The recent Chinese stock market slowdown and slower economic growth have raised concerns over the high case burn rate at O2O startups, resulting in a drop-off for funding for those startups. In the US, similar startups have gained traction due to the convenience that they bring to end consumers. However, in China, consumers are attracted to such services due to the discounts they offer.
Roughly half of the capital raised by such startups typically go toward subsidies for customer acquisition. According to Ken Xu, a partner at venture capital firm, Gobi Partners, 30 to 40 percent of O2O startups have shut down over the past few months.
One car-repair app based in Shenzhen, Xiuyang, shut down in August after being unable to keep up with its competitors in offering discounts and promotions as it ran out of funds, after spending more than one third of its initial capital on customer acquisition.
Entering the already-competitive market of online-to-offline (O2O) space in China, new wine startup BottlesXO, aims to provide consumers with quick delivery of mid-priced wines in major Chinese cities, with plans for future expansion to other cities in Asia.
The app allows consumers to shop for wines and also suggests food pairings to go along with each bottle. In addition, the app features the history of the type of wine, together with photos and descriptions of the vineyard.
So far, the company operates in Suzhou and Shanghai and has raised a USD1.7 million Series A round. They are preparing to raise their next round of funding to help them expand to other cities in Asia.
E-commerce giant Alibaba is rolling out a new initiative to promote its Taobao marketplace this weekend by inviting the public to try on stylish wardrobes in minibuses provided by Uber that serve as “mobile dressing rooms”.
The minibuses can be summoned via Uber’s app and will operate in Guangzhou, Chengdu and Hangzhou this weekend. The objective is to see how customers interact through this new experience, before rolling out the program to other cities in the future.
McKinsey’s iConsumer China 2015 survey tapped into the behaviors and desires of China’s 630 million Internet users, across different city tiers and throughout rural areas. The research shows robust growth in social commerce, a trend toward transforming physical retailers into mere ‘showrooms’, and mounting consumer enthusiasm for more online-to-offline (O2O) services.
Here are a few interesting statistics:
30 percent of consumer perform online mobile research while shopping in stores, of which, 16 percent bought products from that store while 45 percent bought the same products from other online stores
72 percent of respondents expressed interest in purchasing online and being able to return offline
Consumers were eager to see more O2O offerings in entertainment, healthcare and housing/car services
The most frequently purchased category online was packaged food, with an average of 34 purchases made per year
Black Garlic is a meal-kit delivery service. It sends pre-packaged groceries in a box. All ingredients are portioned and labeled, and there’s a step-by-step guide for each dish. The idea is to mix convenience with the joy of cooking.
The target audience for this startup’s product is arguably narrow. It’s a product for busy urban folks who don’t want to miss out on the experience of a healthy, home-cooked meal.
The box contains three meals for two and costs IDR 325,000 (US$24). That makes roughly US$4 per individual meal. Delivery is free. The price is comparable to what one would pay for one meal at a mid-range restaurant in Indonesia.
According to CEO Michael Saputra, urbanization and more demand for organically-grown food indicate the emergence of LOHAS in Indonesian cities.