What is the key to the success or failure of O2O?

From 2065438 to 2006, there was a wave of O2O enterprise closures in China, not only the closure of a single company, but the mass deaths of a series of enterprises. For example, be a jingle community for community O2O, take a dog tour for tourism O2O, be a classroom for educating O2O, be a car with on-site car wash service, and so on. It can be said that it is the sorrow of domestic O2O enterprises.

Domestic O2O startups have all gone bankrupt, and the situation abroad is not much better. Even Homejoy, the originator of online housekeeping O2O, stopped serving this year. This company, which had been optimistic by the outside world and was known as the star of tomorrow, suddenly disappeared, which brought a big impact to domestic O2O entrepreneurs.

Many people think that these O2O enterprises died from the break of the capital chain, but this is actually not the cause, but the result. I think there are three reasons for the massive closure of O2O enterprises:

1. The business model is not established.

Many entrepreneurs of O2O projects are technicians of Internet companies. It can't be said that they are all "technical houses that have turned a deaf ear to things outside the window and made them wholeheartedly", but there is a basic fact that everyone can't deny, that is, many of them really don't think enough about business models. Many entrepreneurs think that as long as I do well, I won't worry about not having users, but this is not the case in reality.

For example, the founder of Cool Wedding O2O is an Internet company with a technical background. At the beginning of his business, he never considered the business model. Finally, he burned all the funds, and he was sad. Because the wedding industry is a typical low-frequency industry, it can't form consumption stickiness at all, and consumers' habits can't be educated in a short time, which leads to many such O2O wedding platforms, whose profits are far away, and they are basically lingering.

2. Insufficient traffic acquisition

Internet economy, in a sense, is traffic economy. For Internet companies, no traffic is impossible. Many founders with technical background should have no shortage of traffic when doing O2O projects. They are familiar with various SEO technologies and know how to use various internet tools to drain. Even within the enterprise, there will be a team dedicated to traffic. However, on this issue, the "Matthew effect" of the Internet appears again: some big platforms or giants, such as WeChat and Taobao, occupy the entrance with a large number of users and become "traffic black holes", which makes the already scarce traffic resources more and more scarce, thus making the promotion expenses of O2O enterprises high.

For example, 9 1 foreign education network, 36 classrooms, housing network, pocket travel and so on. They all fell down because they couldn't afford the traffic. The merger of the fast and Didi at the beginning of the year is also largely due to cost considerations, because if it continues to burn like this, both sides will inevitably fall into a dilemma.

3. The distribution cost is too high

The founders of some O2O projects did not consider the issue of distribution cost at the beginning of their business. In fact, with the development of China society, domestic labor costs have been rising in recent years, and distribution is a typical "labor-intensive" business. For some O2O projects that need door-to-door, it has become "the last straw to crush the camel".

For example, to make a "quick schoolbag" delivered within one kilometer, the gross profit of a book is only 2-5 yuan, but it often costs 20-30 yuan to send a book-the delivery cost is too high! The founders of "Fast School Bags" later revealed that their distribution expenses account for 70%-80% of the total operating expenses, which is too heavy for startups! Because you are not JD.COM, you don't have so many categories to distribute, and your meager profit is eaten up by manpower and the expenses of building your own warehouse, which reminds me of the famous Occam's razor law: don't add entities unless necessary.

So, is O2O really hopeless? What should I do if I want to spend such an entrepreneurial winter? First of all, you need to know what the needs of consumers and businesses are.

Consumers' needs are: low price concessions and good service experience;

The needs of merchants are: profit maximization, small profits but quick turnover, and promotion by the way;

The demand of the platform is: how to be a third party and be responsible for its own profits and losses.

Every link requires entrepreneurs to use their brains and give practical solutions to achieve a win-win situation for consumers, businesses and platforms.

O2O projects should put an end to falsehood and reality, advocate truth and smallness, and deeply observe the real transaction details. Only by solving the small problems in consumption can we bring tangible benefits to enterprises. Based on this, I give three suggestions to O2O entrepreneurs:

1. Choose projects carefully:

First, try to choose high-frequency projects. Because high frequency means high repurchase rate, high repurchase rate means user stickiness, and online to offline only items with high stickiness to users make sense. Those O2O projects that only need to be used once in a lifetime can't be done even if the unit price is higher.

