There are three major problems in building O2O closed loop based on POS machine

Creating a closed loop is the goal that all kinds of O2O companies have dreamed of. Various articles discussing O2O closed-loop have seen a lot of articles in the media. There are dozens of articles on the product official website. Typical examples are: "Ding Ding network solves "O2O closed loop" "Difficult", "Easy e-commerce: 19e O2O closed loop", "Ali box focuses on the system to form O2O closed loop", "micro-passport push HTML5 electronic voucher to break ice O2O closed-loop dilemma" and so on. It is undeniable that the closed loop is indeed significant for the healthy development of the O2O industry; but it is very difficult to achieve the ideal O2O closed loop.

In November 2012, the listing of TTG (Tao Taogu) provided a new idea for the industry: to create an O2O closed loop based on the POS machine. Recently, Pinway.com also introduced the case of the US company FiveStars to integrate customer loyalty management and marketing through the integration of POS machines. The domestic products similar to it have the luxuries of Luke Life; and the other one focuses on coupons. The 8-year company's panda discount has also recently announced that it will establish a business POS channel cooperation with UnionPay to achieve O2O closed loop. Based on the POS machine to create a closed loop, to achieve customer relationship management and marketing, this looks perfect at first glance: you can avoid the terminal promotion costs, do not change the customer's consumption habits, merchants do not accept the cost and so on. But in practice, this way of creating a closed loop based on POS machines also faces serious difficulties:

Credit card spending is not a strong habit, POS machines cover a small range of merchants

"According to the information released by the People's Bank of China at the end of June 2012, the number of bank cards issued nationwide reached 3.225 billion, of which, the number of debit cards issued was 2.923 billion, and the number of credit card is 302 million. According to the population of 1.3 billion, each People have nearly three bank cards." These data are often evidence of a bright future for O2O based on POS machines. The actual situation will not be as optimistic as the data shows. China UnionPay has statistics in 2008. China’s “active” bank cards account for about 10% of the number of bank cards, and bank card dormancy is very serious, which means that China’s truly active banks There are only more than 300 million cards. Unlike the United States and other Western countries, Chinese residents use cash more when they go out to spend. Credit card spending is not a strong demand for most people. In this way, the mass base of the O2O closed loop based on the POS machine is not very solid.

From the point of view of the number and distribution of POS machines, the number of POS machines in China is currently around 6 million units, the absolute number is not small, but compared with the total number of Chinese merchants, it is not a large proportion; due to a certain threshold, a large number of small businesses If you don't apply for it or you are not eligible to apply for a POS machine, the larger number of merchants will not be able to close the POS. Moreover, from the perspective of POS merchant types, offline physical retailers are mostly households, while O2O is a minority with more emphasis on service-type merchants having POS machines. At present, most of the closed loops based on POS machines are concentrated in the catering field, and other industries are involved in very shallow.

UnionPay POS machine has high cooperation threshold and high upgrade cost

UnionPay POS machines account for the vast majority of China's POS machines, and UnionPay, as a national financial institution, is relatively strong in its own right, and UnionPay maintains a certain relative independence in its provinces and cities. For most online O2O companies, it is difficult to negotiate bargaining power with UnionPay, and even if they talk to UnionPay in a certain place, once they want to expand their business to other places, they often need to UnionPay also talks about cooperation. China's O2O first concept stocks listed in the TTG (Tao Tao Valley) first talked about the cooperation partner is Shenzhen UnionPay, and then expand the business to other places, but also need to talk with the local UnionPay, which has led to its business development has been slow .

The mainstream POS machines do not support so-called closed-loop or post-consumer marketing promotion by default. O2O enterprises need to modify or upgrade existing POS. According to Pinway.com, in order to upgrade the UnionPay POS machine, O2O companies need to negotiate with UnionPay institutions in each province and city, and the cost of upgrading is particularly high. In the case of uncertain future earnings prospects, companies need to extract a large amount of input costs, and the risks are high. At present, some corporate propaganda and UnionPay cooperation often have the gimmick component. They only have cooperation with UnionPay in a certain place. Considering the cost of cooperation of UnionPay, the choice of products like 哆啦 is to cooperate with Epro. Upgrade the offline POS machine that Epro belongs to; this method can save a lot of cost; but in the long run, it faces the shortage of merchants.

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