Insight
Tough way ahead for O2O platforms to tap offline markets
Last Updated: 2016-10-12 11:29 | CE.cn
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By Chen Jing

"Meituan.dianping.com has raised USD 5.5 billion in total, while total funds raised by merger of Didi, Kuaidi and Uber have surpassed USD 10 billion. However, it is still in urgent demand for these enterprises to prove that they can create value for consumers and customers sustainably and offer value for investors by the core competitiveness accumulated through large quantity of consumption and investment previously. China's O2O has come to the "second half" of development", said Wang Xing, CEO of Meituan.dianping.com at the YaBuLi Summer Summit concluded recently.

Wang Xing told the truth. The Internet economy is seeing slowing-down increase of netizens and decreasing "demographic dividend". According to the latest data released by China Internet Network Information Center (CNNIC), China had 710 million netizens by June 2016, 21.32 million of whom were newcomers in the first half of the year and the popularizing rate of Internet was 51.7 percent, an increase of merely 1.3 percentage points compared with that at the end of 2015. Meanwhile, the "dividend" of smart phones is also fading away. According to data, China's smart phone market saw 102.6 million of shipments in the first quarter of 2016, a year-on-year increase of merely 2 percent. The lowering "dividend" motivated the Internet enterprises to back to the technology- and service-based growth and find new growth mode.

Under the overall context of new normal of economic growth and "Internet+", O2O has big shoes to fill. However, behind the "money-burning war" and "frequent integration", in addition to breaking such standing dishes as guide information flow and breaking information asymmetry, what will O2O render for the "second half" of the offline sector?

Apparently, precision marketing comes to be one of the answers. In April this year, the payment team of Wechat unveiled and launched the "Spark Program" and invested RMB 100 million yuan for marketing accumulatively to fully support platform service providers. Huang Li, Chief Operating Officer of payment products of Wechat, told the journalist that one of the keys is the precision marketing provided by the service providers for vendors. "Mobile payment + membership mean acquisition of detailed information of members, through which precision marketing can be realized and even the limitation of commercial structure can be broke. For example, there are many long-tail users for catering, entertainment and services within 3km of Tianhong Supermarket and all of them can share the member system and credits under the premises of integration of service providers."

Wechat even launched new capabilities therefrom. "For instance, the integration of Wechat Payment and discount coupons enables the consumers to use the coupons by direct integration with the Payment without the need to show the coupons to vendors and vendors can deduct the amount of coupons from the payment amount by directly charging off. This is exactly the capability progress that we have done for marketing."

As for Alipay, Koubei also took convenient stores as the breakthrough to make trials in precision marketing of offline vendors in mobile payment service. According to Koubei, Koubei of Alipay has established close cooperation with nearly 30,000 convenience stores nationwide. Big data of Alipay Koubei is helping offline vendors to step into the new era of digital operation.

"In July this year, 78 convenient stores of 711 in Shanghai were launched in Alipay Jidianka. Miya, one service provider of Alipay Koubei electronizes conventional offline Jidianka, not only helping vendors save costs but also accumulating consumption data of users. Based on these member data, owners of convenience stores can analyze consumers in a more precise way and achieve layered marketing targeted at different client bases. Meanwhile, single-item marketing strategy also saw faster implementation schemes," according to a principal of Koubei.

From a longer-term perspective, the dada accumulated on the O2O platform can provide decision reference for offline vendors. Wang Xing said "to better serve offline vendors, O2O platform needs not only to guide the trend but also help vendors to improve efficiency and reduce cost. For instance, "location" is rather frequently mentioned in the commercial real estate sector and also very important for a store to make money. Given the most abundant big data of users in possession, Meituan dianping can help vendors decide the location and business of a new store. Sorting out data regarding various aspects can help vendors make wise decisions. However, to fulfill this, deep integration must be achieved."

However, though mobile payment and O2O platform is rather hopeful for data value in the future, the study report from CNNIC still shows that at present, user data collected are not comprehensive, mining algorithm is backward and the effect of active push is poor, all of which affect the "potential" of O2O in the "second half" on the offline sector. "On one hand, consumption decisions are influenced by many factors. Due to the closed data among platforms, it is hard to obtain all data regarding users' visiting behavior; on the other hand, there is still a large gap between data of visiting-store behaviors and online data and the dimension of online data is limited. However, owners of convention stores have rather weak awareness on collecting users' behavior data after users' visiting, though iBeacon (micro positioning technology of Apple), face recognition, thermograph, VR and other technologies continue developing, the relevant apps are rare."

Therefore, in spite of the ambitious dream, the reality is not promising. Strenuous efforts are needed to apply the Internet thinking and technology in the offline sector.

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