The report "Research on Citywide O2O and Community O2O Markets" recently released by Roland Berger analyzes China’s market potential, the prospects of some market segments and corporate development strategies. It predicts that the development of community business and popularized mobile payment will continue to boost China’s citywide O2O market, whose size is expected to cross the RMB one trillion threshold by 2020; China's community O2O market size will increase nearly 15-fold in the next 5 years, with home delivery service as the biggest engine. When vying for the community O2O market share, relevant enterprises need to choose their access path prudently and consolidate resources effectively to maintain the competitive advantage.
This report defines citywide O2O as the business booked and ordered online while accomplished offline within the same city (or region). Roland Berger forecasts that from 2015-2020, the citywide O2O market size will grow from RMB 356 billion to RMB 1.0503 trillion, with an average annual growth rate of 24%. The community O2O, within the framework of citywide O2O, refers to the market within 3-5 kilometers of a community and meets the daily needs for products and services of the community residents.
As the community O2O started late and is still at the initial stage of development, the market segments, which have clear application scenarios, a customer base with steady consumption capacity and mature business models, will stand out and lead the market. It is projected that, from 2015 to 2020, the community O2O market size will hike up to RMB 223.4 billion from RMB 30.4 billion, marking an average annual growth rate of 49%. By 2020, food and beverages business will be the market pillar, with a market share of 57%; community retailing, laundry and showering services will be the major players, taking up a market share of 7-13%; housekeeping as well as cosmetic and hairdressing will also take a cut from the cake. From 2015-2020, of all the community O2O services, home delivery service will especially soar from RMB 8.3 billion to RMB 121.3 billion, averaging an annual growth rate of 71% and becoming the biggest potential for explosive growth.
Regarding to market access approaches, community O2O can be categorized into four types: a community offline service platform based on the offline communication channels between traditional property management companies and property owners, and three kinds of online platforms - citywide information service platform, community integrated service platform and community vertical service platform. Compared with the online platforms, the offline one will be likely to dominate the market and secure strong competitiveness, as long as they can consolidate two important resources - offline presence and physical stores (or service teams). In general, these four categories are unique in their own ways, and the main development paths of the community O2O market include:
Leverage one's own resources and access the market in a proper manner:Industry background dictates what resources every kind of enterprises has. For instance, information service platform providers possess substantial technological prowess; community vertical service platforms sit on service provider resources; property developers have earned property owners' trust; property management enterprises hold the access to routine, frequent and in-depth communication with property owners. Market players need to examine their unique resources, and then accordingly choose an access to the market. Only in so doing, can they stand out and establish themselves in the market.
Expansion strategies vary with different business backgrounds:Businesses that vary in types should design differentiated expansion strategies according to their background, resources and approaches to access the market. For instance, internet-based companies can capitalize on their technological competitiveness to optimize the online platforms, enlarge the customer base; whereas for property management companies, expansion hinges primarily upon the area of managing property, and when the current acquisition costs for property management companies hover around an exceedingly high level, the key to expansion shifts to core value's export management models.
Build customer database to lay groundwork for product and service expansion:The capacity of collecting, accumulating, analyzing and capitalizing on big data is the core of O2O platforms, particularly the data regarding to customers' occupation, family members, consumption habits, etc. Compared with traditional approaches like subsidies, promotions and advertising, big data-based marketing as well as product and service expansion are more conducive to reinforce customer stickiness. For instance, property management companies run an extensive range of offline proprietary business, and enjoy considerable development potential, in that they could be able to leverage big data and thereby gradually introduce property owners from daily community services to high value-added businesses including housing sales & lease, as well as collateral and guarantee services.
Achieve breakthroughs by focusing on core businesses, and rapidly optimize services via cooperation:Community services are diversified, and differ in value. Enterprises should refrain from offering a comprehensive package of services at the initial stage. Instead, the wise move is to make breakthroughs in a few core services, and rapidly optimize the portfolio of services via cooperation and introduction of external resources. For instance, if some property management companies can only offer limited services, they could take the initiative to cooperate with vertical service platforms, and rapidly improve the service portfolio during the window period, and then incrementally build up proprietary business.
Roland Berger forecasts that from 2015 to 2020, both the citywide and community O2O market will witness significant growth, respectively at 24% and 49% per year.
