Baidu LBS or Tencent LBS?
Which can win the LBS+O2O cake in China?
The first Chinese attempt of LBS is check-in. In 2010, when LBS suddenly first grew rapidly in China, there launched a large number of new companies or concepts, like Jiepang, Digu and Bafang. However, just one year after, facing the fact that consumers lost their interest in the check-in service, these companies came to a difficult position where the decreasing number of users and blur profit model happens. Finally, Digu changed to be a Chinese Pinterest and Bafang was closed, leaving Jiepang still struggling in the market.
The failure of check-in websites reveals the fact that LBS is not just about location. A profitable LBS ecosystem would not be established without life-based service. And this life-based service should highly depend on O2O (Online to Offline) Model. If the check-in websites represent the first death of LBS in China, then LBS+O2O will be the rebirth in the market.
Baidu LBS = Baidu Map + Nuomi + Baidu Purse
Baidu is almost the first one in the map market. With the advantage of powerful search engine access, Baidu Map is recorded to have a huge user base of 370 million and hold a market share of 63.7%.
However, the service part of Baidu is not strong enough to stimulate consumption. As a result, in January, 2014, Baidu brought Nuomi, a group buying website in China. Also in April, Baidu released Baidu Purse, a mobile payment service.
Location + Service + Payment, it shows Baidu is building its own LBS+O2O system starting from 2014.
Tencent LBS = Wechat + (Tencent Map + Dianping + Wechat Purse / Tenpay)
Tencent LBS is all around Wechat, an improved Chinese Whatsapp and a new social network system. Wechat is the fastest and easiest way for people to use Tencent LBS system. Wechat purse and Tenpay, two payment methods established by Tencent, can be found in Wechat. In fact, Tencent has been promoting Wechat purse since 2014, like the Lucky Money campaign in Chinese New Year. During the 9 days of 2014 Chinese New Year, over 8 million users took part in the Lucky Money campaign and over 40 million lucky money bags were taken. With the strong social network of Wechat, Wechat purse has developed quickly.
For the map system, launched in 2006, Soso map changed its name to Tencent Map in 2013. At that time, the number of users of Tencent Map’s was 10 million, much less than Baidu Map.
In the service part, in February 19, 2014, Tencent invested Dianping, the second largest group buying platform in China, to help building its O2O Empire.
So here comes the question, which one can win the LBS + O2O market?
Taking the powerful user share Baidu has in map industry into consideration, I bet your answer must be that Baidu will definitely beat Tencent. But remember the check-in websites mentioned before? It told us that location is not always the king.
When it comes to the O2O field, the social queen Tencent, as far as I am concerned, are more likely to win the cake in the market.
From AISAS Model’s perspective
O2O is a business model. Users, who can also be consumers, are the main target of LBS. The question is how to turn a potential user into a consumer, and how to ask them take the money out of their account and have the buying action. According to Denstu, a 4A advertising company, in the new media age, consumers’ consumption behavior model has changed from AIDMA (Attention — Interest — Desire — Memory — Action) to AISAS (Attention — Interest — Search — Action — Share). And in this model, Baidu is doing much worse than Tencent.
- Attention — Interest
How to raise attention can be a big problem for both companies. The best way for Baidu may be the instant coupons showed in the map result. But this kind of action may influence user experience and some consumers may not like it. As for Tencent, it may strongly rely on the sharing system in the social platform.
However, since consumers usually have a clear goal and usually know what they want before using the service in the O2O system, attention and interest part may not be a problem in doing the business.
Baidu and Tencent both have the mapping function. However, in terms of searching, Baidu, who is owning the biggest search engine in China, has definitely a stronger power.
If people cannot take the action of buying after the searching part, it means nothing. No matter how much traffic Baidu has in its search engine, it cannot contribute to the O2O market without an acceptable payment method to users.
However, seldom people use the payment of Baidu, Baidu purse. According to iResearch, in 2014 Q2, Baidu purse only owns 0.1% market share in Chinese mobile payment market. On the other hand, Tencent’s Tenpay is doing much better in 8.9%.
