19 Aug 2014
O2O2F: Enfranchising Communities and Extending E-Commerce
O2O2F – online to offline to family – is the newest trend in the mainland e-commerce sector. This new concept bridges the gap between producers and purchasers, while opening up the internet to the previously digitally-disenfranchised.
While O2O ("online to offline") has barely become established as a business concept across the mainland, there is already a refinement waiting in the wings – O2O2F. The "F" in question is "family" – though it can be analogously interpreted as referring to any group of end users.
The term refers to the extension of O2O to family/community members through "community-based information and consumer services centres". The concept of popularising information consumption among community members while facilitating online shopping is seen as likely to form an integral part of any future "intelligent community".
I. Start-up of O2O2F
The O2O2F protocol sees the linking up of online, offline and community members using internet-enabled "Intelligent information and consumer services centres". These are being established in communities in order to promote consumption and provide greater access to entertainment and social networking services.
This concept is said to combine all of the advantages of B2B, B2C, C2C, O2O and other forms of e-business. It enables the automatic aggregation (or "pushing") of website content into customised portals for companies, individuals as well as via online malls. Such inter-connections between different portals and online malls have all been optimised for information sharing and product and services transactions.
A pioneer in O2O2F field is zbian.cn. The model was first adopted by members of the Yiwu International Trademart following a fall in demand from international buyers in the wake of the global financial crisis. Under the auspices of the local government, various chambers of commerce and trade associations arranged for many of the merchants to be trained in the use of the website. Today many of its members are using O2O2F as part of their day-to-day business operations.
Following this initial success, the O2O2F model was then adopted in Xiamen. With the support of the local government, the first three intelligent community-based information and consumer services centres have now been established. In Shanghai, the Ganquan sub-district of Putuo district has established more than 20 community information and consumer service centres, while the Gumei sub-district of Minhang is also preparing for the establishment of such facilities.
Government departments, trade associations, chambers of commerce and network technology developers are all said to be working closely together to establish the O2O2F model. One of the key movers in the initiative is the private enterprises branch of the China Information Industry Association, an information technology development alliance of Chinese private enterprises. It is backed by the relevant government departments in a number of mainland cities, including Yiwu and Xiamen.
In Shanghai, for instance, the members of the local China Information Association include the Shanghai Information Association, the Shanghai Post-Expo Research Center, the Shanghai Small and Medium-sized Enterprises (SME) Service Centre, the Shanghai Intelligent Fission Network Technology Co Ltd, the Shanghai Motion Control Technology Co Ltd, and the relevant sub-district and residents' committees.
II. Consistent with promotion of e-commerce
The O2O2F model is said to be highly-consistent with the government's policy of promoting e-commerce. The Implementing Opinions on Promoting the Application of E-commerce issued by the Ministry of Commerce (MOFCOM) at the end of 2013 clearly laid out the key tasks required for promoting the healthy and rapid development of online retailing, strengthening e-commerce application systems in rural areas (particularly for farm produce), supporting e-commerce application systems for urban communities, and encouraging the application of e-commerce among SMEs.
In line with the MOFCOM proposal, every effort is being made in urban communities to match supply with demand for community residents. This should see the provision of online services relating to all aspects of daily life, including shopping, dining, household service, maintenance, intermediary services and distribution.
The proposal also encourages SMEs to carry out joint purchasing of e-commerce platforms in order to reduce the cost of circulation, while supporting their business partners in developing their own e-commerce platforms. The O2O2F model also has a number of applications within "community e-commerce", "SME e-commerce", "farm produce e-commerce" and other key concepts relating to the MOFCOM briefing.
Direct links between production and distribution
The O2O2F models link suppliers with consumers from farmers to residents and from warehouses to communities. This helps open up sales channels for commodities, reduce intermediary links, slash operating costs, eliminate price bubbles and lower retail prices. This intellectual change technology allows all of the products uploaded by merchant members of the network to be shown on the online mall of each individual member of the network. This means that every supplier will effectively have tens of thousands of agents online.
