O2O In Fashion

Are Tecent and Alibaba cra- zy？ They are now scrambling to invite you to take taxi with their money.

In the past several months， the taxi industry suddenly became the spotlight of the society. Tecent and Alibaba， the owners of two largest mobile payment tools in China， threw over 3 billion yuan in that battlefield.

From January 10， Didi-Dache（Didi）， a taxi calling app in China， began to reward the taxi drivers and passengers 10 yuan per person if they make the deal through WeChat. At the same time it also launched a campaign with 10 thousand free orders. Meanwhile， Didi-Dache’s major competitor Kuaidi- Dache （Kuaidi） decided to reward the taxi driver 15 yuan and passenger 10 yuan if they accept/pay the taxi fees through Alipay.

Didi and Kuaid are respectively supported by their shareholders Tencet and Alibaba. WeChat and Alipay are also the tools of the two companies （WeChat for Tecent and Alipay for Alibaba）.

A senior executive of Kuaidi said that the initiate startup team came back from Silicon. At first they just wanted to follow U.S. car calling app Uber to build a small and convenient taxi calling app to solve the difficulties in calling the taxi. However， after the participation of Alibaba， the war of “spending money massively” began and everything changed.

Lu Jun from Alibaba’s wireless business department was appointed to take charge of Kuaidi project. According to him， it was not Alibaba’s initiation to spend money massively. Inside Alibaba， this was originally a small project at the corner. No one had expected that the situation got changed so quickly. At that moment， Didi announced its attachment to WeChat and integrated the car calling and payment services together along with attractive rewards.

The opponent has shown its trump and Alibaba decided not to stay silent. Lu Jun said： “They （WeChat and Didi） are too quick. We have to take responsive measures. This becomes the largest project in all industries we are involved in.”

On February 10， Didi lowered the reward for each deal from 10 yuan to 5 yuan， which was thought to be the end of the “campaign of massively spending money”. However， one week later， Kuaidi threw the strategy of “rewarding one yuan higher than the opponent”， pushing the battle into a bottomless pit. The result was that Didi increased the reward to 12-20 yuan per order while Kuaidi， as promised， increased the reward to 13 yuan.

Are they crazy to do so？ What on earth are they planning and calculating behind this crazy money spending？

The Ambition of Money Spending

The generosity in spreading the taxi calling apps is the new way to scramble for customers for their payment tools.

The data shows that the usage of Didi and Kuaidi increased dramatics during the past. The aforementioned senior executive of Kuaidi said that there were only around 1，000 orders given through Kuaidi every day. But by March 4， the average daily number of orders in China reached 6 million， a quarter of which were paid through Alipay. In addition， the daily number of orders for Didi also witnessed impressive increase as well from January 10 to February 9， the number of deals hit 1.83 million each day， 700 thousand of which were paid via WeChat.

“Some people even called a taxi just to the market to buy some food，”Mr. Huang， a taxi driver， said emotionally. “This is really a huge spending of money. The money rewarded is larger than the amount spent.”

It is estimated that Kuaidi and Didi spent as much as 3 billion yuan on rewards and spreading for this campaign， which was unparalleled in the Internet industry or even China. But an IT expert said that this behavior was not beyond the normal business logistics and even possessed a great cost performance.

He compared it to the common cost of Internet companies spent on attracting the traffic volume. It takes 0.8-2 yuan to convince a user to download an app into their smartphones or tablets， and additional 8-15 yuan is needed to have a user activate the app and use it frequently. The better the app is， the more costly it is in spreading. Some of them even cost users 30-60 yuan. In that way， taxi calling apps keep the “highquality”， allowing app developers to avoid unnecessary expenditure as much as possible.

“This method is more economical compared with the traditional method of buying the traffic volume and can get better data，” said the analyst.

More importantly， the battle is followed by the overall start of the O2O contention， as the competition spread from offline to online.

On February 28， Ma Yun， board chairman of Alibaba， said in an email to Alibaba’s employees that it was time to move to the data age aiming at boosting the productivity. “The overall distribution from the cloud to the terminals， the strategic focus on cloud （cloud computing and big data）， driving the cloud with wireless terminals and coloring the terminals with cloud will be the key to the mobile Internet in the future.

At last， Ma Yun used a term in a card game “Alibaba all in ecommerce”， meaning that his company is going to bet the last coin in that field.

