Will Meituan-Dianping cut into Didi Chuxing’s ridesharing domain?

Can you imagine grabbing a taxi via Groupon, or shopping from an Uber vehicle that’s essentially a supermarket on wheels? Well, both are already happening in China.

Meituan-Dianping, once known as “the Groupon of China”, recently launched its timeshare car rental service in Chengdu. Meanwhile, Chinese ride-hailing giant Didi Chuxing has already invested in Ele.me, the largest food delivery startup in China. It did so in November 2015, approximately one year before Didi acquired Uber China. More recently, Chinese media reported that Didi is secretly testing its own online food delivery service as a counter-blow to Meituan-Dianping’s invasion into the ride-hailing sector.

These two popular Chinese unicorns have now entered each other’s markets. As a result, they will inevitably complete head-to-head.

Meituan-Dianping’s location-based ambitions

According to an internal email on December 1st this year, founder and CEO of Meituan Wang Xing, said that the group-buying startup will upgrade its platforms by focusing on four location-based services: when users are in a store, at home, in a car, or travelling.

This strategy focus is Meituan-Dianping’s boldest move since its latest funding round in October, from which it raised a staggering USD 4 billion. The CEO said the adjustment aims to better realize the company’s mission — “to help everyone eat better and live better” — and to act as a “social enterprise.”

In comparison to the “Troika” strategy (which covers dining and wining, in-store general services, hotels, and travelling) that Meituan-Dianping adopted earlier this year, the company’s new strategy focus indicates that location-based services (LBS) will be the next core business on its list of services to further develop.

Meituan-Dianping’s attention to the ride-hailing transportation sector can be traced. The group-buying company has offered car-hailing service in Nanjing since February. And the Meituan Dache, an Uber-like application available in the App Store, has been updated and upgraded 10 times over the previous four months.

Last month, Meituan-Dianping launched its timeshare rental application, Meituan Zuche, as a pilot project in Chengdu. The new service set up 17 parking zones with more than 50 cars for rent. Zuche offers customers a choice of Volkswagen Lavida or Santana, the price of which range from RMB100,000 (USD 15,108) to RMB 150,000.

Meituan Zuche requires a deposit of RMB 599 and ID card registration during the trial period. Users can rent a car at RMB 0.2 per minute and RMB 0.8 per kilometer, a price slightly lower than Didi’s timeshare car rental service.

Reportedly, the group-buying startup has established an independent unit operating within the travel and transportation sector, managing businesses like timeshare rentals, mapping, autonomous vehicles, car-hailing, etc.

Meituan-Dianping expects to provide this so-called “integrative solution” in response to users’ strong demands for LBS before and after their daily online-to-offline purchases.

Photo from Baidu Images.

Didi’s strike on fast food delivery

On the other hand, cooperation between Didi and Ele.me has been widely read as a response to Meituan-Dianping entering the ride-hailing market.

In fact, Uber is a good example of car-hailing company benefiting from its delivering services, such as Uber Eats and Uber Rush. The food delivery service under Uber developed quickly in the second quarter of this year, taking nearly 10% of Uber’s total trade volume worldwide.

Zhu Xiaohu, founder of GSR Ventures, has led investments in Didi and Ele.me and is reported to be at work on a new retail project, which will “turn every Didi registered vehicle into a moving convenient store and help passengers to buy drinks, snacks, and even umbrellas when riding with Didi.”

With so much overlap in services and target demographic, can Meituan-Dianping and Didi Chuxing both succeed? If not, only time will tell which will ultimately prevail.

(Top photo from 58pic.com)

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Y.R. Zhao

Zhao is our columnist. She previously worked at China Daily, and she was the chief Southeast Asia correspondent while living in Bangkok. She holds two master’s degrees from the University of Sydney and Australian National University. She is a foodie and avid marathoner. She believes technology will change our lives and that China is leading the trend.

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