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Flow diagram of an O2O model for the furniture industry

A simple html5 website, with all the features, allows any brick-mortar to become a point-to-point and make-on-order company, saving operating expenses and overheads

Online-to-offline commerce is a business strategy that draws potential customers from online channels to physical stores. Online-to-offline commerce, or O2O, identifies customers in the online space, such as through emails and internet advertising, and then uses a variety of tools and approaches to entice the customer to leave the online space. This type of strategy incorporates techniques used in online marketing with those used in brick-and-mortar marketing. - Investopedia

The drawing factor from shopping online is the big discounts and perks given by e-commerce retailers. In 2013, a slew of online furniture retailers in China attempted to turn brick and mortar furniture stalls into mere showrooms. That prompted the China furniture association market committee to issue regulations that mandated e-commerce sites to inform physical stores and key partners if they are running deep discounts, so that prices can be adjusted together at the same time. The regulations also outlawed the use of online campaign to appear on in-store advertisements.

Deep discounts works in China, and it's not hard to get followers of popular sites like Tmall to notice when deep discount campaigns are running.

In the rest of Asia, and mainly Singapore, we are still seeing the traditional way of running discounts in-store, and only purchasing online for convenience reasons rather than financial.

In an environment of reliant on manpower and burdened by high rental, shouldn't furniture stores considering opening up their online channel and be their own Tmall?

Furniture companies can save operating expenses by running deep discount campaigns from their own online platform. This makes them become asset-light instantly, while achieving a higher ROI as it doesn't take much to run a website or an App. - Johnson Koh, theAsianIR CIO

The flow process goes like this;

Online component

  1. Online user logs into a marketplace, a H5 mobile website or a H5 WeChat official account. 
  2. Online user makes an order from any of the above channels
  3. During the sales process, the user can do any of the following online;
    • Put items into the shopping cart
    • Enquire Live
    • Review the order
    • Participate in reward points program
    • Share item and enjoy commissions
  4. All interactions are tracked on the backend, including people shared, people who read, where they read, rewards earned, which items are viewed most etc.
  5. Any order by the user or their networks is pushed and captured instantly by the offline furniture stall
  6. Online user who completes an order can choose to pick up from any branch locations 
  7. User can choose to pick up physically in person or to arrange delivery
  8. User can log into their member section to see the status of their delivery, which can even be in real-time. 

Offline activities

  1. User who elects to pickup from physical location can goto the branch at the appointed date/time
  2. Store will send goods direct to the user's home from the nearest branch 
  3. Regardless where user will pick up goods from, the store saves on warehouse and storage as the pick-up location will only be a meeting point between user and store
  4. Store will save on freight and logistics, by benefiting from the proliferation of point-to-point logistics providers in the market today
  5. For stores with predominantly brick-mortar operations, deployment of O2O model will depend largely on the POS system, which acts as the central point to record and process orders

Fig 1: Official account of KeLei Furniture

The Benefits of O2O business model

  • Save of warehousing and freight forwarding. Much of the stock can be stored and sent from 1 central location
  • Ability to turn the company into a make-on-order model, increasing logistics savings whilst increasing account receivables and reducing working capital
  • All enquires online are tracked effortlessly from the moment a user enters any online facility, thereby getting the company to better understand the customer decision process
  • Better customer experience, specially if store appoints a dedicated online marketer to interact with users online
  • Reminders can be sent to the online user of any campaigns or discount, specially around the product they were previously interested in
  • All orders converge into an online-offline POS system, consolidating all orders in one location
  • Save on other overheads such as physical offices and sales persons
  • Store understands the customers better because of the potential to create behaviour, performance, interaction metrics from users interaction online
  • Store is closer to the customer because they can send subtle, personalised messages to the user, keeping store items fresh in users minds

The ROI

Many of today's internet technology are open-source, thereby reducing cost of systems and only having to fork out design and developer fees. Which is why we are seeing the companies are starting to invest in Apps and Marketplace sites that are specific for their own use.

theAsianIR provides such an E-commerce App system for the furniture industry at a price less than the cost of one year's salary for a sales person. The ROI is instant because the company immediately becomes asset-light and reduces t