What You Need to Know about O2O Commerce in China


By Martin Suter

O2O, short for online-to-offline, is a business strategy that uses online content, such as e-mail marketing, websites, ads, and more, to identify potential customers and then drive those customers to brick-and-mortar establishments for additional sales.

We’re seeing companies in China build out high-density footprints where customers who walk in off the street or access services through a mobile app can order home or office delivery and get their products in just 30 minutes. That high-density buildout of what are essentially fulfillment centers is unique to China.

O2O encompasses a wide variety of services in China, from the equivalents of companies like Groupon and Uber to services that you don’t typically see in the States, like in-home haircuts, on-site massages, and dry-cleaning delivery.

Even services that wouldn’t necessarily be considered O2O in the United States—making a reservation at a restaurant, for example—are often rolled into the O2O category in China, increasing its breadth and utility as a category.

This boom in China’s O2O businesses comes from users demanding convenience.

With most of China’s eCommerce already being accomplished on mobile devices, it makes sense that the O2O model works well there. You can order and pay for your goods on mobile, then pick them up or have them delivered at your convenience. O2O helps streamline this entire process in a dense, digitally connected country.

While O2O is not entirely the same outside of China, it is starting to pick up in other markets as well.

For example, food delivery services are cropping up in the States—Uber is moving into food delivery, Amazon has launched Amazon Fresh, and individual stores may offer local delivery. The trend is clearly moving in the direction of on-demand O2O services. The Chinese, though, have already perfected this model.