How Does O2O (Online-to-Offline) Work in China?


O2O (online-to-offline) constantly grows in China, which can also be described as frenetic, dynamic, and lucrative. What can we learn from this strategy?

How Does O2O (Online-to-Offline) Work in China?
Maria Krisette Capati, Author
05 September 2018
The West can learn from China’s innovative e-commerce solutions to increase the sales in the digital space and brick-and-mortar shops.

O2O (online-to-offline) continually grows in China and can be described in three words: frenetic, dynamic, and lucrative. Tom Doctoroff, the author of Billions and What Chinese Want said that the country’s unique commercial landscape partly drove the adoption of this strategy.
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O2O is like a bridge that links the online stores to the physical stores. O2O prompts online customers to buy (or visit) products or services to the actual stores. Merchants use different strategies to get them onboard via online and close the deal at the same time.

From online social platforms and other digital marketing or e-commerce solutions, the sold items are either ready for pick-up by the customer or delivered to their doorstep. So, the cycle continues. Customers complete the transactions online. They pick-up or have the items purchased online that are ready for delivery.

What strengthens the O2O (Online-to-Offline) strategy?

1. Chinese customers prefer to make transactions online

E-commerce is a lifestyle for a typical consumer. It’s part of our daily lives in China. The convenience of a few taps on smartphones can bring you grocery items in a few hours. With a 1.3 billion population, 802 million people are connected to the internet, 57.7 percent of the total population.

98 percent of the total internet population are mobile users. The figures also illustrate the efficiency of the internet economy where online transactions are part of the everyday life of consumers.

Booking a taxi, buying movie tickets and ordering your favorite Chinese food are delivered powered by Meituan-Dianping describes convenience at its finest.

2. The ubiquity of mobile payments

Forget about cash. Everyone’s using WeChatPay or Alipay to pay merchants, even with the street vendors selling fruits or taxi drivers. WeChat payment arm, WeChatPay, has gained popularity and the ubiquity of mobile payments via QR code scans isn’t a novelty or a discovery when living in China.

From merchants to retail store owners to fancy restaurants and luxury boutiques, the convergence of O2O and integrated payment method pushes both homegrown and global companies to play with the strategies.

Major cities in China are already embracing cashless transactions. Imagine, food vendors post their Alipay or QR codes for customers to pay their order. Walmart opened a 1200 sqm supermarket and launched its Scan and Go, which elevated the O2O concept.

3. Homegrown tech giants invest in technology and unique platforms

The big three – BAT, Baidu, Alibaba, and Tencent are continually improving their platforms to serve this dynamic market.

Baidu and Suning Logistics strategic partnership explores self-driving technology that may be applied to commercial use via crewless delivery vehicles by 2022. The HEMA Supermarkets are Alibaba’s initiative for the new retail that combines online-to-offline experience. Shoppers online can receive free delivery within 30 minutes. Walmart’s Scan and Go using Tencent’s mini-program has already attracted 10 million users.

The fast-paced lifestyle in major cities and increasing adoption of rural areas drive O2O to tap various sectors, which is not limited to e-commerce alone.

Good Doctor app of Ping’an Insurance Group allows patients to access diagnosis and treatment support, set appointments, and consultation with doctors via texts, images, and videos—online and doctor’s visit are only a few taps for convenience.

Why should you care?

As merchants in China, whether homegrown or foreign-owned, the adoption of O2O is undeniably tapping different sectors that push you to think outside of the box when offering your services to Chinese customers.

The complexity and uniqueness of the strategy that penetrates to the everyday lives of the customers should not hinder merchants and sellers like you to explore it and localized the system and approach.

A local partner like AZ-Loc can help you create a sustainable and actionable plan that matches your goals, budget, and what Chinese customers need.

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