"O" your head! A list of the dead O2O projects in 2014

Editor's note: O2O, an English word invented by the Chinese, was very popular in the venture capital market in 2014. Entrepreneurs slapped the O2O label on themselves; investors made big promises, saying that they would not invest in non-O2O projects. As a result, nail art, housekeeping, aftermarket, and later even massage and haircut all became O2O. Just imagining the scene of the O, it is jaw-dropping and makes people sweat. O2O is not a panacea. Not only is it annoying to hear it too much, but we should also be careful to prevent it from dying tragically on the roadside. Without further ado, today we will tell you about the failed O2Os one by one.

Let’s talk about this before. What is O2O?

Different definitions of O2O lead to different understandings. Version 1.0 refers to online to offline and offline to online. Basically, any project involving online and offline operations can be called O2O.

Version 2.0 divides O2O into different categories. One is physical O2O, which is being pursued by many manufacturers and retailers such as Suning and Wanda. The core is to connect online and offline product systems and conduct omni-channel distribution. The other is service O2O, which is to build a user-oriented platform online to attract offline physical businesses.

The 3.0 version of O2O means that under the future trend of Industry 4.0, the Internet of Things will become fully mature, realize the interconnection of all things, and achieve a higher level of integration between online and offline.

This article mainly deals with the second category of O2O in the service industry. That is, those service companies that initially relied on posting small advertisements on telephone poles to attract customers have now been upgraded in the mobile Internet era, and their methods of attracting customers are more sophisticated. This is the case with the currently popular projects such as nail art, food delivery, and housekeeping.

1. Catering

In 2013, the O2O market size of China's catering industry reached 62.3 billion yuan. It is estimated that by 2015, the O2O market size of my country's catering industry will reach about 120 billion yuan. The capital market is also quite considerate of catering O2O. With Ele.me receiving $80 million in financing from Dianping in May this year, Meituan recently received $700 million in Series D financing. However, the reality is cruel. The following is a list of catering companies that disappeared while O2O was still going on.

Death List

Cause of death

1) "Platform black hole": You must constantly burn money, provide subsidies, increase traffic, and snatch users. Ele.me, Daojia Food Club, Meituan, etc. are constantly waging wars to snatch users. However, the number of entrances that users can continuously choose is limited. There is only one first and no second. Even Taobao and Baidu may become direct competitors. This type of project has a high degree of difficulty.

2) There is space, but it is difficult to operate: Picky Hotpot, No. 8 Shrimp House, Call a Duck, Aixianfeng, etc. are all O2O models based on special products, but they are also facing pressure from logistics and scale. It depends on who can plan a breakthrough.

3) Low industry barriers: Whether the field chosen by entrepreneurs is a rigid demand determines their bargaining power. Therefore, the number of users and demand frequency in the subdivided field determine the quality of the project. For example, the project of chefs cooking at home is aimed at a relatively vertical group of people, but the traffic is limited and it is not easy to expand.

For entrepreneurs, the key is how to enter the blue ocean market segment, create characteristics, quickly increase traffic, and form a time difference advantage.

2. Life services

Since the second half of 2013, some life service projects have begun to emerge and started a journey of efficient financing. In 2014, Entrepreneur Magazine & iHeima also did several special issues on O2O projects. At present, there are many life service O2O projects, including traditional enterprises that have transformed into O2O, such as e袋洗 and e家洁; there are also large enterprises that have focused on the layout, such as 58同城's 58到家 in the field of housekeeping, and many new entrepreneurs have made money in specific sub-sectors such as housekeeping, maintenance, and moving. In addition to the smiles of the newcomers, take a look at the death list below.

Death list

Cause of death

1) The competition environment in the entire market is not optimistic: 58 Daojia, Ayibang, Teddy Washing, e-bag washing, Shunfeng Express, etc., in the end, it all depends on the ability to burn money and the operational ability to integrate resources.

2) A strong demand is better than a good product. Although there are opportunities in the segmented market, it also depends on whether it is a high-frequency consumption with a strong demand. For example, floor waxing, a family waxes the floor at most once a year. Such projects with a small user base and low consumption frequency are not suitable for individual projects but should be placed on the entire housekeeping platform.

3. Travel

In 2014, Didi, backed by Tencent, and Kuaidi, backed by Alibaba, staged a fierce subsidy war across the country. According to statistics, the two companies burned up to 2.4 billion yuan. With the entry of Uber, which is participated by Baidu and Google, into the Chinese market, the car rental market is full of smoke. Although there are many entrepreneurial projects related to tourism and automobiles, there are also many casualties in the current competitive environment with many giants.

