Baidu Ramping up LBS Effort to Tap into O2O Heat

Baidu, the largest Chinese search engine was rumored to restructure its map service with the setup of a new LBS BU in an aim to capitalize on the current O2O heat.

Baidu has been stealthily integrating local services into map service for quite a while after sniffing out the profitability on that front. With the ongoing proliferation of mobile devices and constant emerging of new services leveraging on the power of O2O, we’ve seen more and more big-names stepped their toes into the area which was previously dominated by startups like Dianping, Jiepang, Buding, Dingding and so on. For instance, Tencent is counting big on turning Weixin  – one of the most popular mobile app in China – into some sort of a marketing tool that links local businesses and mobile users.

Dai Zhikang, deputy GM of the company’s ecommerce department for life services once disclosed in an internal meeting that Tencent will be using a fancy combination of “QRCode+QQ account system+QQ connections+LBS” to better serve local businesses, like help them deliver digital DM through channels like Weixin at very low or nearly none cost.

Statistics showed that in the first eleven months of 2011 more than RMB 7 billion worth of venture capital was poured into the so-called O2O market. Chinese O2O market size was put at RMB 56.23 billion in 2011 and was expected to hit nearly 100 billion in this year.

Baidu has failed many times in tests regarding ecommerce, Youa, Baifubao, JV with Rakuten, to name a few, and its Leho.com and Shenbian – two ‘martyrs’ of Baidu’s LBS attempt – weren’t as appealing as they were expected to consumers. More than 90% – conservatively speaking – of Baidu’s revenue comes from monetizing its huge traffic, while it’s previous efforts to diversify revenue sources all failed to yield good results.