What drives the growth of the O2O (Offline to Online) model is the increasing demand to connect software platforms to physical brick and mortar businesses that are providing actual services. In an offline only business model, customers discover goods and services in physical storefront, where they make subsequent purchase decision and complete actual transactions. While an O2O model moves the discovery process online, providing consumers with a much wider selection pool that is often limited in physical world, often expose them to new purchasing intent. Following the online discovery process, it then use “software bridge” to connect consumer with physical service providers.
Besides providing customers with more flexibility and choices, there is additional value O2O model brings to the Chinese market. The lack of credit system, for example, most Chinese don’t have credit cards, and O2O model allowing them to pay on delivery of goods or services. With everyone on their smartphone all the time and with mobile payment system connecting directly to personal bank accounts, it basically leapfrogged credit cards, as indicated by percent internet users who has made mobile payments online.
With digitization enabling more and better ways to create values to both businesses and consumers. WeChat has become a game-changer in China: it has evolved into a multi-platform tool for marketing/eCommerce use, and it’s proved to be an effective way for business to build an O2O model and pull the customers closer.