China’s Internet giant Baidu has announced plans to invest 20 billion yuan ($3.2 billion) in its group-buying unit Nuomi over the next three years, in an effort to strengthen its position in the online-to-offline (O2O) services sector, the Global Times reported.
"Right now Baidu has over 50 billion yuan in cash on its books. We're going to take 20 billion of that and do Nuomi right, because services are ultimately more important than information," Baidu's CEO Robin Li Yanhong made the announcement on June 30, Tuesday, at a press conference in Beijing.
Liu Xuwei, an analyst with IT consultancy Analysys International, said that Baidu's big investment shows its strong determination to expand its business in the O2O services sector.
O2O services are dominated by group buying, car hailing and food delivery deals, but have expanded into on-demand door-to-door services including massage, cleaning and car washing.
In 2014, China's O2O services market was valued at 235 billion yuan, according to market research firm iResearch.
Nuomi has launched prepaid and membership card to test its "Membership Plus" strategy this year in two key categories: restaurants and movie tickets. Users who were able to hit certain spending levels can enjoy discounts from Nuomi and the merchants' member clubs.
"The investment will be mainly spent on connecting Nuomi's membership system with offline merchants' systems, as well as on subsidies to attract consumers," Ding Daoshi, head of Beijing-based Internet research institute sootoo.com, said.
According to statistics from Analysys, meituan.com led the group-buying market by occupying a 57-percent share in the first quarter of this year, followed by Tencent-invested dianping.com with a 24.26-percent share, and Baidu-backed Nuomi with a 9.55-percent share.
Baidu believes that in terms of sales, Nuomi will occupy the second position in its category by the end of the year.