China and the Online World of Food Delivery
Food delivery in China is not only a booming industry but also effective and widespread. Hatchery takes a look.
With leaps of progress made in e-commerce and the remarkable integration between various apps and Alipay, purchasing anything – clothes, pets, furniture, art, food, Halloween costumes - has become oh so easy!
Image from The Wall Street Journal
Let’s talk about food delivery.
China has hordes of fast food joints, restaurants, tea and juice shops, dumpling stalls (the list goes on) at every street, corner, nook and cranny. It’s actually quite easy to find a cheap, quick meal anywhere. Depending on your lifestyle, it can be easier and cheaper to just eat out, rather than cooking at home.
With rising competition among fast food businesses coupled with the advent of apps like Ele.Me and Dianping, getting food delivered to your door is child’s play. You can sit at home and order whatever, WHATEVER, you feel like eating.
What is it about the local food apps?
The Chinese apps are easy to use, require a minimum order of RMB 20 if not less, are complete with photos of each dish, options to add to your favorite list, seamless payment set-ups, accurate order tracking, discounts on nearly every order you place, compensation or red packets on the slightest delays, serious attention to customer reviews and a no-nonsense delivery guy who hands you your meal and instantly disappears.
Food businesses depend more on apps now than ever before, rather than on customer footprint in their shops, and these apps keep it all very competitive, making it super cheap and fast for the hungry customer to go from placing an order to receiving a well-packed hot (or cold) meal in a very short time.
Image from Vator.TV.
The major local players
It’s common to spot delivery fellows whizzing through city streets on their scooters in uniforms decked out in their delivery company’s brand colors. Hatchery explores the favorites!
Ele.me – This is the largest food delivery giant in China. According to sources, they acquired their rival Baidu Waimai (which was the 3rd largest) for USD 800 Million, thus increasing their dominance substantially. No surprise, but Ele.Me has the backing of Alibaba Holding Group and boasts control over nearly 54% of China’s food delivery market. Pretty much every restaurant would have Ele.Me’s computer system set up that connects the food business to the platform, making it an operationally efficient system that benefits all parties. Most orders are completed within half an hour, if not in lesser time.
Meituan Waimai – This is at second spot, no easy feat, and recently joined forces with Dianping (think Yelp), and remains the biggest competitor to Ele.Me. Meituan Waimai is backed by Tencent Group, and offers services similar to Ele.Me. You can also buy groceries and medicines (yes, you read that right) on this platform! Meituan has around 40% market share. Customers get coupons for adding friends to the app.
Like other industries, these two top duopoly players are cashed to the nines and aggressively competing for China market share – subsidizing consumers like similar episodes seen between ride-share giants Uber and Didi in 2015 and 2016. As a result, traditional restaurant players are experiencing lower foot flow offline but increased demand online, where delivery revenue for a good, offline restaurant chain should be at least 15-20% of average sales.
Image from Unfood Tours.
Outside of the big guys, smaller players include:
Sherpa’s – This Yum China-owned delivery service, around since 1999, was the first of its kind, and primarily focused on making life easier for foreigners in China who want food delivered but are clueless about using Chinese apps. This service has been successful among the expat community in China. Sherpa’s runs fun campaigns from time to time to keep things interesting and sustain and/ or increase customer base. Delivery time is usually 45 minutes at the minimum, with service starting at 10 am and last order at 10:30pm. You can also buy beer, liquor and wines, but only after a click-through on any of the restaurants listed, rather than direct order.
Mealbay – This app is the second most popular delivery service among China expats. They have great service, are usually faster in completing the order, cost a bit less but also contain a smaller restaurant base than Sherpa. On Mealbay, you can purchase alcohol without needing to get food, which is a plus.
Jinshisong – This app is in English, and is caters to the more sophisticated Chinese and non-Chinese customer. They list out high end restaurants and have a clean, elegant interface. You can expect to find health food, alcohol, and more of Western cuisines.
Our favorites in this category of food delivery are Nosh and Saucepan. Your craving for gourmet sandwiches, healthy snacks, power bowls, hipster salads, Chili and more will be successfully satiated. Their delivery radius is not as wide as the other services we have covered, but it’s worth the delivery fee given the top-notch food quality.
Booze for your house parties
Well, not just for house parties, but whenever you need to stock up your collection, the best alcohol delivery service in Shanghai (and some parts of China) is Shanghai9. They have an impressive range of everything with a hard guarantee on quality (or money back)! They offer discounts often, and provide same day delivery, if your order if placed before 5pm.
If it’s craft beer or fancy to good wines you are looking for, the best app in town is Bottles XO. Operation hours are suited to their customer base, starting at 10 am going all the way until midnight. The bottles are packed well and arrive chilled at your doorstep.
These two apps have it in the bag when it comes to delivering booze to your home, starting in Shanghai but growing elsewhere.
At Hatchery, we're always keeping our finger on the pulse when it comes to food innovation and convergence of technology in the sector. As a result of growing demand for online delivery-only food models, we are excited to launch our DX Food Accelerator by Hatchery in the middle of Beijing’s CBD district (Guomao) in early 2018. In addition to Hatchery’s food incubator model, DX will be a food delivery-only incubator model and will allow up to five entrepreneurial food companies fixed residency in our 200sqm shared kitchen to test out their food ideas in front of Beijing’s CBD young professionals. Interested? Send us a message via our website.
Header Image from South China Morning Post.
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