Death list

Cause of death

It can be seen from the death list that the automotive aftermarket, like the taxi-hailing platform, is a bloody battlefield for resources and traffic.

1) For starters, O2O entrepreneurship in the automotive field has a high threshold. Especially for automotive platform projects, the three giants of BAT have been involved in Didi, Kuaidi, and Uber taxi projects. Even Yidao Car and No. 1 Private Car have gradually become popular, so taxi platforms basically have no chance.

2) O2O projects that focus on the automotive industry and related products can avoid the competitive pressure from giants. However, for newcomers to O2O services, traditional offline automotive practitioners who turn to online services will also be strong potential competitors. Therefore, it is key to selectively avoid platform black holes, develop products based on user pain points, and quickly accumulate traffic.

4. Beauty industry

With the rapid rise of Diaoye's door-to-door nail art, the beauty industry O2O market, led by nail art, has been gradually opened up. Home hairdressing, makeup, home massage spa and other projects have sprung up like mushrooms after rain. But can the traditional beauty industry successfully transform into O2O by connecting to the Internet? Most of the beauty industry O2O projects were launched in 2013, and within just one year, many projects have failed.

Death list

Currently, the nail art and hairdressing industry is led by Beaver Home, and there are Xiu Meijia, Dudu Meijia, Bobo.com, Our Hairdresser, as well as plastic surgery and beauty communities such as Zhenyoumei, Gengmei, and SoYoung.

Cause of death

1) As described before, the key to all service categories lies in traffic. Therefore, entering a niche field and quickly generating traffic is the most important skill that entrepreneurs need to hone. Although the hairdressing industry has a high frequency and demand, entrepreneurs may need to think twice whether the O2O project of door-to-door hairdressing is really a rigid demand. Not to mention the mess left on the floor at home after cutting hair, it is a problem whether you can invite the real "big names" in the barber shop to come to your home. Even if the wife invites him, the husbands at home probably won't be happy.

2) Many door-to-door services, although the rental costs of stores are eliminated, the costs of online operations and offline delivery must also be considered to achieve profitability.

Key success factors for O2O entrepreneurship

1. Select industries based on time difference

Different industries are affected by the Internet to different degrees, which means that O2O projects in different industries face different challenges and opportunities. Entrepreneurs should be good at taking advantage of industry time differences to discover industries that have not yet been valued but have certain potential. When others are doing catering, you can do housekeeping, and when others are doing housekeeping, you can do massage.

2. Create products based on pain points

O2O is just a form, and it will eventually return to the user's needs. Is the problem being solved a rigid demand of the user? Are the users willing to pay for it? Is it a high-frequency consumption? These questions will determine the vitality of this O2O project. Entrepreneurs must put aside the so-called O2O coat and find the essence of this industry and the pain points of users.

3. Disseminate content based on content

The "everyone is a media" effect in the Internet era has greatly improved the efficiency of media communication, and the importance of content itself has been highlighted. High-quality content and events are the key to brand communication. The popularity of projects such as Jiaogeyazi and Edi Shen has a lot to do with a good name. Entrepreneurial project communication must pay attention to the importance of content operation.

4. Potential energy based on speed

For entrepreneurs, sometimes speed is more important than anything else. You must build brand awareness in a niche field in a short period of time, and then raise money, gather people, integrate resources, and continue to build brand potential. If you fail to make good use of this time window, you are likely to be targeted by giants, and the consequence is that you may be out of the market.

5. Selectively avoid platform black holes

All types of O2O projects will face the "platform black hole" effect online. Some large platforms, with their users and data, occupy the entry resources, which will cause many new entrepreneurial projects to be involved in this "black hole". When entrepreneurs do not have the resources and capabilities to quickly start up, they should pay attention to avoiding platform black holes and not compete with these large platforms for traffic. It is best to choose a highly vertical market segment and go deep into it.

Conclusion: O2O itself is not a new thing. Its core lies in the electronicization of business and the dataization of operations. For O2O projects in the service industry, online entrances are a battleground. How to quickly gather target audiences, form entrance advantages and brand potential, and accumulate capital for expansion are issues that entrepreneurs must think about. Only in this way can you avoid having your project appear on the death list in the future.