimately, it will be possible to automate logistics (supply chain processes) as well.

By fulfilling these four conditions, “Even if it is a real channel, it will be possible to have a constant online connection and interact with data processed on the spot, so the boundary between online and offline will become ambiguous. “We’re going to merge,” Lee said.

What is the difference between omni-channel, O2O, and OMO?

There are two keywords that are often confused with OMO: “omni-channel” and “O2O.” Let’s review these differences.

In the first place, OMO refers to “a society that fuses online and offline”, and it is not a keyword that only refers to marketing (business) strategies. On the other hand, “Omni-channel” and “O2O” refer to marketing (business) strategies, and OMO covers a wider range as a concept.

What is O2O (Online to Offline)?

O2O is a term that indicates a marketing strategy that induces purchasing behavior from information on the Internet (online) to real stores (offline).

The spread of location information on smartphones, the spread of social media such as Twitter and Instagram, word-of-mouth sites, and coupon apps have expanded the range of sales promotions that stores can implement, and this is the reason why O2O is attracting attention.

Specifically, measures such as issuing discount coupons that can be used at physical stores from apps and membership sites to lead to sales at stores, and pushing advertisements targeted by location information to lead to store visitors. there is. Recently, O2O methods such as SNS and stamp apps, which can be easily started at restaurants and small stores that are busy with their daily work, have become commonplace.

What is omnichannel

Omnichannel is one of the prevalent sales strategies in retail, which refers to the seamless integration and coordination of all sales and distribution channels. Omnichannel enables buyers to purchase and receive products in the same manner from any purchasing channel.

The same member information can be used for multiple channels such as physical stores, e-commerce sites, catalog mail order, etc., and the ability to check inventory in the same way anywhere and receive products anywhere will improve customer satisfaction. I can expect it.

The purpose of OMO, the concept of “customer’s point of view”, and its merits

As represented by the idea of ​​O2O, the idea of ​​separating online and offline is not only becoming obsolete, but it can be said that it is a way of thinking from the perspective of companies in the first place. This is because for the consumer, who is the customer, it is not important whether the channel through which the company purchases the products or services is “online or offline”, but simply chooses the most convenient method at the time.

Companies should adopt the OMO concept in order to develop services from a thorough “customer’s perspective”.

To that end, we will create as many touchpoints with users as possible, collect as much customer-related data as possible, and use that data to quickly improve our products, services, and UX (customer experience). It is likely that the success or failure of future business strategies will depend on whether or not we can continue to do so.

OMO success stories in China, the United States, and Japan

From here on, we will introduce some practical examples of business models in Japan and overseas that have introduced the OMO concept in each industry.

Case in China: Hooma Fresh

The idea of ​​OMO was born Humar Fresh, a supermarket owned by Alibaba Group, a major Chinese company, can be said to be a model case for OMO.

Starting with the first store in Shanghai in 2016, more than 100 stores have opened in 2019. It looks like an ordinary supermarket that sells fresh food, but it is characterized by being able to purchase online (EC).

Our physical stores also function as distribution warehouses, and we guarantee delivery within 30 minutes within a 3km radius of each store.

When an order is placed through an app or website, a store clerk picks up the ordered item, and a delivery person delivers it to the person who ordered it. It guarantees delivery within 30 minutes within a radius of 5 km from the store, and it can be said that the high speed and convenience of ordering from the app are the characteristics of the customer experience realized by OMO. .

US example: Walmart

Walmart, the largest retailer in the United States, has invested a large amount of funds in OMO measures to compete with the major EC service Amazon. One of the results is the “Pickup Tower”, a huge storage machine that allows customers to pick up products purchased on the website at the store.

If you read the barcode issued when ordering online, you can receive the product in 5 to 10 seconds.

Amazon’s home delivery service is certainly convenient, but in the United States, it takes a long time to deliver, “the stress of waiting for home delivery” and “theft stress” of having items placed in front of your home stolen. Consumers have been annoyed.

Walmart’s recommended “order at home, pick up at store” method can solve this stress. Thanks to these OMO measures, Walmart is achieving good results even though major retailers are suffering from the corona crisis.

Case in Japan: BEAMS

Beams is a select shop that sells imported and original clothing and miscellaneous goods, and has approximately 160 stores in Japan and overseas.

Initially, member data at physical stores and customer data registered on EC sites, that is, offline and online customer data, were managed separately. Therefore, in 2016, we successfully integrated the two databases and unified them.

As a result of integrating customer data, it will be possible to understand the purchase history and fashion genres of interest on an individual basis, regardless of the channel through which the purchase was made. .

Customers can check the size, feel, and comfort of the product at the store, and if there is no stock or another color, they can order it online, or conversely, choose the product in advance online, try it on at the store, and purchase it. It has become possible to purchase flexibly, such as being able to purchase it, and the convenience has been greatly improved.

Keys to OMO success are data integration and thorough customer experience (UX) thinking

In order to realize OMO, it is essential to have a growth hack-like idea of ​​integrating online and offline customer data and using that data to improve the customer experience (UX).

The process of increasing customer touchpoints such as stores, websites, apps, and call centers, creating new plans and measures from the customer data obtained from them, and updating the service itself is exactly what DX (Digital Transformation) is. It can be said that

As the phrase “manufacturing superpower” suggests, Japanese companies tend to think of measures based on a corporate perspective because they place too much emphasis on products.

However, as the barrier between online and offline melts and the trend of consumption changes from consumption of goods to consumption of experiences, we will eventually lose support from customers. On the other hand, if OMO can reproduce the individualized response and thoughtfulness of Japan’s strength of “hospitality”, it should be possible to realize a customer experience that is recognized worldwide.

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