Rapid market changes, of course, oblige all businesses to upgrade and transform. SMEs, however, tend to be lacking both in technology and funds, while also having difficulty in establishing their own e-commerce networks. In rural areas, poor circulation channels often affect the marketing of farm produce, with the result that farmers cannot improve their income even if they have enjoyed a bumper harvest. The O2O2F mode, though, provides an ideal platform for SMEs and farmers.
The zbian.cn platform allows for industrial goods and farm produce to be delivered directly to individual consumers or groups, thus shortening the time taken to reach the market. Golden melons and white goats from Shanghai's Chongming Island, for instance, as well as fresh vegetables, minimally-processed vegetables and deep-processing industrial goods and farm produce can be delivered to residential communities via cold chain distribution.
Consumers can then collect the deliveries from the community information and consumer services centres themselves or leave the food in the community refrigerator. The O2O2F model helps farmers overcome the difficulty of selling their produce and bridge the "last mile" gap in terms of ensuring freshness and prompt delivery.
Servicing elderly consumers
Many businesses only target young white-collar consumers, while ignoring the senior market. It is an indisputable fact that China is now an increasingly aging society, meaning that this senior market should not be ignored.
The elderly are largely disenfranchised in terms of e-commerce and unable to enjoy the convenience of online shopping and consumption. This is largely because many simply do not know how to use the internet. With this business opportunity in mind, the O2O2F model allows users to go to the community information and consumer services centres and ask the staff there to directly place orders for them. This allows them to buy items at a discount and maximise the use of their disposable income.
These community information and consumer services centres, however, are not solely geared to online shopping. They also provide family services, such as household support, care for the elderly and all kinds of day-to-day essentials. These centres have a brief to launch projects that others have not considered or have been unwilling to try.
III. O2O2F promotes innovative business modes
In the case of zbian.cn, it overcomes the silo-like nature of many individual websites and achieves connectivity and information-sharing across a variety of portals. The O2O2F concept not only links online with offline, but also reaches out to families and individuals, ensuring that all parties can share in the benefits.
1. A new channel for starting new business
The O2O2F model also offers a new channel for starting business ventures, as it allows graduates to build personal portals, while also offering them policy-related services and guidance in terms of starting their own businesses. zbian.cn, for instance, offers them access to a massive inventory of products from which they can make profits by finding buyers without having to make an investment. Those wishing to start their own business may choose wholesale items from the warehouse of zbian.cn, retail them to individual buyers and make a profit from the wholesale and retail price differential.
2. Transparent consumption
The O2O2F model clearly shows consumers the cost, price and profits of products and services, thus making it impossible for businesses to mark up prices prior to offering discounts. Placing similar commodities side-by-side also makes it easier for consumers to compare prices. The resulting transparency is said to help dispel consumers concerns over unfair pricing.
3. Full range of consumer services
Overall, zbian.cn has been designed to bring together social networking, entertainment, consumption, livelihood and business services. To facilitate this, it is divided into eight sections – business, livelihood, healthcare, information, agriculture, technology, tourism and culture. It offers a number of one-stop services, including shopping, entertainment, learning, handling of financial matters and payments, medical insurance and business.
4. Big data analysis of different trades and different enterprises
The zbian.cn portal is also a good source of supply and demand movements and market information in real time. It can provide pertinent information to the webmasters of relevant websites and offer data analysis likely to better inform their decision-making. It can also identify user preferences based on their interest in products and the page views of their websites and then offer them targeted goods and services.
IV. Refinement O2O2F
O2O2F has a short history and its operation, management and functions have yet to be fully refined. The scope of co-operation of the community information and consumer services centres, however, will inevitably be further expanded. Co-operation with third parties, notably convenience stores, will be strengthened as most such stores have a "zero distance" from residents, while their excessively high density also makes it imperative for them to undergo their own transformation and innovation programme.
Qi Xiaozhai, Special Correspondent, Shanghai