Recently, CEO of Baidu.com, Robin Li put words in media, saying that baidu want pull off from Nasdaq because of US investors have no idea of what baidu is doing in the O2O trend and lowered its market value. Baidu is a component stock in Nasdaq since 2005. And since its listing, Robin is earning a lot for his investors. It’s not that easy to pull off from the public market.

Pic via:Chianz

First, let’s make it clear, What is O2O?

O2O stands for Online to Offline. The O2O provides a more personal experience by bringing people from your online networks to your offline networks. This is done by connecting and engaging with people online and then inviting them to your store, a networking event, a Chamber meeting, or even lunch. (from DKR)
  1. | Is there any unique place that China O2O is different from US?
  2. | Why US investor won’t understand that trend?
  3. | What’s the real truths of China O2O trend?

Why China is good at o2o startup trend this time?

High discounts

Can you imagine it’s much more cheaper to eat at home rather than eat outside? Yeah, that’s real in China. By using O2O apps, it could save you more than 50% if you have a quick finger and normal luck.

Let’s see the screenshot below. Screenshot from Ele.me( in Chinese it means “are you hungry?”)

Pic via: Stanford

As you can see, Dicos offers user a huge discount: save 11 for every 20 RMB, 16 for 37 RMB. A 45% was offered normally to normal customers.

And to car/cab-calling service, the discount us unbelievable. You may think the discount won’t last long, but actually the discount is continuing for…almost 3 years. Major car and cab services in China is provided by Didi and Kuaidi. While the period they competing, the discount is amazing to passengers: you get two chances to take free taxi drive a day ( less than 10 RMB). During the Spring Festival of 2015 in China, young people find it’s almost free to travel around the city. And with food delivery O2O, life expense is nearly zero!

But as the competition went less furious and the decreasing confidence of investors, big discount were seen less than before but still exists.

Even dominating Uber has to use high discount to fight back Didi and Kuaidi. If they don’t offer any discounts, fewer people would use Uber. It can saying that: discount makes China O2O, and the competitiveness of China O2O startups.

2. O2O startups privide al kind of services.

From group buying to food delivery, from grocery shipping to to house massage, people can live a full life without going out side of his house. China local Internet media QDaily editor did a test last month, he lived a 18-day happy life without step out his house by using O2O services. We often heard that people can’t live without Internet, now this time people can live only by O2O services. However only in China can this be true.

JD.com delivery man

After our observation, TNiC editors found O2O startup in China provide service from breakfast to lunch to dinner and afternoon tea, from dry cleaning to phone repair to haircut to drug delivery, from bill payment to seafood delivery to door-to-door house cleaning and anything you can imagine.

3. High standard service.

What President Xi Jinping said the China standard is real! The O2O startups are providing very high standard service to its users. For examples, the hot pot food delivery O2O, if you buy their hot pot suite on apps, they would send you a real hot pot pot to use. (Hey guys! Hot pot is very popular among foreigners in China, they love it!!!)

Hot Pot. Pic via:CNN

Yes , for free! Or one food delivery would assign several delivery man in one restaurant in order to make the food is delivered in time and make sure the quality is good. All what they do is to attracts and high customer retention rate.

The difference between China and USA in O2O field

Many fields in USA were not fit to use the O2O model. For example wedding O2O is not fit. The industry is quite muture which startups were not able to break or disrupt. O2O were quite fit the business area where there exists a lot of freelancers and party time workers.

As we searched in Google, we would find that many O2O startups are limited in fitness and beauty and food delivery.

Unlike China, the service industry sucks. But what we see today is that with the help of Internet and Apps, their service efficiency and quality bumps. And to our surprise that Chinese users are more acceptable than we thought. One reason is that the high population density in big city leads a lower human resource cost.

And the enterpruners mental guide “Xiaomi” showed them: success comes from the Internet. And that influence Chinese government, they are encouraging startup founders to go outside to found a company to increase the employee rate. And to many businessmen, the O2O trend is a very good chance for them to pitch around.

But there are problems in China O2O

First, those O2O startups hold a high burning rate. And many of them never shows a possibility of profit in the near future or the further future.

Second, tradition enterprises tried to grasp this opportunity. But many of them won’t survive in the so called O2O business model.

Third, the market is so small that there are fewer customers. Yes, the O2O in some fields are fake concept.

Fourth, customer won’t keep on using their service. As they first tried it, customer would find its interesting to use but to a long term usage, fewer would insist.

Pic Via: Incedogroup

Lessons US entrepreneurs should learn before take actions

Discount is okay but don’t spoil your potential customers. In China the O2O is a new business model and new idea. Startups need to burn some money to incubate a market. But situations are different in USA, USA customers have a nice custom habit, they are willing to pay more for a high quality service. In China , people just want cheaper one; if the price is the same, then they would pay the higher quality one. That’s the truth.

Discount is a bad boy. He lies and may lies a lot. If the market need is fake, then any discount won’t save a dying market. So here is one advice that try to get some profit before you went for the next fundraising. Proving the need is real and the market is big are the most essential thing!