Chapter 9: How Will the Revenue Structure Change?
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OMO (Online Merge Offline) does not only enhance customer experience—it directly reshapes the profit structure of retail businesses. By integrating online and offline channels, key performance indicators such as average transaction value, visit frequency, inventory turnover, logistics costs, and gross margins are all affected in interconnected ways.
Because drugstores and home improvement stores differ significantly in product characteristics and purchasing behavior, the impact of OMO on their profit structures also varies. This chapter examines how OMO influences profitability, based on real-world data and cases from major players such as Matsumoto Kiyoshi, Tsuruha Holdings, Sundrug, Cosmos Pharmaceutical, as well as Cainz and DCM Holdings.
1. Drugstores: Rising Basket Size and Customer Lifetime Value
In drugstores, OMO implementation tends to increase both visit frequency and average transaction value simultaneously.
At Matsumoto Kiyoshi, app members visit stores approximately 1.4 times more frequently than non-members, and their average purchase value is about 15% higher. Features such as inventory checks, reminders, coupons, and health information create more opportunities for store visits and encourage additional purchases.
The core mechanism here is that OMO simultaneously drives repeat purchases and impulse buying. Customers become more aware of purchase timing through the app and tend to buy across multiple categories during store visits, leading to a natural increase in Customer Lifetime Value (LTV).
Similarly, Tsuruha Holdings reports that app users visit stores about 1.3 times more often and purchase 1.4 times more categories per visit. The integration of pharmaceuticals, supplements, daily goods, and food creates a “lifecycle purchasing model,” shifting revenue from single-item transactions to multi-category consumption.
2. Home Improvement Stores: Higher Basket Size and Project-Based Spending
In contrast, home improvement stores do not rely on frequent visits but rather on increasing the value of each visit—what can be described as “project-based spending.”
At Cainz, inventory search data is used to power features such as a “DIY planner,” which bundles products like shelves, pipes, fittings, and safety equipment into project-based sets. This encourages customers to move beyond single-item purchases toward comprehensive project solutions, increasing the overall transaction value.
Customers plan online and finalize decisions in-store, where they can confirm products physically and receive advice. This process naturally leads to upselling and cross-selling.
DCM Holdings similarly integrates search data with in-store merchandising. By prioritizing frequently searched items in store layouts, they have improved customer engagement and increased purchase values. In this sector, OMO functions as a mechanism to expand transaction size rather than frequency.
3. Logistics Costs and Inventory Turnover: Optimizing the Balance
OMO also significantly affects logistics costs and inventory efficiency.
Drugstores mainly handle small, fast-moving items, resulting in relatively low delivery costs and high inventory turnover. App-driven store visits further accelerate inventory cycles.
In contrast, home improvement stores deal with large, heavy, and specialized products, making delivery costly. Therefore, Buy Online, Pick Up In Store (BOPIS) becomes a critical component.
Both Cainz and DCM Holdings leverage BOPIS to reduce logistics costs while increasing store traffic. This dual effect improves both operational efficiency and sales performance.
4. Gross Margins and Profit Design
OMO is not just about increasing revenue—it also enables deliberate profit design.
Drugstores use points, coupons, and membership programs to influence purchasing behavior, promoting high-frequency, multi-category purchases that help maintain or improve gross margins.
Home improvement stores, on the other hand, enhance margins through bundled sales, project-based proposals, and in-store pickups. BOPIS plays a particularly important role, as it reduces delivery costs while driving store visits, thereby strengthening profitability.
5. The Essence of Profit Design in OMO
As seen above, OMO is not merely about connecting channels.
Drugstores: Frequency × basket size × repeat purchases
Home improvement stores: Project value × bundled proposals × store pickup
Each sector designs its profit model differently, depending on its business characteristics.
The essence of OMO lies in strategically determining which metrics to improve and how to achieve it.
6. Conclusion: OMO as a Profit Design System
OMO is not just a tool for improving customer experience—it is a system for redesigning profit structures.
Drugstores use app-driven engagement to increase visit frequency, basket size, and inventory turnover simultaneously. Home improvement stores focus on project-based purchasing and store pickup to enhance transaction value and margins.
In essence, OMO is not about channel integration—it is about designing how profits are generated.
Without this perspective, OMO remains a superficial digital initiative. With it, however, OMO becomes a powerful lever that can fundamentally transform a retailer’s competitive advantage.
References
Ministry of Economy, Trade and Industry, FY2024 E-Commerce Market Survey
https://www.meti.go.jp/press/2024/08/20240830005/20240830005.html
MatsukiyoCocokara & Co., Investor Relations / Integrated Reports
Tsuruha Holdings, Investor Relations / Financial Reports
Sundrug, Investor Relations
Cosmos Pharmaceutical, Investor Relations
Cainz Corporation, Corporate Information
DCM Holdings, Investor Relations / Integrated Reports
Japan DIY Homecenter Association, Market Data and Industry Reports
Ministry of Internal Affairs and Communications, Family Income and Expenditure Survey
Dentsu Digital, OMO / Customer Experience Reports
SB Payment Service, LTV and OMO Insights
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