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Era of cheap eats draws to a close as China’s food delivery services merge [Copy link] 中文

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Post time 2017-8-31 15:03:17 |Display all floors
This post was edited by senoritazhao at 2017-8-31 15:03



A wave of consolidation among China’s food delivery services has an unfortunate downside for consumers who’ve grown accustomed to aggressive coupon discounting as rival companies jostled to build market share.


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Post time 2017-8-31 15:03:44 |Display all floors

Analysts said that subsidies to consumers in major cities such as Beijing and Shanghai will gradually disappear as consolidation in the industry continues, and as investors apply pressure for food services companies to show a profit.

“Food delivery operators will gradually cancel the discount and reduce the coupons when the competitions thins with mergers of different platforms,” said Li Yi, a researcher from Shanghai Academy of Social Sciences Internet Research Center.

Last week, China’s largest search engine Baidu sold its unprofitable food delivery business Baidu Waimai to its rival Ele.me, which is backed by Alibaba Group Holding. The merger will see Ele.me with an estimated 53.4 per cent share of China’s food delivery market, followed by Tencent-backed Meituan Waimai with a 40.7 per cent.




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The acquisition would leave two of Asia’s biggest technology companies to divide up the lion’s share of China’s takeaway business, where the number of delivery orders rose almost 42 per cent in the first half to 295 million.

Luis Liang, an office clerk in Shenzhen who orders meals online on most working days, says he’s been a heavy user of the food delivery services thanks to the subsidies on offer.

“Currently I still can get at least a 10 yuan coupon for a 40-yuan online order and free meals are sometimes offered to the first visitors of some restaurants,” Liang said. “However, I do not expect the cheap or free meals will be always offered especially when I notice in the news that industry mergers are increasing.”

Other analysts said that the ride-hailing industry underwent a similar wave of consolidation two years earlier, which also resulted in a drastic reduction in consumer subsidies.

“Two years ago, it only took me 5 yuan to take Uber or Didi from my home to office, even cheaper than taking the subway,” said David Wang, an entrepreneur who has used car-hailing service for more than three years. “Now the situation is totally different, hailing Uber or Didi is no longer cheaper than taking a taxi, and it’s even more expensive in rainy or hot days [after Didi’s purchase of Uber China].”

Chinese car-hailing service app Didi Chuxing acquired Uber’s China business in August last year.

Li said the consolidation among ride-hailing services and the emergence of a monopoly operator meant that there was no longer any need to offer steep consumer discounts.

“The subsidies cancellation is a certainty in car-hailing service because you have no choice after the merger of Didi and Uber China,” Li said. “The monopoly due to the platforms combination hurt the customers’ interests.”



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Post time 2017-8-31 15:04:16 |Display all floors

The subsidies cut may also eventually affect bike-sharing companies amid concerns of over saturation of services in leading cities.

Under current subsidised pricing schemes, it is possible to rent a bike for as little as 0.5 yuan per hour, while in some instances the bikes can be used free of charge.

Ofo, China’s largest bike-sharing company, reportedly received US$1 billion in funding from Softbank. This comes less than a month after raising more than US$700 million from investors led by Alibaba and two others, following rival Mobike, which in June announced a US$600 million investment led by Tencent Holdings.

China’s crowded bike-sharing however, has already suffered its first failures and a wave of consolidation is expected in the near future.

Among recent companies to close down, Wukong Bicycle folded after five months of operation, while 3Vbike, which was mainly focused in third-tier cities, also closed. 3Vbike attributed its demise to having had most of its bikes stolen.

Meanwhile, Ting ting, a Nanjiang-based bike-sharing service platform has acknowledged difficulties and revamped its management after customers complained they had trouble getting their deposits back from the app.


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