‘Hello stranger’: how did the long tail contribute to Momo’s success by Wang Anni

                                   

As a social application based on LBS, Momo enables people to search for and locate the other users or groups nearby. By sending texts, voice and images, the users can build up connection as well as starting interaction in the most efficient way. Until September, 2014, the application has accumulated 180 million users, among which 60.2 million are active and 1million are members paying for the fee. After launching the business for 3 years, Momo has filed for IPO. While there is fierce competition within the battlefield of social media, what has made Momo stand out?

Compared with other instant messaging platforms such as Wechat and line, Momo has been the rebellious one from the very beginning. By digging deep into the LBS technologies, Momo has provided a playground for the strangers in cities and it has actually satisfied various social needs of them.

As the CEO Tang Yan suggests, what Momo has entered is the blue ocean. Although Wechat and Mitalk also provide LBS services, their business is mainly based on the relationships between people who are familiar with each other. On the contrary, what Momo focuses and relies on is the relationship between strangers.

Before Momo, people may ask why they should talk to people who are alien to them. However, Momo has sensitively noticed the potential needs of people. When logging in to the platform, it is surprising that people use Momo with diverse motivations: some of them would like to dating partners; some of them would like to find groups according to their hobbies; some use Momo as a marketing platform to sell different stuff, while the others are simply curious about the strangers nearby.

Andersen suggests in the long tail theory that besides the hit products, the Internet can provide people with countless accesses to niche products. Once accumulated, the value of the niche products may even surpass that of the mainstream market. The success of Momo has proved that in the age of the Internet, if the companies would like to earn a fortune, they should not only provide niche products but also niche services. The start-ups will grow fast once they unearth those personalized consumer needs and succeed in taking care of the segmented markets.

While innovations are crucial, it is more important for a company to find the effective profit model. Momo has not genuinely start to earn money due to its heavy cost on marketing and advertising, but it seems like by taking the special needs of the users into consideration, they have already stepped into the right direction. The revenue stream of Momo firstly comes from the members’ fee. After buying the membership, the users can enjoy several premium services provided by Momo such as getting a discount when buying the expression applications. Meanwhile, Momo also makes money by offering platforms for playing mobile games, by which people can facilitate the fragmented time and interact with the strangers. However, the most obvious advantage of Momo is still its LBS service. One example is that by launching a new function called ‘Daodiantong’ this year. This is a platform for business people to carry out accurate advertising based on geographic locations, which can help them to interact with the users instantly.

By adopting the long tail strategy and providing niche services, Momo has win its position in the fierce battlefield of social media. Its success suggests that firstly, innovation is the still of key to achieve users’ satisfaction and investors’ attention. Moreover, the companies have to cultivate technological advantages and find its specific profit model. Finally, in order to flourish in the competitive market of Internet business,  the small companies need to seek strategic cooperation with the big ones, just like Momo has cooperated with Alibaba.

Reference:

1.    ChinaSpectator. (2014) China’s Momo raises US$216 million in IPO. Retrieved Dec 14, 2014 from:

http://www.businessspectator.com.au/news/2014/12/12/china/chinas-momo-raises-us216-million-ipo

2.    Techcrunch. (2014) Momo, a flirting app with 180m users, is latest chinese tech firm to file for U.S. IPO. Retrieved Dec 14, 2014 from http://techcrunch.com/2014/11/09/momo-a-flirting-app-with-180m-users-is-latest-chinese-tech-firm-to-file-for-a-u-s-ipo/

Is Uber going to share a piece of the pie in China? by Wang Anni

Due to the fact that Airbnb, Uber, Lifty and other kinds of sharing economy are flourishing all around the world, it is time for us to admit that everything is about sharing, which has already gone beyond information sharing to sharing physical resources.

After starting its business in Shanghai in 2013, the American rideshare company Uber has continued to develop its services in seven cities in Mainland China, from Beijing, Tianjin, Guangzhou to Chengdu and Hangzhou. So, is Uber as well as the business model going to succeed in China, where people were quite used to sharing stuff ?

It is undoubted that Chinese people have seen the value proposition of the company and the obvious benefits of sharing a car. The most important benefit is it is cheaper than taxis. For ordinary people, it is an efficient way to make money by taking advantage of the underused vehicles. Meanwhile, the service of Uber provides people a chance to meet and talk with others, which helps to establish closer relationships and easily reach the local life. Besides, in comparison with traditional taxi services, Uber offers customers different facilities at different prices. In China, the company has divided their services into two kinds: People’s Uber, which recruits individuals with their private cars and Uber Black, which cooperates with car rental companies to provide high-end cars and service.

