{"id":16593,"date":"2016-11-18T17:54:49","date_gmt":"2016-11-18T22:54:49","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/the-rise-of-online-to-offline-o2o-and-future-e-commerce\/"},"modified":"2016-11-18T17:54:49","modified_gmt":"2016-11-18T22:54:49","slug":"online-to-offline-o2o-and-the-future-of-e-commerce","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/online-to-offline-o2o-and-the-future-of-e-commerce\/","title":{"rendered":"Online-to-Offline (O2O) and the Future of e-Commerce"},"content":{"rendered":"<figure style=\"width: 227px\" class=\"wp-caption alignright\"><img loading=\"lazy\" decoding=\"async\" class=\"\" src=\"https:\/\/cdn.techinasia.com\/wp-content\/uploads\/sites\/4\/2015\/12\/The-Wechat-Universe-infographic.png\" width=\"227\" height=\"2224\" \/><figcaption class=\"wp-caption-text\">Source: Steven Millward, The amazing ways WeChat is used in China, Tech in Asia<\/figcaption><\/figure>\n<p>Imagine a day in\u00a0your life:<\/p>\n<p>You started the day off reading some\u00a0in-app\u00a0news before you got off bed, you liked an article on trends in pet grooming business, it reminds\u00a0you of your dirty corgi that needs a shower. You booked an appointment with the app\u00a0for\u00a0a local pet cleaner to come to your house later. The cleaner showed up in an hour, washed and styled your corgis and you are satisfied with the service. You paid him through the app, reviewed his service and\u00a0shared it to your profile page on the app. Your friend Jamie saw your post and sent you a quick voice message through\u00a0the app, also\u00a0asking you out for lunch. You then looked up nearby restaurant from\u00a0the app, made reservation, browsed\u00a0online\u00a0menu and ordered dishes using\u00a0the app. You requested a ride share via the app, met Jamie at the restaurant, both of you had\u00a0already ordered through the app, so you two scanned the QR code at the restaurant table, and\u00a0waited for food to be brought to your table&#8230;<\/p>\n<p>Now, imagine doing everything above with one\u00a0single app.<\/p>\n<p>Concerning or not that more and more\u00a0Chinese\u00a0live their\u00a0life without the need to leave THE app&#8211;exactly what the tech giant Tencent marching\u00a0towards with WeChat, its one stop shop social platform app.<\/p>\n<p><iframe loading=\"lazy\" title=\"How China Is Changing Your Internet | The New York Times\" width=\"640\" height=\"360\" src=\"https:\/\/www.youtube.com\/embed\/VAesMQ6VtK8?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"text-decoration: underline\"><em>The\u00a0O2O Business Model in world of digitization<\/em><\/span><\/p>\n<p>Commonly seen in developing countries, more and more people are connected to internet through mobile phones than PCs. A report by CNNIC indicates that 71.5% of the 688m Chinese internet users accessed the internet via their mobile phones at end-2015, while those using PCs declined from 51.6% to 39.2% for desktop,\u00a0 from 13.2% to 7.5% for laptop, respectively [1].\u00a0 The growing mobile internet users have boosted rapid development of mobile platform\u00a0applications. Wechat, with over 700 million monthly active users developed by Tencent in China, is growing with the upward trend and tapping into new grounds of O2O e-commerce.<\/p>\n<p>E-commerce business models are categorized as B2B, B2C, C2C and C2B by the parties involved in the transaction. With digitization diffusing into offline businesses , studies have explored a new set of categories that differentiate business models not only by &#8220;who is involved in the transaction&#8221; but &#8220;how business is done&#8221;&#8211; transaction behavior and process. By doing so, a new business model &#8212; online to offline (O2O) is becoming a growing segment, in addition to traditional online or offline only models.[2]<\/p>\n<figure style=\"width: 495px\" class=\"wp-caption alignleft\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/www.innovationiseverywhere.com\/wp-content\/uploads\/sites\/4\/2015\/05\/what-is-o2o-online-to-offline-digital-ecommerce-retail-china-gmic-1-2.jpg\" width=\"495\" height=\"504\" \/><figcaption class=\"wp-caption-text\">Image Credit: Martin Mosquier, O2O: WHY CHINA LEADS THE \u201cONLINE TO OFFLINE\u201d REVOLUTION, http:\/\/www.innovationiseverywhere.com\/o2o-why-china-leads-the-online-to-offline-revolution\/<\/figcaption><\/figure>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>What drives the growth of O2O model is the\u00a0increasing in demand in connecting software platform to physical brick and mortar businesses that are providing actual services.\u00a0In 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\u00a0expose them\u00a0to new purchasing intent. Following the online discovery process, it then use &#8220;software bridge&#8221; to connect consumer with physical service providers.<\/p>\n<p>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&#8217;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\u00a0leapfrogged credit cards, as indicated by percent internet users who has made mobile payments online.