The second is to try to choose a heavily vertical market segment. Don't fight traffic with some big platforms, and deepen your own market segments. Don't be a "local Taobao" in strategy formulation. The market capacity you face is different. Taobao faces the national market, while you only serve the regional market. Even if you have a national vision, you must win locally first!

Third, try to choose projects with high customer unit price. As mentioned above, the distribution cost of O2O is very high. How to solve this problem? One solution is to choose items with high customer unit price as far as possible, and cover high distribution costs with high customer unit price!

2. Make service a high threshold:

O2O is online to offline. In fact, the lower end of the line is the key. It can even be said that the success of an O2O project depends on 20% online and 80% offline. O2O projects can't bring consumers a good experience only by relying on technology. No matter how you solve the payment problem, how to realize the closed loop of products and put aside professional services, it has no practical significance. Why did the previous group buying websites complain so much? It is because they regard the service as a commodity in Tmall Mall! Service is not a standardized commodity. Personalized, differentiated and diversified services. You can't just ask for quantity, not quality!

Didi taxis and public comments have a fierce evaluation of these O2O giants. As a small enterprise, how to avoid the vicious competition of these giants? I think, in essence, it is to set your own threshold! Neither technology nor capital can be regarded as the threshold of O2O. Only by giving full play to local advantages and doing a good job is the threshold to resist strong enemies. Localized laundry, localized car washing, localized cleaning, and door-to-door delivery in the same city. They are all O2O projects that can take advantage of offline resources to dominate one side. Large enterprises can't do it without local resources, so smaller enterprises should dig deeper and provide good services.

3. Jump out of the APP pit and start from the official account of WeChat WeChat.

First, it is very troublesome to make an APP. Compared with the official WeChat account, making an APP is not only long in development time, technically difficult, costly and cumbersome: it requires pixel-by-pixel adjustment to be compatible, and to improve the user retention rate, it must be iterated, improved and maintained continuously, requiring entrepreneurs to invest a lot of energy and financial resources, and it is easy for entrepreneurs to fall into the quagmire of development.

Second, because the promotion cost of APPs is getting higher and higher now, the online acquisition cost of a popular app user is about 10 yuan, and the offline cost is more than double that of online. Even if users download your APP, if your product is not very attractive to them, it is a problem whether you can keep it in the future.

Third, because the APP ecosystem built by Apple is being passivated, the probability of success through natural traffic is getting smaller and smaller, which means that the APP is being marginalized now, and it will become more and more difficult to be an APP in the future. Apps like WeChat have monopolized 70% of the mobile Internet traffic and almost become an operating system. Since you can't beat it, you'd better choose to cooperate with it.

So my suggestion is: to do O2O projects, it is best to jump out of the pit of APP and start from the official account of WeChat.

Finally, let's make a conclusion: if enterprises that have entered the O2O field want to avoid bankruptcy, they must do the following three things: First, they must think clearly about their business models from the beginning; Second, they must rely on users' pain points and real needs to innovate; Third, they must attach importance to offline services and bring consumers a good experience.

In addition, the mentality of many O2O entrepreneurs also needs to be adjusted. There is a saying in Three-body: Weakness is not an obstacle to survival, but arrogance is. Weak species know that they are weak, but they can run and hide, and it is difficult to die. But if you are arrogant and think that you will definitely hit an elephant tomorrow, if you don't reserve anything, you will die easily today. What is the arrogance of entrepreneurs? It is arrogant to know unreliable projects but think they are reliable. This is a big taboo for entrepreneurs. I hope entrepreneurs must keep in mind!

Let's talk so much first. If you think it is good, you can like it. If you like 100, I will update it. You can also click on my avatar to follow me. I am Mr. Lan Hai, a columnist of Sales and Marketing magazine. I hope my answer will be helpful to you.