2016 China’s O2O Sector Report - Home iResearch China’s O2O Sector Report 2 According to the latest data of iResearch, B2B e-commerce continued to dominate China’s e-commerce

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2016 China’s O2O Sector Report

2

According to the latest data of iResearch, B2B e-commerce continued to dominate China’s e-commerce market in 2015,

with a combined market share of over 70%. The market share of online shopping and local lifestyle service O2O

increased slightly from a year ago.

SME B2B e-commerce 43.9%

Corporation B2B e-commerce 27.8%

Online shopping23.0%

Local lifestyle service O2O5.3%

China’s E-commerce Market Segmentation in 2015

Online Shopping and Local Lifestyle Service O2O

Outgrew E-commerce Market

B2B E-commerce Still Dominated the Market; Market Share of Other Segments

Increased Slightly

Note: In this report, local lifestyle service O2O industry only includes 8 segments, which are catering, entertainment, beauty, hotel, wedding, parenting, travel and

education. It excludes automobile, real estate, etc.

Source: Based on the financial results published by enterprises, interviews with experts and iResearch’s statistical model.

0.5 %

2.3 %

3

Mobile Shopping GMV Doubled, Paving the Way

for Online-offline Interaction

Mobile Shopping GMV Reached 2.1 Trillion Yuan in 2015, Surging123.8% YoY


According to iResearch, China’s mobile shopping GMV hit 2.1 trillion Yuan in 2015, soaring by 123.8% YoY. The segment

grew much faster than the overall online shopping market (China’s Yuan in 2015, up 36.2% YoY). online shopping GMV

reached 3.8 trillion

iResearch believes that China’s mobile shopping market will maintain rapid growth in the next few years, and its GMV is

expected to exceed 5 trillion Yuan by 2018. Mobile devices are characterized by portability, fragmented usage and

immediate interaction. These factors facilitate integration between online and offline purchasing, social activities and

consumption, and PCs, smartphones and TVs to produce integrated marketing strategies and the potential for multi-

screen interaction.

0 100 300 900

2,100

3,400 4,500

5,500

426.1% 490.1%

297.6% 242.8%123.8% 60.5% 34.0% 22.0%

0

2,000

4,000

6,000

8,000

10,000

2011 2012 2013 2014 2015 2016e 2017e 2018e

China’s Mobile Shopping GMV 2011-2018

GMV (bn Yuan) % Growth rate

4

Growing Mobile Shoppers Has Built a Solid User

Base for O2O ServicesChina’s Mobile Shoppers Reached 380 Million in 2015

Source: Based on CNNIC data and iResearch’s statistical model.

The number of mobile shoppers in China totaled 380 million in 2015 with a 44.7% growth rate, representing 92.4% of all

online shoppers. As the main entrance to O2O services, rapid popularization of mobile devices has laid a solid

foundation for the development of O2O market. In the meantime, it provides the user base for various forms of online-

offline integration.

3060

160

260

380420

460 480

136.4% 160.2%

64.4% 44.7% 11.8% 6.9% 4.8%13.4% 25.5% 53.1%

73.0%92.4% 95.0% 97.2% 98.1%

0

100

200

300

400

500

600

700

800

2011 2012 2013 2014 2015 2016e 2017e 2018e

Number and Share of Mobile Shoppers 2011-2018

Mobile shoppers (million) % Growth of mobile shoppers % of mobile shoppers of all online shoppers

5

Rapid Growth of Local Lifestyle Service O2O Market

Market GMV Reached 879.7 Billion Yuan in 2015 with a 35.1% Growth Rate




Lifestyle service industry has a direct bearing on people’s daily life and helps stabilize growth, boost domestic demand, increase

employment, and improve people’s livelihood. China’s lifestyle service industry has developed rapidly and experienced big changes

in recent years. A large number of emerging industries have mushroomed and are playing an increasingly important role in the

economy and society. Nevertheless, the penetration rate remains low. In the past two years, the boom in O2O platforms have

stimulated the rapid growth of the O2O Market. Market GMV totaled 879.7 billion Yuan in 2015, and is expected to reach 1.6 trillion

Yuan by 2018 with a CAGR of 15.5% from 2010 to 2013 and a penetration rate of over 7%.