At the other end of the gambling table， Tecent is sitting with certain easiness. In the first few months of 2014， Tecent almost grabbed all the spotlight in China’s Internet industry. It started the Red Bag campaign at the beginning of the Year of Horse， in which Tecent got millions of users to attach their banking cards to WeChat through sending 100 yuan to each user as the gift. Ma Yun compared this to the “Attack on the Pearl Harbor”. Nowadays， Tecent has the functions of payment，tax calling， restaurant review and others in its WeChat， which has been upgraded from a communication tool to a complete marketing tool covering every field of people’s life. It is also reported that WeChat is now focused on the POS system for the offline dealers， which might its last weapon for the O2O battle.

The year of 2014 might be called the “Year of O2O” as Tecent and Alibaba are sparing no efforts in contending for online and offline businesses.

In the metro station of Shanghai， the logos of WeChat and Alipay even appeared on the same vendor. The“hybrid” marks and the instructions to use them cover the entire exterior body of the vendor. Visitors coming here are usually confused at first. They just stand in front of the machine with their smartphones in the hand but knowing nothing about what to do.

After turning November 11 and December 12 into “shopping festivals”， Alibaba has become the most capable company of “producing holidays” in China. The International Women’s Day on March 8 was shifted into the Living Day for Girls in its calendar. Watching a movie with 3.8 yuan， having a dinner with 3.8 yuan… these charming sales promotional campaigns attracted enough users. They locked the screens of smartphones light with the webpage of Taobao， hoping to find the discounted products they like， and then paid for what they buy through the mobile Alipay. Such a living method is penetrating into the everyday life of Chinese people.

The 16th floor of Alipay’s headquarter building has a 15-meter long huge screen installed onto the wall opposite the elevators. The data shown on the screen reports the deals in different provinces， which is updated on a minute basis. The first line of the data rightly tells the number of users paid through their mobile phones.

Alipay’s dream of “eliminating the cash” seems close to being realized. From going out by taxi， having dinner in the restaurant， shopping in super- markets， to checking in hotels can be finished through the mobile Internet. All PR， marketing and offline expansion staff of Alibaba are now used to adding that “I almost take no cashes when I go out” in front of the media.

But Alibaba is not the sole dreamer， Tecent， with its WeChat， also has the same dream.

In the process of “eliminating the cash”， the consumer data gained from the mobile terminals is going to play a more important role in the future.

Yintai Department Store just found the new continent in the user data. They found that 90% of its millions of users have been registered in Taobao. Through the analysis， these people’s consumption habits and consumer behaviors are easy to be gained. Online retailers and offline vendors are no longer the “archenemies” to each other. The cooperation extends to catering， retailing and entertainment and increases the possibility of the more accurate targeting service.

For example， when a consumer enters a shopping mall with WiFi， the operators immediately know who he/ she is and send selected recommendation list for him/her. “The application of big data has such vast scenes and methods and still leave a great space for imagination，” said Yi Fang at the O2O department of Alibaba.

In the first year of O2O age， the blueprint is just unfolded.

Scrambling for the Access

The unfolding of the blueprint also started with an onslaught， which is still initiated by Tecent.

At the beginning of 2014， Alibaba could easily sense the furious attack at its stronghold： WeChat wielded the weapon of “Red Bag” and relentlessly attacked the field of mobile payment.

According to the data from Tecent’s PR department， from the New Year Eve to the eighth day of the first lunar month of Year of Horse， over 8 million users joined in the event of “taking Red Bags”. They together claimed 40 million Red Bags， or 4-5 per person. Since the money contained in these bags could only deposited into the WeChat accounts with bound banking cards， Tecent easily got millions of bank cards attached to WeChat within eight days. Undoubtedly， Tecent got the job that took Alibaba several years done in a week with extremely low cost.

This move forced the senior executives of Alibaba to end their holiday in advance and return to the office to discuss about the strategies.

“WeChat made great deal， a wonderful battle，” said Hu Xiaoming， vice president of Ali-Group. On the third day of the first lunar month， they had an emergent meeting， in which they re- flected over why Tecent could work out such good products.

In fact， such a hot situation was even beyond the expectation of WeChat.“We first hope to recruit 1 million users. We never expect the result to be that good，” an insider of Tecent said. When people were still preparing for the upcoming event， the red bags have made the users crazy. The servers of Tecent got expanded several times and the vice manager of Tenpay a payment tool under Tecent in charge of WeChat’s payment business was promoted to the vice manager of WeChat.

