O2O has been one of the main buzzwords talked about during GMIC Beijing conference, the leading mobile event in China with 20,000 attendees and a platform for all the Chinese tech giants to announce their innovations.
If o2o as a concept is so visible in China, it’s also because there, technologies and the hunt for convenience have made it a big phenomenon, with local success stories.
For a quick definition, one might say o2o is anything digital which brings people to shop offline, in real-world stores. Famous o2o startups in the West include Groupon, OpenTable, Uber for instance.
It matters a lot as e-commerce is still a small share of all retail sales globally, from 1 to 15% in countries as different as US, UK, China and India.
QR codes as the natural link for online to offline interactions
A few technology trends explain the rise of the o2o concept in China.
The first one is about is the sheer number of people connected on mobile, on mobile internet, and, even more, on powerful mobile internet. Out of China’s 555 million mobile users, 162 millions are already on 4G, a figure expected to reach 250 million by the end of 2015.
Technology matters too. If the West’s early adopters are keen to mock QR codes, Chinese – and the QR scanner embedded in WeChat, the country’s biggest messaging app – use them heavily. An old stat, from October 2013, counted more than 113 million scans in one month (Adage).
At GMIC Beijing, 60-70% of Chinese participants I saw rushing to speakers to get their contact info did so by scanning their QR code in WeChat, which connects them directly as friends in the messaging app.
QR Codes got a recent new validation in China as Alibaba invested in Visualead (WSJ), an Israeli startup providing custom QR codes increased the scan rate by 4. According to them, China is 2 years beyond the rest of the world for this specific channel – usually shunned by the Western early adopters.
Voice-based and instant messaging apps to increase trust, selection and deal-closing
Voice-based apps are another feature which can increase the level of trust and service online before a purchase offline.
Ronglian Yuntongxun is such a software provider, they work with several industries. For instance, their voice-based platform help doctors to have a first pre-sale chat with patients, increasing the trust and potential closing of the deal.
Another industry is car retailers, who offer a private chat for leads in order to get closer to the deal than with a pure screen-based interaction.
The service has today 6,000 customers, and have already done 2 rounds of funding.
Mobile payments: the last mile of o2o successfully implemented in China
Mobile payments, then, are a third and ultimate level of this o2o rocket.
Where US banks and fintech startups have been rather slow to make mobile payments a reality (through non user friendly processes and cuts on transactions), in China, the industry has been lead by e-commerce players.
As a result, more innovative ways to pay have been setup, from social commerce to messaging apps (you can freely send money to anyone on WeChat, when it’s still a pain to pay a doughnut with mobile anywhere in the US). There’s also no cut or rate for online payments.
Convenience at the corner: o2o to navigate better Chinese cities
Beyond pure tech, it’s also a matter of convenience, with the rise of local m-commerce. In sprawling, congested cities where you’re happy to spare a few hours just shopping for basic stuff.
Startups like Dmall offer an amazingly clever o2o service as they turn nearby supermarkets in inventory warehouses you can browse from your phone, order, and get delivered in 1h in a 2km radius.
Dmall, while still in beta in one city only (Beijing), has received $100 million in funding, making it a record for seed-funding.
Leyou, the largest omnichannel retailer of baby products, also use the scan feature to allow mothers and parents to get additional information on products in store.
By scanning the barcode, they can see the traceability of the product to, again, purchase in confidence.
Legacy brands also try their luck at o2o. One of them is Daimler, which experiments in Shenzhen, nearby the HQ of Tencent, a car rental and car sharing program. Users can browse on the app which car or truck they’d like to rent, and can then unlock it through smartphone.
The o2o checklist: design, design, and design again
With all these examples in mind, and the growth of mobile users in China, it’s pretty clear the lead local companies took in o2o will continue.
How should you do it? Well, here are a few steps which can help:
- Act as a platform, not as a brand. Dmall turns supermarkets into warehouses. Dianping, China’s restaurant booking app, is just a hub to better browse an existing information. They’re now valued at more than $5bn (WSJ).
- Bet on design: you’re offering access to a LOT of information, be it SKUs (Leyou), available cars (Daimler) or thousands of nearby goods (Dmall). The interface must be neat, optimized.
- o2o features can help: close the deal online thanks to instant messaging (WeChat is used by brands a lot for 1-to-1 communication) and mobile payments.
- Ensure the offline end of the business is 100% smooth and available. There’s no more epic fail than to browse & buy online, to realize the offline, most important part is missing or broken. Train your staff, make the goods available.