<\/p>\n<figure style=\"width: 491px\" class=\"wp-caption alignnone\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/www.innovationiseverywhere.com\/wp-content\/uploads\/sites\/4\/2015\/05\/o2o-online-to-offline-China-ecommerce-retail-digital-technology-startups-alibaba-dmall-leyou-wechat-mobile-payments-QR-codes-voice-martin-pasquier-GMIC-beijing-innovationiseverywhere-5-2.jpg\" width=\"491\" height=\"243\" \/><figcaption class=\"wp-caption-text\">Image Credit: Martin Mosquier, O2O: WHY CHINA LEADS THE \u201cONLINE TO OFFLINE\u201d REVOLUTION, http:\/\/www.innovationiseverywhere.com\/o2o-why-china-leads-the-online-to-offline-revolution\/<\/figcaption><\/figure>\n<p>&nbsp;<\/p>\n<p><span style=\"text-decoration: underline\"><em>Operating\u00a0Model of WeChat\u00a0<\/em><\/span><\/p>\n<figure style=\"width: 217px\" class=\"wp-caption alignright\"><img loading=\"lazy\" decoding=\"async\" class=\"\" src=\"http:\/\/www.tmogroup.asia\/wp-content\/uploads\/2016\/02\/image11-576x1024.png\" width=\"217\" height=\"386\" \/><figcaption class=\"wp-caption-text\">Official WeChat account of a Chinese national bank<\/figcaption><\/figure>\n<p>Wechat is taking the lead in coming up with new ways to bridge online and offline. \u00a0Its operating model\u00a0is shaped by the goal of\u00a0creating a single app that serves as many functions as possible, which is very different from what tech firms in the United States adopts that emphasize simplicity in their apps. To achieve its\u00a0goal,\u00a0Tencent has opened up WeChat to other companies, allowing them to create apps nested\u00a0within WeChat. Ebaoyang \u2014 a start-up that enables people to order oil changes for their cars directly on smartphones \u2014 was at first almost totally reliant on WeChat to attract business.\uff3b3\uff3dA list of such &#8220;in-app&#8221; app span across\u00a0all aspects of daily life of a consumer. To build trust between customers and merchants and facilitate purchase deal selection and closing process, WeChat utilized \u00a0its core function&#8211;voice based instant messenger. For example, before booking an appointment with a doctor, people can text or voice chat with the office staff to have any pre-visit questions answered. Most businesses such as banks and insurance companies have WeChat account to interact with customers, more frequently and more closely, in order to improve on service.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p><em><span style=\"text-decoration: underline\">Conclusion<\/span><\/em><\/p>\n<p>With digitization enabling more and better ways to create values to both businesses and consumers.\u00a0WeChat has become a game-changer in China: it has evolved into\u00a0a multi-platform tool\u00a0for marketing\/eCommerce use, and it\u2019s proved to be an effective\u00a0way for business to build\u00a0an O2O model and\u00a0pull the customers closer.<\/p>\n<p style=\"margin: 0in;font-family: Calibri;font-size: 11.0pt\">(842 words)<\/p>\n<p style=\"margin: 0in;font-family: Calibri;font-size: 11.0pt\">[1] Country Commerce Report-China, The Economist Intelligence Unit , New York, February 2016<\/p>\n<p style=\"margin: 0in;font-family: Calibri;font-size: 11.0pt\">[2] Wang, Chu-Ching, et all, &#8220;Trade-Off Among Online, Offline, and Online-to-Offline Business Models: A Perspective Based on the Four Ps of Product Characteristics&#8221;,International Journal of Electronics Communication and Computer Engineering, Volume 7, Issue 4, ISSN (Online): 2249\u2013071X<\/p>\n<p style=\"margin: 0in\"><span style=\"font-family: Calibri;font-size: 11.0pt\">[3] Paul Mozur, &#8220;China, Not Silicon Valley, Is Cutting Edge in Mobile Tech&#8221;, The New York Times, AUG. 2, 2016<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Imagine a day in\u00a0your life: You started the day off reading some\u00a0in-app\u00a0news before you got off bed, you liked an article on trends in pet grooming business, it reminds\u00a0you of your dirty corgi that needs a shower. You booked an [&hellip;]<\/p>\n","protected":false},"author":2685,"featured_media":20505,"comment_status":"open","ping_status":"closed","template":"","categories":[],"class_list":["post-16593","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/digitization-challenge-2016\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Online-to-Offline (O2O) and the Future of e-Commerce - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/online-to-offline-o2o-and-the-future-of-e-commerce\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Online-to-Offline (O2O) and the Future of e-Commerce - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"Imagine a day in\u00a0your life: You started the day off reading some\u00a0in-app\u00a0news before you got off bed, you liked an article on trends in pet grooming business, it reminds\u00a0you of your dirty corgi that needs a shower. 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