According to iResearch, the robust growth of the O2O market mainly attributes to the rise of various vertical segments. From 2014

to 2018, the CAGR of wedding, catering, parenting and entertainment O2O segments all exceeds 24%.

263.7 357.6

478.0 651.3

879.7

1,104.4 1,337.6

1,590.1

47.7%35.6% 33.7% 36.3% 35.1% 25.5% 21.1% 18.9%

2.1% 2.9% 3.7% 4.6% 5.5% 6.3% 6.8% 7.4%

0

500

1,000

1,500

2,000

2,500

2011 2012 2013 2014 2015 2016e 2017e 2018e

GMV of China’s Local Lifestyle Service O2O Market 2011-2018

GMV (bn Yuan) % Growth rate % Penetration rate

6

Travel O2O Grabbed the Largest Share; Share of

Catering O2O Increased Steadily

The Ecosystem of “Food & Drinks, Entertainment and Shopping” Has Taken

Shape




According to iResearch, wedding, catering, parenting and entertainment O2O segments grow rapidly from 2014 to 2018

with an above 24% CAGR. The market share of catering, hotel and wedding segments has been on the constant rise. As

far as O2O market structure is concerned, travel O2O captured the largest share of 48.3%, followed by online catering at

16.2% and online education at 13.6%. Entertainment, hotel and wedding accounted for 9.8%, 9.7% and 0.9%

respectively.

49.8% 47.3% 46.4% 47.5% 48.3% 48.2% 48.1% 47.8%

8.1% 11.7% 13.3% 15.0% 16.2% 16.4% 16.3% 16.3%

21.8% 19.6% 17.6% 15.3% 13.6% 13.0% 13.0% 12.9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 2012 2013 2014 2015 2016e 2017e 2018e

Structure of China’s Local Lifestyle Service O2O Market 2011-2018

% Online travel % Online catering % Online education % Online hotel industry

% Online entertainment % Online wedding % Online parenting % Online beauty

7

Investments Concentrated in Early Stages and

Declined after Series C Round

Investors Paid More Attention to the Profitability and Scalability of Startups

Note: Based on publicly available information.

With the capital market cooling down in the past year, many Chinese O2O startups are dying at an alarming rate. O2O is

a money-burning business with cutthroat competition, therefore, investors place higher requirements for the projects in

later investment rounds such as Series B and C. Around 70% of startups had financing difficulty in Series B round.

Worse still, more faced “the C round of death”.

According to iResearch, for early-stage investments, investors pay more attention to the team’s capabilities and business

direction. For startups in the middle and later stages, they focus more on the core competence, business model, profit

model and scalability of investment targets.

More investments in the

early stages (Angel, Series

A and B) and the later

stages (Series D, E and F)

Investors were more

prudent and placed higher

requirements for middle-

stage investments (Series

C and D)

Most O2O startups failed

before Series B round

45.0%

19.4%

11.6%

10.1%

3.9%

2.3%2.3%

2.3% 1.6%1.6%

Investment in Local Lifestyle Service O2O Companies in 2015

Series A

Series B

Angel

Series C

Series F

Series D

Series E

Strategic investment

IPO

Listed on New Third Board

8

Differentiated Growth of Local Lifestyle Service O2O

Professionalism Is the Core Competence of Local Lifestyle Service O2O

As consumers gain deeper understanding of O2O, the convenience the model brings becomes more widely recognized. Driven by

diverse needs of consumers, O2O is penetrating into vertical segments, covering car rentals & taxi-hailing, house-keeping, auto

service, healthcare, online education, and more. This is because mobile internet, LBS, real time and interaction have given rise to

innovative O2O strategies and techniques.

