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A ‘Free + Premium’ model

Because many O2O businesses no longer have to rent a brick-and-mortar store or even hire their own staff, they are able to offer consumers competitive prices. Some even heavily subsidize their first-time customers to attract a new, large user base. Experts say the logic behind that is that by providing inexpensive and frequent services such as car detailing, O2O companies are able to encourage consumers to try more expensive but infrequent services, such as car maintenance and repair. But to stay competitive, providing consistent quality service is essential.

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