Get the app today! Download iPhone App Download Android App

China's Hottest Internet Sector Is Old-Fashioned Food Delivery

Published on Aug 5 2017 10:30 AM in Technology tagged: China / Online Delivery / Food Delivery

China's Hottest Internet Sector Is Old-Fashioned Food Delivery

China’s fastest-growing online industry segment in the first half was food delivery, as startups backed by Tencent Holdings and Alibaba Group touted discounts and marshalled armies of people to get restaurant meals to the homes of almost 300 million.

The population of people who rang up meals from phones and computers surged 41.6% to 295 million over the first six months, the government’s online industry overseers said in a biennial internet snapshot Friday. That’s well in excess of other markets, including the 7.7% user growth in digital payments and 23.7% rise in ride-hailing, both more mature sectors.

Food delivery, which has existed for decades, has been turbocharged in the smartphone era to become one of the country’s fiercest online battlefronts. The largest platforms, backed by the country’s internet triumvirate of Tencent, Baidu and Alibaba, have plied diners with coupons and built out extensive networks. That in turn has encouraged patronage from urbanites who demand fast service at the press of a smartphone screen.

Investment

The industry has attracted billions of dollars worth of investments and spurred a flurry of deal-making. This week, Bloomberg reported that sector-leader Meituan Dianping, which is backed by Tencent, is in talks to snag as much as $5 billion in a round of funding that could make it the world’s fourth largest startup.

Baidu, the Chinese online search giant, is said to be negotiating the sale of its loss-making Waimai unit to Alibaba-backed Ele.me. Ele.me had 28 million monthly active users as of May and complements the e-commerce operator’s own on-demand services affiliate Koubei. Together, they are vying for supremacy with Meituan.

Over 92% of the customers used smartphones to place an order, the China Internet Network Information Center or CNNIC said in its report.

“As the industry matured while profitability remains low, it became an obvious choice for the platforms to explore other related businesses,” the CNNIC said.

There were 751 million internet users in mainland China as of June, almost 20 million more than at the end of 2016, according to the report.

News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine.

Share on Facebook Share on Twitter Share on Google+ Share on LinkedIn Share on Tumblr Share via Email