On the other side， Pan Zhiming， president of Alipay， refused to do the same thing. He admitted he felt unnerved when seeing the report about“WeChat did what took Alipay eight years in one night”， but when he recovered， he said： “It was not so easy to overmatch us. After eight days， they just recruit 4 million users’ bank cards.”

In his opinion， the key difference between the Alipay accounts and WeChat accounts lie in the active user accounts with distinguished real names and identities. That means that one account means identity recognition and added service. No matter through online and offline channels， the account is the access to the services.

As per Pan Zhiming’s standard， QQ， WeChat and Email could not be considered accounts， which are only valid when they are bound to users’ identities and added services. He is supported by some experts， who said that the number of users of WeChat’s payment function might be boasted because someone might use others’ bank cards to get the bonus and then discarded it.

WeChat was not blinded its instant success. The insiders of WeChat said that they kept a clear mind since they knew the data to be less optimistic than it looked. The payment of WeChat is still in the phase of recruiting users， but in given time， they can develop to a certain level and by then， WeChat still owns unmatchable advantages with its easyto-use and comprehensive functions compared with Alipay， which is only an e-wallet right now，.

The discrimination of business information of WeChat’s users is more based on the recommendations of the familiars. The push through WeChat is working with those who can move the users. There are no memberships， vouchers and discounted campaigns in WeChat. All its advantage lies with its original role as an instant communication tool， which is used， as the survey found， much more frequently than Alipay in the smartphone. Therefore， WeChat is now focusing on the access. The recent activities of Tecent could prove its ambition. The investment into Dazhong Comment， an app that recommends the suitable restaurants and dishes， merging its online retail website with the B2C giant are both considered to the measures for Tecent to open the access.

The experts forecast that Tecent would spend “a larger part of 2014”doing this. And they believe that if Tecent could not do it in that fixed term， WeChat will never surpass Alipay in the future.

To Key to the Competition

A product manager in Alibaba wrote in the internal forum that “you must find a girl if you want to date one”. That means Alibaba should focus on the girl， which refers to users actually， instead of being drawn to what the love rival Tecent did. “As long as we keep improving our cutting-edge products and developing the users’ experiences， we could finally win the girl， no matter what Tecent did.

For mobile payment companies， users are really like the girlfriend who could be quite picky. They would soon get tired of one function， or find out one defect that they had never noticed before. This requires the app makers and service suppliers to be focused on the users from time to time and make proper changes anytime.

Kuaidi needs to optimize a dozen of functions among its function list. The team spends days and nights seeing for the users’ reflections in WeChat and Microblog and make changes based on these suggestions.

In order to lower the risk of the taxi drivers in driving while seeing the smartphone， they are thinking of installing the app into the operating screen of cars and paying the taxi fees with credit cards is coming into reality soon.

This is backed by the crazy investment. Ma Yun set up a new department in charge of the offline business spreading and promised to build a large team. “The company is very supportive for this matter. Basically， they will give you more money and people than you want，” an insider said.

Lu Jun with the wireless business department is just one of them. They usually had meeting talking about a payment scene last till 3：00 am. As Lu Jun said， all industries covering eating， clothing， traveling and accommodation will provide numerous topics for discussion and every time the topics could fill several blackboards in the meeting.

Whether there are corresponding products to combine the data and to provide the value-added services for the users to get the best experiences. For the mobile payment companies， the retailers are as important as consumers. They are also “the girl Alibaba and Tecent want to date”.

In a supermarket of Meiyijia in Guangzhou， the long scroll with instructions to use Alipay for payment could be seen everywhere. Even though there are only two or three people using this service every day， the retailer still considered this to be a service convenient for the consumers.

The market director of Meiyijia Supermarket said that 80% of the 5，600 convenient stores of Meiyijia have the UnionPay POS installed. However， as a chain supermarket dealer， Meiyijia has to face a lot of payment with small amounts. For this， using the credit card seems unnecessary and trouble. At this moment， Alipay comes out and plays an important role. It saves the users from the trouble of taking out the card and signing their names. It also saves retailers from the risks of taking fake counterfeit money and the franchise fees.

With the assistance of Alipay and others， the offline business claims to be able to strike back at the online business. The online payment tools are competing with each other and bringing the “Internet elements” to every corner of the society.