The quest to bridge the gap between online and offline commerce is happening pretty much everywhere that retail has a presence — to varying results — but one region where it seems to be happening all at once is Asia-Pacific. In the latest edition of the O2O Tracker, we take a look at some of the major players in China and India that could make online-to-offline a dominant force in Asia’s retail landscape in 2016.
Alibaba Orders In With Ele.me
There currently exists a pretty severe discrepancy between the size of China’s O2O market and its Internet penetration: $150 billion to 4 percent, according to HSBC (via Forbes). This obviously speaks to a massive opportunity for growth — the Forbes story points out that in the first half of 2015, the online segment in China increased by 80 percent to the tune of $47 billion — and it’s an opportunity that eCommerce giant Alibaba is going after.
The company recently invested $1.25 million in the Chinese online food delivery service Ele.me, giving Alibaba a 27.7 percent stake in the service — one so popular that Alibaba’s rival, Tencent, also owns a piece of it.
Putting its heft behind an O2O company like Ele.me, posits Forbes, puts Alibaba in a unique to position to boost the market position of its own mobile payments platform, Alipay, which an increasing number of Chinese consumers are using to make online-to-offline transactions. The more of them that do so, obviously, the more revenue Alibaba gains from its mobile platform, and if those transactions happen to apply to Ele.me, the company is effectively making money twice on them.
Should Alibaba eventually integrate Ele.me into its own platform, making Alipay the default payment option for the service — which Forbes floats as a possibility — the sky would effectively be the limit for Alibaba’s position in China’s ever-growing O2O market.
Paytm Goes For Food And Grocery Delivery At Home
Elsewhere in Asia, India’s digital wallet provider and eRetailer Paytm — another company in which Alibaba has a stake — is following in its backer’s footsteps by seeking to enter the O2O segment of food and grocery delivery in its own country.
“The opportunity in this segment is bigger in China than in India. But hopefully, we will work with food delivery companies and build something here, using our platform. You may expect some news soon,” Paytm Founder Vijay Shekhar Sharma recently told The Financial Express. “The O2O … commerce segment is turning out to be way bigger and far more important than we had assumed. It’s creating a half-a-trillion-dollar opportunity for Alibaba, and it’s a category we want to be identified with in India.”
Sharma tells the outlet that Paytm’s online marketplace has now “gained significant traction,” allowing the company to shift its eCommerce and payments offerings into “independent app[s] and businesses.” With a $450 million dollar budget (including marketing) to spend on the company’s marketplace, the Paytm founder states that it “will focus far more on the O2O space, including the food and grocery segments,” in 2016.
Snapdeal Connects The Dots
Perhaps it’s unsurprising, given its reach, that Alibaba’s influence in O2O in Asia doesn’t end there. Yet another startup that the company backs — Snapdeal, India’s largest online marketplace — is making moves in the online-to-offline space.
Snapdeal Chief Product Officer Anand Chandrasekaran recently spoke with Gadgets 360, a conversation in which he pointed out the company’s across-the-board improvements in its eCommerce operations, including logistics and delivery, as well as faster returns and refunds.
“2016 is the year that eCommerce matures and becomes a habit for consumers,” Chandrasekaran remarked to the outlet. “They will start to think less of it as something they do once in a while and more like something they completely trust and rely on for everyday needs.”
Snapdeal’s O2O strategy will involve a continued focus on providing reliable delivery, something that Chandrasekaran attests is one of the company’s USPs (unique selling propositions).
“During the Diwali season [the Hindu festival celebrated in autumn], we met our delivery promises 98 percent of the time when orders were nine [times] more than the average day,” he told Gadgets 360. “This will be a key differentiator for us in the industry.”
To further enhance its offline presence, Snapdeal additionally plans to leverage its integration for FreeCharge, the mobile transactions platform that it acquired last year.