From clicks to bricks, online to offline

As the number of Chinese Mobile Internet users surges, investment opportunities in the online to offline sector are being pursued by angel and venture capital investors.

O2O, also called offline e-commerce, means netizens and Mobile Internet users are able to see discounts and service booking information from stores on websites that encourage them to visit real rather than virtual outlets.

The number of Chinese Mobile Internet users in 2011 totaled 429 million. Of them, 4 percent booked travel and 2 percent indulged in group-buying. The number of users in 2005 was only 24.8 million, according to Zero2IPO Research Center.

Group-buying offers products and services at significantly discounted prices on the condition that a minimum number of buyers make the purchase.

"The Mobile Internet sector should take advantage of certain resources, such as catering, entertainment and travel. O2O investment has great potential," said Wang Xiao, founder of Unity Ventures and a former senior executive at Baidu Inc. He added that e-commerce combines socialization with mobility and links the online with the offline.

For instance, Unity Ventures and another angel investment institution, Zhen Fund, invested in a food order website this year. Its software can be installed in cell phones and users can find the restaurant on a map and order food.

There are similar websites abroad such as JustEat.com and GrubHub.com. They are global market leaders in the online ordering of takeaway food.

According to Wang, O2O business provides dealers with free online stores, more clients and orders, as well as marketing. Customers find it more convenient and have more choice and can see comments left by other customers.

"Every sector will be changed by O2O," said Ling Daihong, an angel investor and founder of Infotech Printing Machine Co Ltd.

Ling has been an angel investor for more than a year, having put money into 15 O2O companies. One of them sells discount branded spectacles online. People can select several designs. The company then sends out adn assistant to the prospective customer's home or workplace with the selection. If he or she chooses to buy any of the glasses, the company will package pristine originals and send them to the customer.

In China, Ctrip.com, established in 1999, is one of the earliest O2O companies. It delivers information online but payment and services are completed offline. Group-buying companies deliver information and process payments online.

Globally, car rental, travel and information service companies were among the first businesses to make use of O2O.

Zero2IPO Research Center believes car rental, food, travel and hotel accommodation have enormous potential in the O2O sector in China.

According to statistics from the National Bureau of Statistics, overall sales in the Chinese catering sector totaled 1.76 trillion yuan ($277 billion) in 2010. The travel sector accounted for 1.57 trillion yuan and the car rental sector for 18.3 billion yuan.

Yongche.com, a Beijing-based online car rental service company, received investment funds from Zhen Fund, Morningside Ventures and the venture capital department of Qualcomm Inc. Many other businesses are said to be hoping for similar good fortune as O2O takes off.