April 24 news, Dingding Youhui Vice President Wen Cong said in an interview with TechWeb that Ali Capital did indeed recently add investments to Dingding Youhui. Through this increase in shares, Alibaba has become the second largest shareholder of Dingding Youhui.In November last year, Dingding Youhui received a round of strategic investment from Alibaba and Citibank. This was also the first time Alibaba invested in Dingding Youhui. After this investment, Dingding Youhui and various business lines under Alibaba such as Alipay, Taobao Local Life, etc., all carried out in-depth cooperation. Recently, there were rumors that Alibaba increased its shares in Dingding Youhui. Wen Cong said that Ali Capital is very optimistic about Dingding Youhui's model and prospects. Indeed, Alibaba added investment to Dingding Youhui to increase its shareholding in Dingding Youhui.On March 18 this year, Dingding Youhui officially launched the terminal device "Dingding Youhui Verification Machine" and announced the completion of the O2O closed loop. According to Wen Cong's introduction, after one month of offline deployment, currently the Dingding Youhui Verification Machines have been deployed in over 200 locations across 11 cities nationwide. The number of goods that can be directly purchased on mobile phones has reached more than 100 kinds. With the implementation of the verification machines, Dingding Youhui's pay-per-effect business model has also clearly presented itself.This move by Ali to add investment to Dingding Youhui undoubtedly affirms Dingding Youhui's O2O closed-loop model.Deep Cooperation with Ali, Not Considering SaleWhen Ali Capital made its first investment in Dingding Youhui in November last year, there were voices in the industry suggesting that Alibaba might acquire Dingding Youhui to strengthen its own advantage in the O2O field. This time, as Ali continued to add investment and became the second-largest shareholder of Dingding Youhui, speculation about acquisition resurfaced again.Regarding the talk of acquisition, Wen Cong said that in fact, when the rumor of Ali acquiring Dingding Youhui first appeared, Dingding Youhui President Xu Longjiang had immediately sent an internal email to employees, clearly stating that Dingding Youhui would not be sold. I am very sure of this point. Given Gary (Xu Longjiang)'s character, he would not do anything detrimental to the interests of the founding team," Wen Cong said. During that period, staff members from Alipay, Taobao Local Life, and Etao frequently interacted with Dingding Youhui. There were constantly people from Ali coming and going at Dingding Youhui's office building. Dingding's employees may have been confused by such close contact with Ali, which could be the cause of the acquisition rumors.During the time when Ali’s Koubei website operations shifted to Taobao Local Life, Dingding Youhui was thriving as an O2O platform based on coupon models. In just one year, Dingding Youhui developed rapidly, expanding its contracted merchants from thousands to tens of thousands. It now owns more than 50,000 merchants. Ali values Dingding Youhui's role in the O2O lifestyle domain greatly. Moreover, Dingding Youhui negotiates and signs contracts with offline merchants very quickly, which also interests Ali greatly," Wen Cong introduced. Many of Ali's business teams need this kind of O2O merchant resources, which Dingding Youhui can provide. On the other hand, Dingding Youhui also hopes to expand its audience range through Ali's channels. Both sides benefit each other, achieving a strategic cooperation that suits both parties perfectly.For Dingding Youhui, which is still in the entrepreneurial phase, Alibaba is already a giant in the internet world. Regarding the entry of the giant, Wen Cong frankly admitted that initially the team was quite cautious. After nearly a year of cooperation, both sides worked together very well. Now, both sides maintain a very open and friendly attitude towards doing a good job with coupon O2O. Ali's corporate culture is very different from Tencent's. If it were Tencent, we would be even more careful.Now, many products under Ali have deeply cooperated with Dingding Youhui. For example, Etao's life information comes from Dingding Youhui's merchant information, and the card/coupon function inside Alipay Wallet basically consists of Dingding Youhui's coupons. Wen Cong believes that both Dingding Youhui and Ali have relatively consistent understandings of the O2O model. For instance, the profit model adopts pay-per-effect rather than advertising revenue. Moreover, Ali itself is a platform company, and they also recognize the platform model created by Dingding Youhui. These factors make their cooperation very smooth.O2O Closed Loop Outlines Clear Profit ModelWith the implementation of the Dingding Youhui Verification Machine, Dingding Youhui announced the completion of the O2O closed loop. In Wen Cong's view, the greatest significance of this closed loop for Dingding Youhui lies in making its pay-per-effect profit model clear and feasible.In the past several years, the coupon industry could only achieve one profit model, which is charging advertising fees: Coupon platforms obtain certain advertising fees by agreeing with merchants to publish their coupon information for a certain period of time. In fact, this situation is not only present in the coupon industry but also exists in many business-oriented online websites. For example, a real estate agent can directly obtain a certain percentage of the house transaction price as commission from the house transaction, but this house might have been finally transacted by the real estate agent through services provided by Anjuke website. However, Anjuke website might only be able to get a few thousand yuan of advertising fees per month.Dingding Youhui also hopes to charge commissions based on the actual turnover brought to merchants, which is what Wen Cong refers to as the pay-per-effect profit model.In Wen Cong's opinion, the fundamental reason why coupon websites can only collect advertising fees and cannot charge commissions based on the proportion of transaction prices is that the website platform cannot obtain transaction data and cannot confirm the final flow of users. To overturn the entire industry's model, transitioning from an advertising model to a pay-per-effect model, a closed loop is inevitably needed.Before the implementation of the Dingding Youhui Verification Machine, similar issues existed in Dingding Youhui's cooperation with catering enterprises. Dingding Youhui could not determine exactly how many customers it brought to the merchants, making it even harder to discuss pay-per-effect charges. By using the Dingding Youhui Verification Machine, the number of customers Dingding Youhui brings to merchants becomes a quantifiable figure, allowing merchants to easily identify returning customers. The closed loop is of great significance to us, enabling Dingding Youhui to truly achieve a business model transformation," Wen Cong summarized.To accommodate this kind of profit model, Dingding Youhui also launched corresponding products, such as cash vouchers. Users complete the online purchase of cash vouchers via the Dingding Youhui APP, then go to the merchant's store to verify via the Dingding Youhui Verification Machine, thereby completing the consumption. This product differs from the previous display-and-consume method of Dingding Youhui in that online payments ensure that all users delivered to merchants via Dingding Youhui are recorded in the verification machine. Thus, Dingding Youhui can extract commissions from merchants based on this user count.Regarding this emerging model, Wen Cong also frankly admitted that the current biggest pressure comes from promoting and popularizing the Dingding Youhui Verification Machine, and educating the market will take some time. What Dingding Youhui needs to do now is continuously optimize the operation process and specific details of the O2O closed loop, ensuring good user and merchant experiences.