Goodbye O2O! O+O is the New Retail Standard

Watsons’ Strong O+O Capacity Helps Build a Brand’s Market Position

As the world’s largest international health and beauty retailer, AS Watson Group is setting the new retail standard by seamlessly integrating its O+O (offline plus online) platforms. Our strong O+O capacity effectively helps the supplier brands to expand into new markets and stand out from the competition.

With over 8,000 physical and online stores spanning across 14 Asian and European markets, Watsons, the flagship health & beauty brand of AS Watson Group, has more than 100 million loyalty members. Our O+O strength means that we are capable of helping international brands to enter new markets, while helping local brands to expand their business as well as increase market share.

According to Malina Ngai, Group Chief Operating Officer of AS Watson Group & CEO of AS Watson (Asia & Europe), “Watsons’ O+O retail model is an ecosystem powered by technology, big data and artificial intelligence. Integrated with advanced digital platforms, the extensive physical store network serves as core touchpoints which effectively establish close connections with customers and thereby increasing sales and customer value.”

“We have been partnering with brands of different sizes, and successfully assisted them to expand their business and enhance their market position. Our sophisticated data technology enables us to help the brands target and engage the right customers.”

Giving Brands a Major Boost
While traditional O2O (offline-to-online/online-to-offline) model drives customers from one channel to another, it is now no longer enough to serve customers’ needs. And the pandemic has created a “new normal” that has given rise to a new O+O (offline plus online) retail model.

Watsons is now able to increase its daily touchpoints between customers and brands through its O+O platforms. Leveraging deep customer insights, we help the brands understand their customers, build a stronger relationship with them, increase their exposure and ultimately drive sales growth. It is clear that Watsons’ O+O retail model is able to bring a win-win outcome for customers, brands and the retailer.

In April, Watsons China partnered with Dr. Yu (玉澤), a derma skincare brand under Shanghai Jahwa, to drive brand growth through O+O shopping experience. This case illustrates the power of the new retail model. Customers received Dr Yu’s coupons through the Watsons Cloud Store to enjoy exclusive skincare experiences in store. Added to this, Watsons helped the brand to create social media content that engaged customers while subtly increasing the brand’s exposure.

Alex Pan, Chairman and CEO of Shanghai Jahwa said, “Watsons’ O+O retail model used its online platforms and offline stores to bring strong exposure to our brands, which has successfully stimulated business growth.”

Watsons has an extensive O+O network in Mainland China, operating more than 4,100 stores in around 500 cities. Seamlessly integrated with its online platforms, the physical stores serve as distribution centres for delivery. After customers place orders in the cloud store, the products can then be delivered within 30 minutes. During the promotion period, Dr. Yu’s brand awareness significantly increased with store sales rising by more than 35% month-on-month, while cloud store sales grew by more than 120% month-on-month.

The Power of Big Data
A hallmark of the O+O retail model is that it utilises big data analysis to help international brands seize market opportunities and attract target customers. With our rich retail experience and precise customer analysis, Watsons China and Johnson & Johnson have worked together to develop a goal-oriented strategy for its internationally renowned skincare brand Aveeno to increase its market share.

Watsons China launched a “Seasonal Skin Rejuvenation” thematic campaign for Aveeno. Members were able to redeem product trial coupons online to further enjoy discounts in physical stores. As a result, Watsons attracted a massive new following for the brand in Mainland China accounting for 95% of total customers during that period.

“Watsons’ O+O strategy leverages big data to help brands understand customer behaviour and preferences, it then creates personalised content that attracts their interests at multiple touch points. This has certainly helped the brands to attract new customers,” said Iris Shen, General Manager of Essential Health & Personal Care of Johnson & Johnson China.

Stepping Stone for Entering into New Markets
Watsons partnered with ChromaDex, a pioneer biotechnology company listed in the US, for the first time to introduce the US-made TRU NIAGEN®, a health supplement to enhance healthy aging, in Watsons Hong Kong in 2017, and Watsons Singapore in 2018, offering a safe and effective choice for health-conscious customers.

By making the brand exclusively available in our online and physical stores, the brand has successfully won our customers’ hearts and become the single SKU sales champion in the health category. Leveraging the O+O strategy, Watsons conducted livestreaming to introduce the product on social media. Customers were able to use the promotion code to buy products online, or to enjoy in-store offers by liking and sharing the livestream. Since 2017, TRU NIAGEN® has been experiencing 59% compound sales growth. This success reflects Watsons’ capabilities in helping brands enter new markets.

“Looking forward, Watsons is committed to enhancing the O+O retail model focusing on customers’ needs and staying up-to-date with their lifestyles and shopping behaviour. We believe that the key to the future of the retail industry lies in innovation and moving with the times. Through seamless integration of offline and online platforms, the O+O retail model will help more and more brands establish a leading market position, and at the same time bring more high-quality new products and refreshing experiences to customers,” Ngai reinforced.