China's Local Lifestyle Service O2O Market Has a Huge Potential

Source:iResearch July 17,20173:30 PM
The nature of O2O business is to make the advantages of Internet information platforms to the fullest play and raise the efficiency of information dissemination by transforming the point-to-point information and product flow to point-to-surface information access between customers and commercials and point-to-surface information delivery between merchants and commercials. Based on people’s diversified demands for their lives, local lifestyle service O2O covers a wide range of businesses. It offers people convenient shopping channels, which greatly changes people’s shopping habit; meanwhile, O2O platforms helped the merchants to attract more customers, raise their business efficiency, and due to the huge commercial potential in the market , many companies from different industries started their O2O adventure. 

Local life service has a huge market in China. Data from National Bureau of Statistics show that the revenue of catering, one single segment of local life market, was as high as 3.5 trillion Yuan in 2016, while the penetration of O2O in the whole local life market was only 10% until the end of 2016. The low penetration rate means a huge potential market and a long way to go for further development for most companies in this field. 

Meanwhile, China’s local lifestyle service O2O developed fast and its GMV rocketed up in recent years. In 2016, the GMV of local lifestyle service O2O  exceeded 700 billion Yuan with a sustainable growth rate higher than 40% for several years. iResearch attributes the fast development of local lifestyle service O2O industry to the following three factors. Firstly, the soaring ownership of smart devices and the popularization of and mobile payment produce necessary social environment for O2O industry; next, the wide coverage of O2O in people’s daily lives meets increasingly people’s demand for more convenient consumption in fast-paced life; what’s more, the emergence of phenomenal products and investments in numerous allowances accelerated the formation of O2O consumption habit among public and as a result raised the using frequency of O2O services.  

As O2O market segments are in different development stages and have different number of consumer base, the market share of them shows significant echelon-like structure. Catering market with huge offline market, high consuming frequency and rigid consumption demand faces relatively small challenge in accumulating users and exploring market. It has become the most mature one among all the segment of O2O markets. The share of catering O2O in local lifestyle service O2O kept climbing up and reached 54.9% in 2016. Meanwhile, product home delivery service develops fast thanks to the booming of e-commerce and new-type retailing. The high-standardized market segments like housekeeping services and home laundry became more and more popular among consumers and their market share keeps increasing as well. More details can be seen in 2017 China's Local Lifestyle Service O2O Report released by iResearch.

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