Home

Improvement

O2O

Auto

Service O2OMedical

Service

O2O

Travel

O2O

Food

Delivery

O2O

Catering

O2O

Beauty

O2O

Wedding

O2O

Education

O2O

Tickets

O2O

Pet Care

Service

O2OPersonal

Chef

O2O Fitness

O2O

House

Keeping

O2O

9

Company Introduction/Legal Notice

About iResearch

iResearch is a provider of insights into China’s internet space and global fastest-growing sectors as well as value-added corporate

services. It offers a wide range of services including big data insights and forecasts, industry research and corporate consulting,

investment and post-investment services.

Founded in 2002, iResearch is the first third-party firm focusing on research in China’s internet sector. Since its inception, it has

published thousands of industry reports and provided custom research and consulting services to thousands of clients. It is now the

preferred third-party research brand for the IPO of Chinese internet companies. iResearch set up its global research center in 2015,

expanding the scope of research to fast-growing sectors world-wide.

Copyright Notice

The report is produced by iResearch Co., Ltd. All texts, figures and tables in this report are under the copyright protection of relative

laws and regulations on intellectual property rights in the Peoples’ Republic of China. No organization or individual is allowed to use

the information in this report for any business purpose without the written consent from iResearch. Some texts and data in this

report are collected from public information and their copyrights are held by the original authors. No organization or individual is

allowed to use the information in this report for any business purpose without written consent from original authors and iResearch.

Exception Clause

Industry data and market forecasts are mainly obtained through desk research, industry interviews, market survey, and other

research methods in accordance with iResearch’s statistical forecast model. Corporate data are mainly obtained through interviews

and are for reference only. Some data published in this report is based on sampling method and is therefore influenced by sample

structure. Due to the limitation of research method, sample size and scope of data collection, the report only serves as a reference

for customers who purchase the report. iResearch is not held liable for the data and views in the report.

Contact Us

Hotline 400 026 2099

Website http://www.iresearch.com.cn

Follow us @iResearch on Twitter and LinkedIn

http://www.iresearch.com.cn/

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Table of Contents for Full-version Report

1 Environment for the Development of O2O Industry

1.1 Milestones

1.2 Environment for Growth

1.3 Growth Stages of Online-offline Integration

1.4 Wide Adoption of O2O in Various Fields

2 Growth Stages of O2O Industry

2.1 China’s E-commerce GMV

2.2 China’s E-commerce Market Segmentation

2.3 China’s Online Shopping GMV

2.4 China’s Mobile Shopping GMV

2.5 Number and Proportion of Mobile Shoppers 2011-2018

2.6 Online-offline Integration of China’s Retail Industry

2.7 O2O Strategies of Internet Companies

2.8 O2O Strategy Map of Internet Companies

3 Current State of Local Lifestyle Service O2O

3.1 China’s Local Lifestyle Service O2O GMV

3.2 China’s Local Lifestyle Service O2O Segmentation

3.3 Gradual Penetration of O2O Model

3.4 Investment in Local Lifestyle Service O2O Market in 2015

3.5 Death of Local Lifestyle Service O2O Startups 2014-2015

3.6 Reasons for the Death

4 Trends of O2O Industry

4.1 Online-offline Integration is Wave of the Future

4.2 Mobile Scenario Marketing Gradually Becomes a Trend

4.3 The Market is Penetrating into Second and Third Tire Cities

4.4 Data Mining Technology is the Key for Success

4.5 Differentiated Vertical Development Is a Future Trend

4.6 Improvement in the Service Quality is a Growth Opportunity

Appendix 1-4: Investment in O2O Companies 2015-2016

Appendix 5: Death List of O2O Startups 2014-2015

Documents

2016 China’s O2O Sector Report - Home iResearch China’s O2O Sector Report 2 According to the latest data of iResearch, B2B e-commerce continued to dominate China’s e-commerce