Ch15: Meet China's Food Delivery Dragons!

Forget chopsticks – China's digital age is devouring meals with a tap.

In 2023, China's food/grocery delivery market ended up as a colossal $80 billion powerhouse, serving over 500 million users who placed an average of over 600 million orders daily.

That's like delivering meals to every single person in North and South America combined! Or in the Indian context, it is a crazy lot more than the 4 million orders a day recorded by platforms like Zomato & Swiggy .

Chinese food delivery apps are truly revolutionising the way one of the world's largest population eats, at a mind-boggling scale.

Let's bite into this digital delicacy and uncover how Chinese apps are cooking up a revolution in the world of food!

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The Humble Beginnings (1990s-2010)

Rewind to the 1990s: China's economy is buzzing, and cities are growing rapidly. But food delivery? It's mostly local eateries and phone-in orders.

Fast-forward to the late 2000s, and we're seeing the seeds of tech-based delivery sprouting.

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The Tech Tonic Shift (2010-2015)

Enter the game changers: 美团 and Ele.me

• Meituan, born in 2010, was initially a deals platform, which soon pivoted to food delivery.
• By 2013, Ele.me, established in 2008 by two Shanghai students, started gaining traction. And by 2015, it had amassed millions of users on the back of which it raised a hefty $350 million equity funding.
• Fueled by venture capital, the two rival emperors of the Chinese food delivery realm get embroiled in fierce competition. Imagine a delivery battlefield,?with discounts and subsidies raining down to capture customers.

This period was electrifying, just as things were for Zomato, Swiggy and a host of other such players like Uber Eats & Foodpanda in India between 2015-2020!

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The Exponential Era (2015-2020)

• Meituan and Ele.me expanded at lightening speed, acquiring & finishing smaller competitors to gain market share. And what helped was the massive investments they pulled.
• Sensing a growth explosion here, Jack Ma-led 阿里巴巴集团 infused a whopping $1.25 billion into Ele.me in 2015. Meanwhile, rival internet major 腾讯 backed up Meituan.
• And by 2018, Ele.me became a part of Alibaba, bought for a massive $9.5 billion. Tencent too doubled down on Meituan.
• Then, as we reached 2020, the two heavyweights had cornered a mammoth 98% of the food delivery market share with a combined user base of about 400 million users.

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Pandemic Pivot (2020-2022)

COVID-19 turned the world upside down.

• China's food delivery apps become essential services. Meituan reported a staggering 70% increase in grocery delivery orders in early 2020 alone. And Ele.me saw explosive growth itself.
• And sensing an opportunity like none other, the two platforms peddled into diversification to gain a larger share of their massive user base.
• They expanded beyond meals,?offering groceries,?restaurant reservations,?and even laundry services.
• Imagine one app catering to every culinary whim,?a digital Swiss army knife for your stomach.

Crazy, right?

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Cut to 2023!

• Alibaba’s Ele.me boasts over 750 million unique users and partnerships with 4 million restaurants.
• Backed by Tencent,?market leader Meituan claims over 670 million users and 6.9 million restaurants in its digital kingdom.
• And this has earned it a market cap of $70bn, which is way higher than the value ascribed to the likes of Doordash in the US and Zomato and Swiggy in India.
• Also, these giants have optimised their delivery costs fantastically by switching to electric delivery fleets. As of now, 60% of Meituan’s and 50% of Ele.me’s delivery fleet is fully electric, which is not just cheaper, but also cleaner.

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Challenges

• Meanwhile, each of these companies have about 3 million delivery folks working for them, each.
• If they stood hand in hand, they could surpass the length of the Great Wall of China, 3 times,?delivering everything from dumplings to dim sum.
• And while they contribute significantly to urban employment, they also raise concerns about the rider safety,?long working hours, low wages and ill-protected rights of these 6mn or so gig workers who keep the wheels of convenience turning.

But, it’s naturally not easy. Imagine ensuring fair treatment, as well as ample delivery work, for over 6mn foot soldiers! Tough task.

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Conclusion

Remember, this is just the appetizer!

• From traditional phone orders to AI-powered super-apps, China's food delivery revolution is attracting intensifying competition from other internet giants like Pinduoduo and JD.com
• So, whether you're tuning in from India, the USA, or anywhere else, I hope this data-rich dish helps you savour the flavour of China's tech-infused food delivery saga.

Happy eating, or as they say in China, 吃好 (chī hǎo)!

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See you tomorrow morning 7.30 am with another edition.

Best,

Jayant Mundhra