When it comes to payment system, apart from the biggest brother Alipay in the market, Tenpay is the second largest one. In the payment part, which is also tightly connected to revenue, Tencent has more potential to do the business than Baidu.
Nevertheless to say, Tencent has two of the most powerful social network in China, QQ and Wechat. And what does Baidu have? Only Baidu Tieba, something like a forum. However, the number of people who are using Tieba are far more less than QQ and Wechat. Also, like the function of forum, most of the users will not be on Tieba 24/7. But we can be on Wechat all the time, which makes the sharing part easier when users have the sharing desire.
Overall, in the consumer behavior model of AISAS, which has a strong emphasis in socializing, it goes without saying that Tencent is winning the market.
Baidu Map does not match consumer habit in O2O market
The most powerful weapon Baidu has, as mentioned before, is Baidu Map. However, in the O2O market, Baidu Map hardly shows its advantage.
Let’s have a look. The most typical model in 020 now is group buying. And that is why both companies have a group buying platform in their ecosystems. When it comes to group buying, in order to complete the action, users often have two situations: a. instant buying; b. planned buying.
Instant buying usually happens in mobile devices. It can be a situation when consumers are walking on the street and suddenly find themselves hungry. This kind of consumers is more likely to be sensitive about location and find restaurants nearby.
In terms of instant buying, Baidu Map has a bigger advantage because consumers will use the map first to find what they want. However, in real cases, instead of taking instant buying actions, most consumers show the second type of buying in China today.
Planned buying. Consumers first will have a picture in mind like what kind of product or service they want or which city will it be in. They finally choose a particular buying group depending on price, words of mouth, and location etc. In this case, location is just one of the influencing factors in determining buying action. Consumers are more likely to refer to the group buying website instead of opening a map to find what they want. Therefore, Baidu map cannot take any advantage from the planned buying action.
Besides, map is still giving people an impression of a tool. Will consumers find restaurant nearby by using the map first? This is a controversial question. According to the manager of Sogou Map, Internet map is still a tool to most of the customers and an entire education is needed in the market, which is also why Sogou did not come into the O2O business.
Baidu’s account system is not obvious.
For Tencent, social platform + Dianping (Group buying) + Tencent Map + Wechat pay, the system is well developed. And both Wechat and QQ, the most powerful social account system, can be used as a bridge between service and consumers. The group buying website is linked to these two social network, all consumers have to do is to click one click to login with the social account, then buying action can happen.
However, when it comes to Baidu, although it has an account system, it is not well developed. Most people who are using Baidu are anonymous. They will not login in order to search something or use the map service. If consumers do not have the habit to login or do not have an account, it is difficult for them to take the buying action in the O2O system.
Baidu is buying data from Tencent
The basis of LBS must be geographic data as well as positioning ability. In the market of map data providing market, two companies, Amap and Navinfo, hold 90% market share together. The data in Baidu is actually buying from Navinfo. However, in 2014, as Tencent invested in Navinfo, holding 11% of the share. Baidu is becoming more and more passive.
Tencent can win the Cake！
For now, Tencent is doing better in the LBS+O2O ecosystem than Baidu.
In conclusion, for now, we can see the Tencent is doing better in building its O2O system in terms of the AISAS model, consumer behavior, account system and the data proceeding. But as the most powerful search company in China, Baidu still have the potential to catch up. Baidu can use its strongest weapon by developing instant coupons to match and stimulate the instant buying action.
For example, the Cherry Cone Parkour Baidu did with McDonald this October showed a great success. When consumers are walking near a McDonald shop, their Baidu Map will show an instant coupon. If they can run into the particular shop in a given time, they can win a free Cherry Cone ice-cream. The first attempt of this model was succussful. Total visit of the campaign homepage was over 20 million and earned over 0.5 million share.
Although it seems Tencent is winning the LBS+O2O cake now, if Baidu can fully use its instant buying advantage, it could also be a big threat in Tencent’s O2O business.
By Ping 2014.11.30