Online to offline ("O2O") commerce is all the buzz right now. Last year, when Alibaba invested over $3 billion in the technology, the media took note and journalists around the world began discussing the future of the O2O industry in Asia and abroad.

Equipped with O2O tools and services, business owners would have an unprecedented level of accuracy in their online marketing and, for the first time ever, would be able to reliably determine ROI from online advertising. Until recently, that technological ability simply did not exist.

Online advertising has innovated remarkably little in the past decade, causing many business owners who want higher conversion rates, better analytics, and better customer targeting to grow frustrated. O2O tracking platforms are the next step forward in an industry that has been lagging behind for years.

According to Jon Carder, CEO of O2O network Empyr, whose mission is to bridge the gap between online and offline commerce, thinks the opportunity is a big one. A trillion dollars to be exact. Later, Carder wrote a blog post titled "The Formula to Create a Trillion Dollar Industry" that detailed the specifics of how the industry could be built up in a very short amount of time.

Enormous volume of offline spending.

According to the Chamber of Commerce, over 93 percent of purchases still take place offline, which accounts for over $4 trillion each year. Most people are blown away by this number. People think that, given how integrated our lives are with the internet, online spending would be much higher. But the data shows that a massive amount of spending happens offline and that's likely to continue for years. The challenge business owners face is bringing that online audience directly into their stores and knowing how they attracted them and how much it cost to do so.

Trillion-dollar opportunity?

An article in TechCrunch called O2O commerce a "trillion dollar opportunity." They calculated that the average American earns around $40,000 annually and the average e-commerce shopper spends $1,000 per year online. Apart from taxes, where does the rest of the $39,000 go? It goes to the offline economy: grocery stores, real estate, car dealerships, restaurants, etc. Bridging the gap allows businesses to actively compete for that commerce using online advertising. In a recent blog post, Carder outlines the additional steps needed to capitalize on this potentially trillion-dollar opportunity.

Small-business disappointment.

When the Chamber of Commerce ran a survey of small-business owners to better understand their marketing strategies, the data showed that when asked which marketing channels were most effective, "only 3 percent found PayPerClick (PPC)" to be an effective lead generation tool. This is likely because PPC platforms are difficult to set up and often do not offer reliable or easy to understand analytics.

Solutions out there offer advertisers guaranteed ROI on ad spending and small-business-friendly platforms will continue to grow in popularity as online marketing becomes a must for local business owners.

Consumer research trends.

According to studies by the Consumer Barometer, over 60 percent of consumers research a product online before going to a store to make a purchase. Bridging the gap between when someone who is viewing a product online and when they enter a store to complete a purchase could create an entirely trackable revenue stream for business owners. If someone is searching for your product and finds it online, that's a hot lead! You want to capture that. Technology has finally caught up and making that capture possible, which is an enormous win for advertisers.

While buzzwords come and go, the idea behind O2O commerce is here to stay. Despite recent advancements made by companies, the technology has yet to perfectly align with consumer shopping trends and the needs of business owners. The trillion-dollar problem still lacks a perfect solution, but entrepreneurs are rapidly solving that mystery.

As the loop between online and offline commerce closes, business owners, advertisers, and, most importantly, consumers are well positioned for a win-win-win.

Published on: May 18, 2016