Baidu launches online business service

Allows users to search for merchants, make bookings, payments on phones

Chinese search engine giant Baidu Inc on Wednesday launched a service that enables merchants to attract smartphone users searching for restaurants or other services, in an attempt to challenge a similar service offered by rival Tencent Holdings.

The new service, called Zhida which means "direct access," allows merchants to create accounts to offer online-to-offline (O2O) services.

Baidu will offer 10,000 invitation codes to users to trial the service, and the service will be fully available within the year.

Users will be able to access the service by typing "@merchant name" (with "merchant name" referring to the merchant) on the Baidu app on their phones, which will redirect them to the merchant's page and let them book services and make payments. Merchants can also advertise to nearby consumers through Baidu's location-based technology.

"Consumer behavior is changing in the mobile era … an increasing number of consumers have been looking for services through mobile search engines in the past year," Baidu's CEO Robin Li Yanhong told the Baidu Technology Innovation Conference in Beijing Wednesday.

Tencent also offers a similar service through WeChat's public services accounts. Users can follow merchants' accounts and get information from the merchants.

Li listed some issues with WeChat's public account such as limited customized services, low efficiency and limited help for consumers.

He cited an example of a BMW distributor, saying its WeChat account has 5,000 subscribers, but only less than 5 percent of them book services through the account.

Tencent was not available for comment by press time.

Some merchants such as hotpot chain Haidilao, Beijing Zhuguofan Fitness Technology Development Co, and tourist destination Emei Mountain have subscribed to Baidu's new service.

Shi Qi, chief information officer of Haidilao, said at the same event that "the company expects Zhida to transform a large number of online users into off-line consumers."

Analysts said the new service demonstrate Baidu's ambition to earn more from the mobile Internet sector, which already accounted for 30 percent of its income in the second quarter of 2014.

"Baidu has the capability to make it a big business given its leading position in China's search market, but it is too early to say if it will challenge Tencent," Ding Daoshi, deputy managing editor of IT website sootoo.com, told the Global Times Wednesday.

China's O2O market reached 462.3 billion yuan ($74.9 billion) in 2013, surging 69 percent from a year earlier, according to data from Internet consultancy Analysys International.

"It is difficult for a single company to dominate the whole O2O market, as off-line merchants are highly scattered," Ding said.

Alan Hellawell III, a research analyst with Deutsche Bank, said Zhida seems equipped with features similar to mainstream local services, native apps and WeChat public accounts.

"Although we do not expect Zhida to challenge major local services providers such as meituan.com in the near term, we expect Baidu to meaningfully expand its presence in the O2O space, as Baidu search itself is one of the largest mobile traffic sources in China," Hellawell said in a research note sent to the Global Times Wednesday.

Baidu also demonstrated a wearable device Baidu Eye at the Wednesday event.

Although there were expectations that it would be similar to Google Glass, Baidu Eye does not have a display glass but features functions such as voice and image search.

The company did not disclose the device's retail price or when it will go on sale.