Baidu taps rich O2O seam for growth

China Daily (Canada) - - CHINA - By DAI TIAN in­Wuzhen, Zhe­jiang daitian@chi­nadaily.com.cn

On­line search firm Baidu Inc is widen­ing its hori­zons be­yond the search busi­ness to real-time ser­vices, a top of­fi­cial said.

Zhang Yaqin, pres­i­dent of Baidu said onWed­nes­day that the on­line-to-off­line busi­nesses link­ing users with brickand­ser­vices will be the new­growth en­gine for Baidu, as it re­drafts its long-term growth op­tions.

“In the past, our fo­cus has been on search­ing the right in­for­ma­tion for users any­where. In the fu­ture, we want to in­ter­con­nect the real world and con­nect peo­ple to ser­vices.”

Zhang said de­spite its ro­bust core search busi­ness, Baidu has been bet­ting big on the O2O sec­tor. The com­pany has spent bil­lions of dol­lars to buy star­tups rang­ing from group-buy­ing site Nuomi, on­line travel agency Qu­nar to on-de­mand laun­dry ser­vice edaixi and bou­tique e-commerce mia.com.

De­scrib­ing the jour­ney as a “very ex­cit­ing” one, Zhang said Baidu aims to cre­ate a plat­form ca­ter­ing to all di­men­sions of lo­ca­tion­based life­style, where con­sumers can buy movie tick­ets, or­der food de­liv­er­ies and book rides as well as flight tick­ets.

“The O2O mar­ket is much big­ger than the on­line search mar­ket,” said Zhang, adding that de­spite the cash-burn­ing com­pe­ti­tion to snatch cus­tomers, the edge in tech­nol­ogy will help Baidu have the “last laugh”.

The O2O sec­tor has ev­ery­thing to do with al­go­rithms and math­e­mat­ics, which is key for busi­nesses to be sus­tain­able and prof­itable, he said. “It just takes some time and pa­tience.”

Baidu re­ported a 36 per­cent year-on-year fall in third-quar­ter op­er­at­ing profit de­spite a since year.

Zhang said the huge op­por­tu­nity in China’s O2O mar­ket may not be well un­der­stood in the United States, as the two coun­tries are dif­fer­ent. “In China, be­cause of its de­mo­graph­ics, cost struc­ture, and pop­u­la­tion den­sity, you can

the surge in rev­enue, due to the rapid growth of its O2O busi­ness.

Its Amer­i­can de­pos­i­tory re­ceipts have fallen 12.7 per­cent be­gin­ning of this lever­age a lot of things, and the in­fra­struc­ture and tech­nol­ogy will help us.”

“That’s a huge op­por­tu­nity in China, and that is the profit in the fu­ture,” he said.

Wu Zhaowen, an an­a­lyst with US-based con­sul­tancy Strat­egy An­a­lyt­ics said: “To main­tain its com­pet­i­tive­ness, it is im­por­tant for Baidu to in­cor­po­rate the search func­tion with dif­fer­en­ti­ated ser­vices. Mo­bile map ser­vices are a good op­tion as con­sumers of­ten start from lo­ca­tion based search when look­ing for prod­ucts or ser­vices. That said, Baidu also needs to fur­ther ex­pand its mo­bile pay­ment of­fer­ings.”

LI XIN / XIN­HUA

An em­ployee from an O2O plat­form in Beijing se­lects fresh fruit ac­cord­ing to a client’s or­der re­ceived via his smart­phone.

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