B&E | The Development Pattern of O2O e-Commerce Integration in China

B&E | The Development Pattern of O2O e-Commerce Integration in China

By Xingang Weng and Liying Zhang
Graduate department, Beijing Wuzi University, Beijing, China


 Image Attribute: Amid O2O push, Alibaba bought 20pc stake in brick-and-mortar retailer Suning for US$4.6b in year 2015 / Source: Reuters

Image Attribute: Amid O2O push, Alibaba bought 20pc stake in brick-and-mortar retailer Suning for US$4.6b in year 2015 / Source: Reuters

Online-2-Offline (O2O) e-commerce integration pattern needs the establishment of various operational blocks along with improved integration between physical network, service network, logistics network, data network and mobile network. How to build these five networks and simultaneously integrate, this article's analysis as follows:

1. Physical Networks

There are two forms of the physical network. One is represented by Haier’s offline store mode; the other is virtual nationwide layout experience mode which is called Heike convenience store. Offline entity stores can be laid out in a national scale. Entity network basically needs entity business’s operation capabilities to get digitally transformed and provide necessary experiences, including terminal entity equipment of digital (such as virtual fitting), digital marketing (LED interaction), mobile payment (QR code or NFC payments), independent service (like independent checkout through self-check-out POS terminals), CRM management (No card member, Customize privilege), commodity information (electronic price tag) etc.

2. Service Network

The service network is an auxiliary system developed over the physical network and mobile network. It offers both social communication and customer relationship management, information transmission (using the micro letter, weibo and other social tools), serve the customer experience, complaint response, etc.; It also provide entity process services of online consumption and the rights, including online order (online buying), service experience (go to the store or pick up the goods), marketing return (discount stores), making an appointment (offline payment) and so on.

3. Logistics Network

The construction of logistics network is based on the user’s individualized demand. The four networks consisting of the Internet, logistics network, service network, the marketing network, helps to construct competitive advantage, driven by the user experience in the whole buying process formed by combination of emptiness and reality. 

By building the country network, the provinces and cities network are integrated under hub-and-spoke model, eventually to allow the customer experience the advantage of greater distribution services like last-mile delivery through resources integration. The logistics network needs the national inventory synchronization, inward and outward from the inventory keeps that synchronization seamless. 

Primarily, O2O sector needs to have a virtual warehouse, which should include the all items data including categories in an online format, which can be used to realize the inventory synchronization under real-time scenario. On the basis of these, it just can have the synchronization of logistics system. Because most of the enterprises agrees on the regional synchronous growth factors as the core value proposition led by multiple transaction, delivered by the area branch warehouse.Such network boost the efficiency of logistics. So, Logistics network eventually solve three problems: one is related to the efficiency, the second is  related to the cost, the third is related to the overall experience.

4. Data Network

In the process of the realization of the streamlined O2O operation, data network provide a powerful quantitative analytical system. The entire industry, from consumers order to the brand, from brands to raw materials, from raw materials to all other backward integration links, use data to get through all the industrial chain, so the efficiency changed thoroughly previous production status. 

Through data mining of the O2O e-commerce users, including data collection, data preparation, data conversion, data extraction, data mining and other process are used to analyze the characteristics of user groups, and then analyze users’ personal characteristics, gain valuable knowledge, in order to gain necessary business value. Data helps to do develop a better understanding of the need of customers, online users get in to the mall through mobile platforms. They obtain the data about user’s age, gender, usual spending habits through marketing encouraging and technical means. 

According to the above,  several basic dimensions of data can determine the user’s consumption habits which can be latter used to do the precise marketing in an effective manner. In this part, the above e-commerce companies have no essential difference from other physical retailers. The mobile Internet has a very good function, such as LBS positioning. Through technical and marketing incentives, encourage users to share their address. When the addresses are accumulated enough, it can develop specific consumer groups, and the data can be directly transferred to offline stores to provide required support. The mobile e-commerce data is not only convenient for online marketing, but also influences offline real decisions.

5. Mobile Networks

The popularity of smart phones, and the younger usage trend of shopping websites, as well as each big e-commerce enterprise promote actively in the mobile client, make Chinese users’ habits of mobile shopping be formed gradually. With the more and more use of 3G-4G network along with free Wi-fi hot-spots, integration model of online, offline and mobile e-commerce willa attain rapid growth.This model combines offline business opportunities and the Internet, eventually makes Internet an offline trading desk. Especially the emergence of QR code, it became the key to mobile operators who are entering into the mobile Internet and laid out the future of O2O e-commerce.

The instant communication tool is in the top of the list, combining the online services with applications to improve the user viscosity, and reducing the platform barriers as competition itself provides the necessary boost to the ecosystem. By moving the versatility of the business to the same platform, it can achieve real-time inquiry, order, information push, membership management and that provides necessary bearings to the omni-directional mobile self-service. Also, customers can also use micro letter empowered by companies like Alipay to complete the overall payment cycle, to avoid the trouble of fraud. In order to realize such integration, e-commerce companies should achieve information sharing, including mobile devices of the client and the real network, service network, logistics network and data network.

Copyright © 2015 by authors and Scientific Research Publishing Inc.
This work is licensed under the Creative Commons Attribution International License (CC BY).

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