Creating integrated experiences: Watsons believes O+O model gives it a leg up against e-commerce marketplaces

In recent years, the Hong Kong-based company has been strengthening its offline plus online (O+O) business model, which helped the firm to overcome the retail challenges brought about by the COVID-19 pandemic.

Despite the sharp swing towards e-commerce and the meteoric growth of third-party e-commerce platforms over the past year, Watsons remains confident in its strategy to compete with them.

“E-commerce marketplaces are an additional choice for customers to browse and shop, and it also creates additional opportunities for Watsons,” ​said Malina Ngai, Group COO of A.S. Watson Group and CEO of A.S. Watson, Asia & Europe.

“They play a part in our O+O strategy, while not being able to replace our uniqueness in providing offline and online integrated experience for customers.”​

Watsons boasts a large brick-and-mortar store network – around 4,100 in China alone – and a growing online presence.

While traditional online-to-offline (O2O) model drives customers from one channel to another, Watsons believes that the ‘new normal’ of the pandemic is better served by the O+O model.

The prowess of its new retail model is illustrated in Watsons’ Cloud Store initiative, which was launched early 2020 in China​ in collaboration with Tencent.

The Watsons Cloud Stores are hosted on the WeChat platform and connects all its brick-and-mortar stores across 500 cities in China.

Its stores serve as distribution centres, allowing customers to place orders on the cloud store and receive their orders within 30 minutes.

“Our extensive physical store network gives us an unparalleled competitive edge and plays an important role in the customer journey,” ​said Ngai.

Furthermore, the platform gives consumers access to its beauty advisors and consultations without being in-store.

“​Since the national rollout last year, millions of customers enjoy the connectivity anytime, anywhere,”​ said Ngai.

Earlier this year, Watsons China partnered with Dr. Yu, a derma skincare brand under Chinese firm Shanghai Jahwa, to drive brand awareness and growth.

The brand distributed coupons for exclusive in-store skin care experiences through the Watsons Cloud Store.

This helped the brand to create engaging social media content while increasing the brand’s exposure.

During the promotion period, Dr. Yu's brand awareness increased, with store sales rising by more than 35% month-on-month.

Furthermore, the brand’s sales via Watsons Cloud Store grew by more than 120% month-on-month.

Watson’s cloud store initiative is currently only available in China, but the company sees potential to expand it further to other markets.

“The technology is ready, and we will launch the services if we see customer demand in other markets,”​ said Ngai.

The company has launched a service in Indonesia and Thailand where consumers can place orders via WhatsApp and LINE respectively.

The company has also expanded certain services, like access to personal consultations to markets like Hong Kong, where consumers can book make-up service, nutrition and Traditional Chinese Medicine consultation via Whatsapp.