The biggest competitors that Uber needs to concern about may be domestic applications like Didi Taxi. In my view, it is not necessary that Uber will lose in the battle as long as it keeps its uniqueness. Compared to Uber, the most significant advantage of DiDi Taxi is that they provide subsidy to the customers. They promote their service by encouraging people to grab red envelopes on social platform Wechat. Therefore, it is much more well known than Uber in mainland china. However, athough Uber and Didi Taxi are both challenging the traditional industry, they provide distinct services to the customers. The biggest difference lies in the fact that Uber’s cars are private vehicles. Meanwhile, as some users suggest, the using experience of Uber is far more superior than that of Didi taxi. With better navigating and operating surface, the system of Uber will match people with the most near-by driver automatically, so that the passenger can catch a ride conveniently and efficiently. Moreover, because the GPS will record the driving circuit, the customers can make complains about the driver and get their money back once they find him taking a detour.

However, as a P2P application, Uber is faced with several obstacles and challenges if it wants to develop in China.

The first challenge is to build up trust-worthy relationship between drivers and passengers. Mutual trust is the corner stone of sharing economy, but it is becoming more and more scarce in Mainland China. While some Chinese find strangers reliable, the others do concern about their personal and property safety. As has been reported, a driver in New Delhi’s was accused of raping a female passenger, which led to the result that the local transport department decided to ban Uber. It is the same situation in China. The developing process would be tough if Uber cannot find and effective way to guarantee the providers’ and the consumers’ interests.

Another serious challenge that Uber is faced with is the government policy. In fact, Uber has been endangered in many cities around the world due to several problems. In many European countries such as Poland, Uber is faced with heavy penalty because according to the law, unlicensed drivers should not get payment; Recently, Nevada has also banned Uber for that it is not under strict supervision and that the drivers do not pay for insurance. In China, unlicensed individuals who use private cars to make money are against the law. That is why Uber choose to mutate and cooperate with car rental companies to provide high-end services. Although the local government still holds ambiguous attitudes towards the services of ‘People’s Uber’, it is sure that they will not let the unlicensed service flourish freely for a long time.

Moreover, if the taxi drivers can be considered as the existing competitors of Uber, they might be the last ones who are delighted with the rising of car sharing and the first ones to backlash against the new comer. In other cities around the world, taxi association accuses Uber for challenging their business and bringing unfair competition to the existing taxi industry. When it comes to China, I believe Uber is going to meet the same or even fiercer backlash. In many cities of China, people who find the taxi drives enthusiastic, conversable and knowledgeable may also choose them as the ‘windows’ to understanding local life.

It is seen that Uber has put so much effort in localizing their services in China. One of the evidences is that they include Alipay in the payment methods. At the last Spring Festival, the customers could even ask for dragon and lion dance performance from Uber. However, the most crucial task for Uber in current phase is to promote their services in China. With limited drivers and user scale, it is hard for Uber to exploit the advantages to the full. In china, the incentive mechanism of Uber is that once the user recommends the service to another person, he can get 50RMB. However, many people find it difficult to help promote Uber since it is really hard for people to change their old habits and immediately embrace new things. Therefore, we can only say that once Uber finds the effective way to reduce the cost of developing new users, the company may starts to grow as a successful player in China.

Reference:

1.     The Economist. (2014) The sharing economy: boom and backlash. Retrieved Dec 10, 2014 from http://www.economist.com/news/business/21601254-consumers-and-investors-are-delighted-startups-offering-spare-rooms-or-rides-across-town

2.     腾讯科技. (2014) Uber终于正式进入北京了，但挑战并不少. Retrieved Dec 10, 2014 from http://tech.qq.com/a/20140714/055439.htm

3.     Time. (2014) 5 places where Uber is fighting for its life right now. Retrieved Dec 10, 2014 from http://time.com/3623241/uber-battles/

4.     Fortune. (2014) Backlash against Uber spreads from Chicago to Mumbai. Retrieved Dec 10, 2014 from http://fortune.com/2014/12/10/backlash-against-uber-spreads-from-thailand-to-oregon/