Talking about food delivery services in China, a few big names will come up quickly: Meituan-Dianping, Baidu Delivery, and the Alibaba-backed Ele.me. In a year or so, this may no longer be the case.
“In the next 12 to 16 months, competition in the arena of food delivery may turn more fierce, with the efficiency of each competitor continuing to improve,” Zhang Xuhao, CEO of Ele.me, told The Beijing News in a recent interview. He predicts that this time frame may leave China with only two influential food delivery service providers.
However, Zhang believes that a merger similar to the Didi-Uber case is unlikely to take place in food delivery – at least, not in the short term. He said that among the three million providers of food services in China, Ele.me covers only 600,000 to 700,000.
In addition to the large market yet to be covered, Zhang believes that it is crucial to keep up with the latest technologies which allow problems to be solved with higher efficiency.
At a time when Zhang and his team first started Ele.me, food was still ordered by phone calls. As personal computers became ubiquitous, the team spared no efforts helping catering service providers join their network via the internet. However, it is during the age of mobile internet that Ele.me gained the fastest growth.
In three to five years’ time, Zhang believes that e-commerce as it is today may fade away, and what will come into play will be a few integrated platforms with networks that distribute directly to customers, greatly saving logistics costs.
Despite market rumors speculating that Ele.me was facing temparary financing difficulties last year, Tencent and JD.com are among its investors for its series E and F funding. In November last year, funding from the ride-hailing giant Didi Chuxing was confirmed. Last December, Alibaba invested another USD 1.25 billion into Ele.me, pushing its valuation to USD 4.5 billion.
According to Zhang, although Ele.me covers 1,000 cities in China and has a user base of 70 million people, a lot is yet to be done to unleash the potential of the whole food delivery market.
Zhang made a guess that the next 16 months may leave China with only two major food delivery service providers. Who will they be?
(Top photo from Baidu Images)