Causes and Differences in the Development of O2O Business Model: A Study and Comparison Based on the Cross-Strait Market

The concept of O2O (Online to Offline) is a new business model that is making a splash in China, and its impact has spread to all proper nouns within online and offline stores which have been occurred quite often in Taiwan lately. Major brands see it as the next gold mine and are actively applied to it one after another. O2O has become a significant milestone in the internet industry following E-commerce. This paper aims to conduct a comparison as well as contraction of application of O2O model across the strait using document analysis of qualitative research based on related cases and documents. As compared to Taiwan, China not only has entered the O2O segment earlier, its development is rapid. Therefore, the purpose of this paper is to explore differences in the O2O development between China and Taiwan and causes plus reasons for such differences, offer suggestions accordingly for Taiwan’s online vendors and offline stores, and define the difference between O2O and traditional E-commerce for academic purpose. According to this paper’s findings, differences in the development of O2O between China and Taiwan are as follows: 1. Major participants leading the direction of O2O development: In China, local Internet giants; In Taiwan, foreign brands. 2. Platform integration completion: High complete rates in China; Low completion rates in Taiwan. 3. Marketing: Developments of Online to Offline and Offline to Online in China are in parallel; Taiwan is still in the initial stage of Online to Offline. 4. Payment: In China, O2O payment tool is provided by E-commerce platforms and is extended to users in general; In Taiwan, E-commerce depends on credit card payment and transferring through Internet banks. O2O payment method is not yet popularized. 5. Logistics: In China, the cooperative modes of O2O logistics are diverse; In Taiwan, not many related applications can be found. Causes for differences in the development of O2O across Strait include market openness, market scale, consumption habits, the convenience of offline transaction, contract spirit in the real world, and regulations and laws, etc. By summing up actual differences and market factors between Taiwan and China, suggestions this paper presents for Taiwan’s enterprises regarding the O2O development in the future are as follows: 1. Upon arrival of the mobile network and 4G high speed mobile Internet service, should strengthen the layout of Offline application. 2. Small and medium-sized local enterprises should make good use of specialized business benefits and seek more platform cooperation to improve overall service.