Chinese unicorns with maturing core business are eyeing their competitors’ territory for further expansion, as exemplified by Meituan-Dianping’s recent push to ride-hailing.
And in what sounds like a response to Meituan’s charge, Didi Chuxing, China’s #1 ride-hailing company, is gearing up for a food delivery pilot in Wuxi city, Jiangsu Province by recruiting local riders.
Meituan-Dianping, the world’s largest O2O platform, has a strong foothold in Chinese food delivery market.
As more and more Chinese resort to their smartphones for daily meals, the food delivery has become a rosy industry worth as much as RMB 300 million (approx. USD 47.2 million), while the size of the whole catering industry stands at RMB 3900 billion (approx. USD 614 million), according to WANG Pu, Senior VP at Meituan-Dianping.
JIANG Jun, head of China Cuisine Association, believes that although the Chinese food delivery is already growing at an astonishing pace in 2017, there is still huge potential for future growth.
Local food delivery market is currently dominated by three prominent players, including Ele.me, Meituan-Dianping’s food delivery arm Meituan Waimai and Baidu Waimai, with respectively 34.6%, 33.6% and 18.5% of the market share according to market researcher Bigdata-Research. The acquisition of Baidu Waimai propelled Ele.me to become the No.1 player in the field and Ele.me is rumored to be fully acquired by Alibaba, a deal that would give Ele.me a leg up over its Beijing-based arch-rival.
Grab, Didi’s counterpart in Southeast Asia, has successfully launched GrabFood, a service that taps into Grab’s couriers fleet for food delivery. Global ride-hailing giant Uber also operates UberEats in a similar practice. The ride-hailing to food delivery model has been proven workable. Didi could draw on the predecessors’ experience in launching its response to Meituan’s attack.