Great to be back in Beijing! An article I read in the China Daily during my last trip here proclaimed that 70% of new startups in the city are engaged in O2O (online-to-offline) ventures covering a gamut of services delivered using a smart phone app.
One of the main reasons for this trend is the relatively low barriers to entry to the O2O market. As Ren Bin, founder of the mobile Yaogeili put it: “The threshold to set up such business is comparatively low because you don’t actually manufacture anything. In Beijing, all you need to do is hire a team of people to design an app. That is pretty easy. You can also find product managers, investors, and marketing specialists.”
As Ren neglected to mention, it’s also pretty easy to find low-cost courier services for delivering your products direct to consumers as well. Judging by the gaggle of trucks and carts lined up along the streets nearby our office, a highly-sophisticated O2O logistics ecosystem is already in place that startups can leverage to make sure all the orders they receive reach their intended destination.
The downside to low barriers to entry is of course that competition between startups is fierce since it is so difficult for them to differentiate their offerings in an already crowded market place. It’s going to be fascinating to watch who the winners and losers will be as the Beijing O2O space matures.