Dianping’s Transformation in the Local Commerce O2O Business: Keep Steady or Move Quicker?

Ever since its establishment in 2003, Dianping had been providing services and information for local people in China (see Exhibit 1). By the second quarter of 2014, Dianping had over 130 million active users, over 6 billion page views per month (page views through mobile devices accounted for 80%), over 36 million reviews on the website, and more than 150 million independent users on mobile devices. Meanwhile, the businesses listed on the Dianping website exceeded 10 million, located in more than 2,300 cities in China and other countries including the United States, Japan, France, Australia and South Korea. In recent years, China’s local commerce market was estimated at a trillion dollars and was thought to be the location of the next investment boom, attracting both Internet giants (e.g., Baidu, Alibaba and Tencent) and traditional giants (e.g., Wanda) to join the race. Against such a background, the co-founders of Dianping, including CEO Zhang and the management team, needed to consider the direction of its online-to-offline (O2O) operations. Since its establishment 11 years ago, Dianping had changed a great deal in its business strategy development and implementation. What were its competitive advantages now? How would these advantages help Dianping in the future? In the group-buying market segment, Dianping competed fiercely with Meituan, the current market leader, yet Dianping had managed to gain an edge over Meituan in first-tier and second-tier cities. But in third-tier and fourth-tier cities, Dianping still had much to do in order to catch up. How should Dianping handle these markets? To make things even more complicated, the O2O boom had attracted many new competitors to the local-life-service segment. Although Dianping had an edge, how could it manage its competitive strategies and organizational structure in response to the new entrants?