Online-to-offline (O2O) business: Empirically examining the adoption vs. Non-adoption

The growth of Online-to-Offline (O2O) business is accompanied by a number of failures. Compounding the problem, theoretically-informed knowledge about “why firms adopt O2O” remains limited. The purpose of this study is to address this gap and examine the reasons that influence organizational decisions to adopt (or do not adopt) O2O. Informed by synthesis of Diffusion of Innovation (DOI) and Technology-Organization-Environment (TOE) theories, the data collected from 24 qualitative semi-structured interviews were analyzed using content analysis techniques. The results show that firms adopt O2O to: (1) cope with the shift in marketplace (one from sellers to buyers) by adding flexibility and security into offerings, (2) improve engagement with customers through expansion of scope of relationship and reach, and (3) enlarge customer portfolio and profitability. Unexpectedly, the results show that one of the reasons firms not adopt O2O is because they believe that their existing engagement with customers is mature and stable, changes to which could be determinantal. Managerial inertia is another roadblock. Theoretically, the findings build new knowledge on the adoption/non-adoption decision of O2O and reasons thereof. The results equip managers with insights from industry and provide them an understanding of the challenges as well as reasons for adoption/non-adoption of O2O.