Before the holiday, I attended an O2O workshop organized by New Distribution's consulting team for a brand manufacturer, covering O2O knowledge, market insights, strategy deployment, and case studies. Two days, full of practical content. If before 2020, O2O was just a direction for senior management and internal research, now, with the pandemic and changing consumer habits, O2O is becoming a sales growth channel that every regional branch and local sales office must pay attention to.
-01- O2O is exploding Let's look at some data: Sun Art Retail's O2O semi-annual results show that Taoxianda continuously guides online orders for offline stores, driving online sales to account for over 20% of total revenue in the first five months. Yonghui Superstores: In Q1 2020, home delivery business grew 239% year-on-year. The Yonghui Life app saw a surge, with its share of home delivery business rising to 56.86% in March. On June 18, Yonghui's 'home' business GMV grew over 4 times year-on-year. Suning Carrefour's business grew 412% year-on-year from January to April; on June 18, omnichannel sales grew 185% year-on-year, and order volume grew 75%. During the summer promotion from July 31 to August 18, home delivery orders surged, up 280% month-on-month, with an average order value of 124 yuan, showing strong performance.
These are public online order growth figures from chain KA hypermarkets. There are also undisclosed ones: restaurant O2O mainly on Meituan and Ele.me, and supermarket O2O represented by Hema Fresh, Miss Fresh, and Pupu Supermarket, which have developed rapidly in recent years, expanding into lower-tier markets with exponential GMV growth.
According to Kantar Consulting forecasts, the O2O market will grow 57% in 2020 to nearly three trillion yuan, with O2O home delivery and in-store shares at 46% and 54% in 2019, and expected to be 61% and 39% in 2020. I think these five sets of data should make practitioners understand that O2O is no longer a castle in the air or an exploration of business models, but a real presence in the market, and due to the pandemic, it is in full swing.
Previously, O2O might have been limited to fresh fruits, restaurant delivery, etc. But now, FMCG standard products with 'restocking and stocking up' as the main demand are also becoming a necessity for consumers' daily orders. No soy sauce, almost out of tissue, stock up on drinks and beer—ordering through O2O platform apps with 30-minute delivery is gradually becoming a standard part of daily consumption. A Walmart executive once predicted that in the near future, online O2O business will account for over 30% of total business.
If we used to talk about channel digitalization and fragmentation, it was only internal work for senior management, with little impact on frontline workers. They could continue as usual, just adding digital tools and changing work formats. Now, because of O2O, changes start from the consumer base, directly affecting the retail end. The business changes in retail stores bring about changes in the daily work content of frontline workers. Should they consider increasing coverage of online stores, product uploads, exposure, and conversion?
How to respond to this direct impact on sales changes? I think both corporate executives and frontline salespeople need to think deeply. The trend of online consumption is unstoppable; we must actively embrace it.
-02- Change starts with language What are the specific measures? Based on each category's characteristics and the company's distribution model, they may differ. Of course, this is not the focus of this article. But regardless of the specific measures, for frontline salespeople, the first change is to master a new set of sales language. Only by understanding the O2O e-commerce language system can they truly enter the O2O game.
For example, what we often call POSM corresponds to page design; CNY/double festival promotions correspond to 6.18/11.11 big promotions; purchase frequency corresponds to repurchase rate; stack displays correspond to resource positions; shocking prices correspond to flash sales; manufacturer weeks correspond to brand days; hot-selling items correspond to traffic-driving products, etc.
Although it seems like a set of language, it represents how frontline salespeople perceive things. Teacher Bao Zheng explained in 'The Essence of Marketing' that only by mastering an effective conceptual system can one engage in multi-dimensional deep thinking. When facing new things, especially those affecting the existing stock market, frontline salespeople must first have a complete cognitive system, then a strategic system, and finally form a capability system. Without complete cognition, it is impossible to seize the new battlefield. Just like when we arrive in an unfamiliar living environment, if we cannot understand the local language, we cannot truly integrate into their lives. The market is even more so; behind the language is a bridge for information communication.
-03- Physical shelves vs. virtual shelves Understanding the language is only the first step. Next, we need to understand the logic behind sales. Although the essence of product listing, exposure, and conversion online is the same as offline, the form has changed dramatically.
In the past, it might have been difficult to change the shelf position of products in physical stores. Product placement and display were based on the store's own rules. Online, you can use flash sales, themed activities, or even home screen pop-ups to ensure consumers see your product the moment they open the app.
Another example: for promotions, in the past, we either offered a direct 20% discount or gave away small physical items. Now, when we study consumer shopping processes, we find that after buying snacks, consumers are likely to stock up on drinks. So, can we create a combo package of snacks and drinks? When consumers add snacks to their cart, proactively remind them that Nongfu Spring 550ml*6 bottles are on sale.
Frankly, in the past, our sales were centered on store points and shelf positions, doing dot-matrix sales. Now, every touchpoint in consumers' lives becomes a sales opportunity. This includes not only online and offline touchpoints, but also when consumers enter an O2O platform, every touchpoint behind it can lead to sales conversion.
Previously, the two core functions of salespeople were distribution and promotion: getting products into stores and displaying them. In one sentence, 'Visit, visit, visit; distribute, distribute, distribute; display, display, display. Repeat simple work, persist in repetitive work.' This is the abbreviation of the daily work of frontline FMCG salespeople in the era of deep distribution and human-wave tactics.
When our business has not only static limited shelves but also dynamic unlimited shelves, what should salespeople do? In the past, sales didn't need to consider consumers' shopping motives, paths, or psychology. Everything was based on the store's fixed shelves, thinking about how to maximize sales in limited positions. Now, our frontline salespeople must go a step further and think about C-end consumers. When a consumer opens the app and buys a 'necessity' like a bottle of cooking oil, can we use 'add-on reminders' to get them to buy drinks, beer, or discounted paper products?
Consumers have three common shopping paths on O2O platforms:
- Active category search → product search
- Use category navigation → category browsing → product search
- Homepage activity attraction → product search
Behind these three paths, consumers' initial shopping motives may be the same. The platform considers how to increase product count and average order value, to get them to buy more. As frontline sales, we need to think about how to get them to buy our products. At which touchpoint to intercept consumers, and at which step to increase product exposure.
Offline, we mostly consider when consumers enter the 'category shopping area', how to attract them to buy our product through shelf displays and POSM. But if consumers don't come to our area, sales are almost impossible. Online, even if consumers don't come to our area, we can still consider cross-category combinations to attract and intercept.
In the past, competition was about same-product shelf competition and same-product display competition. Now on O2O platforms, it's about cross-category screen competition and same-category ranking competition. In the end, it's all competition oriented around consumer attention!
When offline was dominant, the salesperson's work ended at the terminal. But today, with the increasing integration of online and offline, the terminal is just the starting point; reaching the consumer is the end of sales.
Summary: Although this article is about salespeople, it is also written for managers. 'Refreshing' frontline salespeople doesn't mean replacing people; it means upgrading skills. Whether frontline salespeople can successfully 'refresh' depends on whether managers can quickly provide standards in the O2O wave, including tools, methods, training, and corresponding incentives!
Note: New Distribution will soon launch a series of special topics on O2O. In the next article, we will discuss how to upgrade the traditional eight-step visit process for frontline salespeople to achieve 'online and offline' eight-step visits in the current era. Stay tuned!
Focus on FMCG distributor new distribution/brand new marketing cases
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