Here’s What Baidu Can Look Forward To In 2016

January 5th, 2016 by Trefis Team
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2015 has been an eventful year for Baidu (NASDAQ:BIDU) With the management putting a plan in place for building a “New Baidu”, its alliance with Amazon to be the default search engine for Amazon’s Kindle and Fire tablet in China, testing its first driverless car and investing into the fast growing Indian market, Baidu looks ready to enter into an exciting 2016. As the company focusses on raising funds for its web based food ordering platform, Baidu Takeout Delivery. [1]. and the Chinese online health care market expands at a rapid pace. [2]., O2O and healthcare can improve Baidu’s revenues in 2016.

See our complete analysis of Baidu here

O2O Fastest Developing Segment In Chinese Ecommerce

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According to iResearch, O2O will be one of the fastest developing segments in the Chinese e-commerce market in future, with the catering vertical within O2O projected to grow at a CAGR of more than 20% between 2013 and 2017. [3]. Baidu is looking to tap into this trend as its O2O food delivery subsidiary Baidu Wamai looks to raise $300 to $500 million in January 2016. Reports suggest that Baidu Wamai is expecting to double its revenues in 2016 from $1.2 billion in 2015 to $3.8 billion in 2016. [4]. Baidu’s focus on Wamai comes at the back of its competitor Alibaba investing in online food delivery company Ele. Me. [5]. While heavy investments in the O2O segment will impact Baidu’s margins in the short term, it can drive revenues in future with growth in this segment.

Growing Chinese Online Healthcare Market

Reports suggest that China’s online healthcare market is expected to reach $3.2 billion in 2015 up 60%, backed by the nearly 50% internet penetration in China in the first half of 2015. [2]. To tap this trend, Baidu launched a service in August 2015 which enables users to take doctor’s appointments online , through its healthcare information portal Jiankang.Baidu.com. [6].  In September 2015, the company invested $ 40 million in medical app start up Quyi which aims to improve patients’ clinical experience by providing related services such as scheduling appointments, checking diagnostic reports and making payments. [7]. As China’s mobile healthcare industry grows at a rapid pace, these investments should drive the Baidu’s revenues in future. Although it faces competition from Alibaba’s “Future Hospital” program and Tencent’s entry into this market through strategic investments in medical information and services portals such as Guahao.com, Baidu’s mobile apps should give it a competitive advantage in this space.

Notes:

  1. Baidu To Feed $500 million To Its Takeout Delivery, Investors Business Daily, December 29, 2015 [↩]
  2. Alibaba, Baidu, Tencent Riding Online Health Wave, Investor’s Business Daily, December 2015 [↩] [↩]
  3. China E-commerce Market Rises 21.3% in 2014, iResearch, February 2015 [↩]
  4. Baidu’s food delivery service Wamai looking to raise  $ 500m : Report, Business Standard, December 30, 2015 [↩]
  5. Alibaba agrees to invest $1.25 million in Chinese online food delivery service: report, Reuters, December 24, 2015 [↩]
  6. Baidu to connect patients with doctors in China, Zacks, September 2015 [↩]
  7. Baidu Injects $40 Million Into Mobile Health Startup Quyi, Technode.com, September 11, 2015 [↩]