New Retail: The Core of OMO-Organisational Transformation


New Retail: The Core of OMO-Organisational Transformation

For a brand to successfully implement Online-Merge-Offline (OMO), various types of integration, including system integration, business integration and marketing integration must take place within the organisation.

In other words, digital transformation for businesses of various nature and industries always depend on organisational transformation.

When brick-and-mortar retail brands adopt OMO, the integration of OMO is usually just a first step.

The more important things are the integration of “business” and the integration of “marketing”.

System Integration

System integration (APP and online store, in this regard) should always be the first step for any retail business that wishes to undergo digital transformation. Brands extend their presence to online channels, and customers connect with the brand online. When a customer joins as a member online, the physical store must be identifiable so that he or she can visit the physical store and accumulate shopping points when shopping.

The same must happen when a customer joins as a member at the physical store and later goes shopping online. This is to ensure members are able to enjoy the same membership benefits and rights online and offline.

But when the system is ready, OMO will not happen just yet. In fact, the system must be used by people. If no one uses it, the system will not transform the business in any way. The results of OMO will start to show when the system and organisation are ready at the same time.

The Important Role Of Shop Assistants

The first problem a brand will face is resistance from the shop assistants or store representatives. The shop assistants have their own performance commission system where the commission comes from store performance so it’s highly probable that they might think ‘what does online shopping have to do with me?’ They might even think that the brand’s online store and APP will affect the performance of the physical store.

If the commission system doesn’t change, the shop assistants will become an obstacle to promoting OMO. This can be solved by distributing online sales revenue to the physical store, and the sales assistants will get the commissions or incentives when they promote OMO to physical customers.

The participation of store assistants will accelerate the implementation of OMO, whether it is to encourage in-store customers to download the APP, shop online or pick up their purchased items from the physical store. As long as the effort of the store assistants helps in generating more online revenue, their performance should be rewarded.

After brands start operating online (online store and APP), it is necessary to make online and offline marketing activities consistent. Otherwise, customers will feel distressed and store assistants will feel discouraged.

Align Offline Marketing Strategy With Online Marketing Strategy

When the brand’s marketing strategy expands to promote its online store, attractive discounts should be offered to all online customers in the initial stage. However, after the initial stage, the marketing strategy between offline and online must be aligned. Doing so will definitely prevent awkward situations in which an in-store customer asks the sales assistant why the brand offers a discount for its online customers but not to its in-store customers.

The physical store will have to offer the same discount, otherwise, customers would only go shopping online. This can hurt the profit of the physical store.

Thus, the marketing strategy must be planned consistently and aligned between the online and offline channels in the long run. However, in the short term, in order to kick-start the online channel, operational flexibility is encouraged.

Business Integration

If the top management or the boss wants to implement OMO, like it or not, the shop assistants will still have to cooperate. In other words, the top management or the boss plays a much more important role here.

If the boss hasn’t figured out the plan to successfully implement OMO and has the mentality of ‘just trying’ instead of working hard on it, the shop assistants will just follow without any passion.

To ‘just try and see’, most bosses will establish a special department to implement OMO, the eCom department. However, with this mentality, the success rate of the eCom department will be rather low.

The Role Of The Store Managers

For the store manager, establishing a new eCom department doesn’t bring any benefits to the store performance. In fact, it feels like someone is grabbing the sales from the physical store. This will be a challenge when it comes to encouraging the store managers to coordinate with the eCom team to make adjustments to the physical store.

Different Physical Stores Of The Same Brand Are In Competition With Each Other

Moreover, store managers are concerned about the stock they can get from the HQ. This is because different physical stores of the same brand are in competition with each other to get the hot-selling goods to sell.

This is also true among the physical stores of direct sales and franchise brands (especially in the clothing industry), to fight for hot-selling goods, especially for seasonal new arrival items. Most often than not, the flagship stores or the large stores would get the hot-selling seasonal goods to sell first before other smaller physical stores.

Thus, the store manager is often annoyed enough to fight and argue for the stocks. Now there will be an online store and APP that would make the fight for the hot-selling goods even harder? The store manager would be even less willing to accept the idea of OMO. The scenario creates much unpleasant internal politics, which can make the implementation of OMO even harder.

