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Video: China's O2O market at a glance

By Liu Zheng (chinadaily.com.cn) Updated: 2015-01-30 09:03

Online-to-offline (O2O), which is seen as the future model of e-commerce, has been witnessing a preliminary stage of disorderly development in China since 2010. While online retailers are eager to exploit physical stores, traditional offline enterprises are keen to attract more online consumers.

According to IT analysis firm International Data Corporation, the business practices of O2O sector include local services, online travel customization, traditional retail transformation, catering service, and group purchase.

"In 2013, the entire market value of China's O2O market was 200 billion yuan," said Dong Xu, senior analyst, Analysys International. The volume rose to 240 billion yuan in 2014, she added.

"Whether it is door-to-door nail specialists' service or family tutors' service, the business model of O2O sector will expand to local community and come closer to individual consumers," Dong added.

According to Dong, one of the golden ways for a company that's keen to stand out in the market is that it should properly manage the development of offline physical stores, offline service networks and the scope of business expansion.

Meanwhile, subsidy is still an effective method for investors to attract more consumers and expand their territories in vertically integrated e-commerce market.

The rivalry between Chinese popular taxi-hailing apps Kuaidi and Didi, rolled by Alibaba and Tencent respectively, came to a head in the first half of 2014. In a battle for market share, they spent an estimated 2 billion yuan ($325 million) on subsidies to drivers and customers.

On January 15, 2015, Kuaidi announced that it had raised $600 million to strengthen its position in the hotly contested market.

A little over month earlier, Didi had secured $700 million in funding from global investors.

Apart from the fierce battle between the Internet behemoths, start-ups and self-employed firms are hungry for grabbing a piece of the market.

"I always wondered whether we could take advantage of the Internet to help upgrade medicine-purchase experience and improve it to become easier," said Ren Bin, CEO of medicinepower.cn.

Ren with 20 employees runs a start-up that provides door-to-door medicine delivery services to customers via a smartphone application.

According to Ren, young people who work in IT industry and young parents are all welcome to their sales mode.

"I posted a tweet on my WeChat account saying that I ran a company that provides one hour door-to-door delivery services to those who need daily medication. I did not expect the message to go viral on the social media and we received 100 orders on the same day," Ren added.

Yang Liu, a nail specialist of helijia.cn, said: "I've worked as a nail specialist for almost four years. The salary of a door-to-door nail specialist in helijia.cn is almost double than a specialist who works at a physical nail salon.".

Yang said she used to work in physical nail salon and got paid monthly. After switching over to become a door-to-door nail specialist, it makes her feel as if she is running a small shop by herself.

"Work is full of enthusiasm and passion, nowadays," Yang added.

Reporter: Meng Jing, Gao Yuan and Liu Zheng

Video: Liu Zheng

Edit and animation: Liu Zheng

Voiceover: Anne Marie Ruisi and Eric Jou

Video: China's O2O market at a glance

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