Like many merchants, O2 pivoted quickly in response to disruptions caused by the COVID-19 pandemic. We’ll examine how their unique community-first response to the pandemic and flexible end-to-end supply chain grew their business by five fold in a time when many businesses struggled to stay afloat.
O2 was founded in 2014 with a focus on helping athletes recover faster and work out harder. Their revolutionary recovery drink was created based on findings around the powerful effect of ingested oxygen on the liver’s ability to process toxins triggered by an intense workout. They found that oxygen-infused water could provide a powerful, healthy alternative to other recovery drinks on the market, and through their core values of Honesty, Humility, and Hustle, embarked on their mission to make recovery part of every athlete’s routine.
O2 immediately found their customer base in the CrossFit community. Founder and CEO, Dave Colina, was a CrossFit trainer and passionate about bringing a healthy, great-tasting recovery drink to the market. Their initial go to market strategy was to stock and sell their product in independently-owned CrossFit gyms, a unique take on a traditional B2B/retail model. Even after opening an eCommerce and grocery store channel, gym sales still accounted for half of their business and were the greatest focus of their marketing efforts, as they found that exposing athletes to their products in the gym was the most effective way to build brand loyalty and drive sales to their ecommerce store.
However, early in the COVID-19 pandemic, as gyms were forced to shut down, it became clear that this pillar of their business was quickly crumbling and they would have to think fast to replace the gym sales they had lost. This is a familiar story for most merchants. In fact, our recent merchant survey showed that 76.8% of merchants had to pivot their sales strategy in response to the pandemic, with 35.2% of merchants starting an online store for the first time. With their largest sales channel effectively shut down, O2 knew that they too would have to make a pivot, and founder Dave Colina went back to the company’s core values when deciding just what their next move would be.
Above all else, Colina wanted O2 to be a company that consumers were proud existed. He wanted to make decisions based on what he knew was right rather than what he thought would be profitable. In a time when small businesses everywhere were hurting, especially independently-owned gyms that relied primarily on monthly membership dues, Dave decided to lean into O2’s core values and made a choice to support the gym partners that had for so long been the heartbeat of the company.
Colina called it the “50/50 Initiative,” and for 6 weeks donated 50% of O2’s profits back to their gym partners. By the end of the program they had enlisted another 5 brands to join the initiative and had raised $230,000 for 2,600 independently-owned gyms. This endeavor cost the brand a significant amount on their margins but gained them the appreciation and loyalty of not only their gym partners but the members of those gyms who were able to support their gym and get a great product at the same time. However, as May approached, it became clear that the pandemic was not slowing down anytime soon, and many gym members struggled to justify the cost of a monthly membership fee. O2 decided to double down on their commitment to the community by creating yet another initiative that they called the “Stay for May campaign”. This campaign incentivized gym-goers to keep their memberships for the month of May by offering a combined $100 gift card for O2 and 3 other brands to those who kept their memberships.
The result: Colina estimates thousands of people kept their memberships that month in response to the campaign. Several gym owners told him that these initiatives were the only thing that kept them in business through the shutdowns, and an unexpected result — more customers discovered O2 and began seeking it out on their eCommerce sales channel. Colina reports that they acquired more new customers in the month of April than in the entire year of 2019, and already in 2020 they’ve seen their D2C sales increase by ten fold compared to all of 2019.
O2 didn’t allow uncertainty to dictate their decisions. Already navigating an uncertain financial climate, they chose a path that many companies would have seen as risky but Dave describes as “just good business”. As orders poured in, many from first-time customers, they knew they had one opportunity to impress these customers, and in today’s digital marketplace, customer satisfaction is driven by order fulfillment. In Ware2Go’s recent survey, 79.5% of merchants indicated more repeat customers as a result of 2-day shipping, and 39% reported better online reviews.
Fulfilling orders to these new customers was going to require a quick pivot from their original go to market strategy. Their order mix had shifted from a healthy mix of full pallet B2B and small parcels to 100% small parcel D2C practically overnight. They knew that in order to turn this 10x spike in D2C sales into a consistent and faithful customer base, they had to deliver on their promise. In preparation for the deluge of orders they doubled up on their production runs to ensure inventory availability, and through their partnership with Ware2Go, were confident that not only would the product be available when customers came to cash in on the offers, but they would be wowed by the speedy delivery and beautifully branded packaging that showed up at their front door.
The result of the programs were not only increased brand awareness through the spike in new customer acquisition, but also brand equity — a sense of trust from their customers and gym partners that O2 was the type of company that would act on convictions and values rather than self-interest. With 98% on-time fulfillment provided by Ware2Go throughout both promotions, customers also saw that O2 would make good on their promises and consistently provide excellent customer experiences. The company also proved internally that their operations were fully scalable from top to bottom, and during a time when many businesses were in turmoil, O2 was able to make a direct pivot in their strategy without adding a single employee, thanks to their nimble staff and flexible partners.
O2 proved through the pandemic that they were a brand that could hold true to their principles even when times were tough. Their focus on giving back to and supporting the gyms that had been the backbone of their business demonstrated true commitment to their community, and their efforts were supported by the strength of their partnerships — both internally with their own employees and with vendors like Ware2Go, who Dave Colina says he holds to the same standards as his employees. As O2 looks ahead at a still-uncertain future, they have confidence that no matter the financial climate or shift in consumer demand, their operations will be flexible to adapt in support of any new endeavor.