The newly setup eCom department will also be in this unpleasant politics. The department can easily be treated as another ‘store’ in the organisation. Eventually, the so-called ‘online store’ won’t even have the stock, let alone generating sales.

Therefore, for OMO to run well, the key to the second step is “business integration”. In this regard, all business units must be consolidated, regardless of online or offline sales and performance, they must be handled by the head of sales. The online and offline departments must belong to the same business unit, and all online and offline performance must be dedicated to all sales personnel evenly. Bear in mind that OMO is about business integration, not a competition between the online and offline channels.

When it comes to the sales performance after the implementation of OMO, the boss can set a “magic number” for the sales objective and calculate the ratio of online sales to the overall sales. Setting 5% as the magic number can be a good start. One year later, if this “magic number” is achieved, the OMO magic will begin to realize.

Marketing Integration

The traditional marketing direction and marketing strategy of a brand are usually only workable with offline channels to improve sales performance. When the aforementioned strategies are used on online channels, these strategies might not perform well as expected. In fact, the growth of eCommerce has created many new digital marketing platforms and channels to shift the traffic from traditional media to digital media.

When we talk about promoting a business or brand on Facebook, Google, WhatsApp, Remarketing Ads, social media community and Chatbot (these platforms are what we call the “MarTech”), many internal marketers are only familiar with traditional marketing and how physical stores should operate. This unfamiliarity is a challenge faced in the traditional marketing department of many companies. And that’s why “digital transformation” is important when it comes to the implementation of OMO.

What is MarTech?

MarTech (also known as Marketing Technology) refers to the software and tech tools marketers leverage to plan, execute, and measure online marketing campaigns. MarTech tools are used to automate or otherwise streamline marketing processes, collect and analyze data, and provide various means of reaching and engaging with your target audience effectively.

These Martech related tools focus on the “effectiveness” of marketing plans and they have become the essential tools for effective advertising from a marketing perspective nowadays. Data is the root of digital marketing evolution.

Data that are important in the digital marketing evolution are Cost Per Click (CPC), Click-Through Rate (CTR), Conversion Rate (CVR) and Return on Ad Spend (ROAS). With these data, ads performance and sales performance can be clearly defined since everything can be calculated and trackable. Unlike traditional marketing, these powerful tools enable businesses to evaluate advertising costs (traditional advertising/media, on the contrary, are not able to do so).

On the flip side, with the availability of these data, it is easy for brands to become obsessed with sales performance. In the end, brands might only care about the result and overlook the process. In other words, brands only care about how much sales they get, instead of focusing on the customers — what they like and how to serve them well. The fact is, brands will not go very far if they are limited by their obsession with the sales figure.

Martech Digital Tools Are Like Magic Rings

No matter how Martech changes and improves, the essence of branding and marketing remains the same. To create a successful brand, a large number of loyal customers are needed. The brand must form a deep relationship with its customers, something similar to creating a meaningful human relationship.

Your customers must know you, understand you and trust you, and vice versa. After the first interaction, if the feeling is right, they will always want to come back to you. These processes are important, and only time can establish a profound relationship.

Martech is not a shortcut to marketing, but a tool.

This is why, in recent days, the effectiveness of Facebook and other advertising has begun to decline and eCommerce brands have generally become more and more anxious. While physical store-based brands are not concerned about the effect of the changes in the effectiveness of Facebook.

The main concern for digital marketing is “effective advertising”, while traditional retail marketing cares more about “brand advertising” and customership management. People from these two groups will think they do not understand each other due to the differences they have in concepts and language, and they may end up cooperating in an unhappy way. This can certainly affect the successful implementation of OMO.

Going back to the basics of brand marketing, it’s a good idea to make good use of these digital tools and integrate new methods of retail OMO marketing to create a new competitive advantage for the retail brand

Final Thoughts

In short, for a brand to successfully implement OMO, system integration, business integration, and marketing integration must all take place within the organisation.

Many conflicts and oppositions between the old and new concepts; between virtual and reality, require organisational reorganisation, the design of new systems, and the development of new processes.

Just like the common saying — the success of the digital transformation of any company or brand always depends on organizational transformation.


OMO 的核心關鍵 – 組織轉型 by Happy Lee

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