Food delivery industry: Meituan and Ele.me are competing against each other, and Baidu is counting down to its exit

Zhang Xuhao will never forget the summer of 2009. In order to get familiar with the traditional food delivery industry, he and other founders of Ele.me contracted a restaurant's food delivery business and worked as deliverymen themselves. Probably no user would know that

This master's student who graduated from Shanghai Jiao Tong University voluntarily gave up the opportunity to study in Hong Kong and chose to fulfill his entrepreneurial dream in the field of food delivery.

The end result is that Zhang Xuhao became a trendsetter in the food delivery industry, and Ele.me also created the O2O boom.

If we count from the establishment of Ele.me in 2009, the online food delivery industry has been around for 9 years; but if we count from the entry of Meituan Dianping, the industry has only been around for 4 years. In the 5-year time gap, Meituan Dianping has used its latecomer advantages such as financing and traffic to overtake others and form a three-way tie with Ele.me and Baidu Waimai.

But now the industry is facing the most important turning point. On the one hand, the lag of Baidu Waimai has pushed Ele.me and Meituan into an oligopoly, and the Matthew effect has become more prominent; on the other hand, the battle between Ele.me and Meituan is essentially still a "proxy war" between Tencent and Alibaba, and the capital behind them is still willing to increase the stakes to win.

However, the online food delivery industry is no longer a simple capital game. After the initial expansion, it has become a consensus in the industry to continue to cultivate the market. A year ago, Wang Xing first proposed the topic of "China's Internet has entered the 'second half'" in an internal speech, which has since triggered a great discussion in the industry about the disappearance of the mobile Internet dividend and the decisive victory of artificial intelligence.

After a year, the food delivery industry is still in the first half, but is rapidly moving towards the second half - new retail has become another new battlefield for the food delivery business, and traffic, logistics and merchant supply have all become the focus of competition.

There is growing evidence that the food delivery game between Meituan-Dianping and Ele.me will be a long battle, and it is very likely that the story will not end with a merger - at least before the profit pressure becomes apparent, neither side is willing to give up market share.

Oligopoly Game is in a Strain

The turning point of the food delivery industry started with the rumors of Meituan Dianping’s new round of financing.

According to Bloomberg, Meituan Dianping is in talks with investors to raise $3 billion to $5 billion, with a possible company valuation of $25 billion to $30 billion. Tencent, an existing major investor, is also interested in participating in this round of financing, with an investment of about $1 billion. However, in response to this financing rumor, Meituan Dianping told the Times Weekly reporter that it was not true.

Meanwhile, Ele.me has also started to negotiate with Baidu Waimai for an acquisition. It is undeniable that Baidu has basically fallen behind in this food delivery war. According to the "China Mobile Internet Development Analysis Report in the First Half of 2017" released by the third-party data agency Trustdata, Baidu Waimai's DUA has hardly grown in the past year, and has been greatly left behind by Meituan Waimai and Ele.me.

But Baidu Waimai is not worthless. If it can obtain Baidu's traffic support through acquisition, Ele.me still has a chance to win this arms race. In addition, Baidu Waimai has always occupied a large market share in the white-collar market, and the ownership of this part of high-quality users will also affect the trend of the battle.

However, the competition between the two giants is not the "second half" as Wang Xing said. In fact, the food delivery market is still in the first half, which is the consensus of industry insiders. Previously, Wang Puchong, vice president of Meituan Dianping and general manager of the food delivery and distribution business unit, told the Times Weekly reporter that compared with the situation in China and the United States, the penetration rate of the domestic food delivery market has not reached its limit. "In the future, the penetration rate of food delivery will increase by at least three times in the next three years. Of course, the catering industry itself is also growing. The online rate will become higher and higher, and I think it will be close to 95%."

Kang Jia, COO of Ele.me, holds a similar view: "Competition in the food delivery industry is still very fierce. We should not focus too much on acquisitions, but should work together to increase market share."

Kang Jia said that given the current competitive situation, acquisitions cannot solve any problems and there is no need for them. "The takeout market is still expanding rapidly. As the industry develops, the future will not only be a competition for market share, but also a competition for efficiency, models, etc. The second half of the takeout competition will be longer than the first half."

Therefore, any link such as traffic, scenarios and logistics may affect the final outcome. According to third-party data from Trustdata, the DAU of Meituan Waimai and Ele.me are basically comparable, but the activity of Meituan's merchant-side APP is almost twice that of Ele.me. Considering that Meituan Waimai also has multiple traffic sources such as Meituan APP, Dianping APP, WeChat mini-programs and QQ Mobile, the food delivery war is quietly moving towards the "721" pattern.

Competing for the new retail trend

The growth of the food delivery market continues, but its growth rate is also slowing down after the reduction of subsidies. According to the monitoring data of the China E-commerce Research Center, the transaction volume of the food delivery market in 2016 was about 152.4 billion yuan, an increase of 232% compared with 45.9 billion yuan in 2015. Although the overall transaction volume is on an upward trend, the transaction volume in the second half of 2016 has decreased compared with the growth rate in the first half of the year.

Therefore, O2O platforms began to shift their business focus to local services, especially the new retail sector, which became the next business growth point. As offline commercial entities gradually joined the instant logistics distribution circle, the scale of the local life service market will reach trillions of yuan. Since last year, Meituan Waimai and Ele.me have expanded their platform delivery categories from takeout to fresh fruits, supermarket convenience stores, flowers and cakes.

Zhangyu Fresh Food, invested by Meituan Dianping, is located in Beijing Wangjing. This is Meituan Dianping's first attempt at new retail. The business area of ​​this store is over 2,000 square meters. It will be a combination of takeaway and O2O platform, providing door-to-door delivery to users within 5 kilometers and promising delivery within 1 hour. It is reported that in the future, Zhangyu Fresh Food may also set up a central kitchen to become an incubator for the catering industry.

Meituan Dianping's entry into the new retail market will directly face a showdown with Alibaba. Before the launch of Zhangyu Fresh, Alibaba's investment in Hema Fresh had already landed. Since the beginning of last year, Hema Fresh has opened stores in Shanghai, Ningbo and other places. This summer, it officially entered the Beijing market and has achieved profitability. In addition to Hema Fresh, Alibaba has recently increased its chips in Yiguo Fresh and Tmall Supermarket as one of the breakthroughs in the new retail market.

Therefore, Alibaba will directly play a decisive role in the competition between Ele.me and Meituan-Dianping. Since Alibaba and Ant Financial invested 1.25 billion yuan in Ele.me in April last year, the latter has been regarded as an important part of Alibaba's ecosystem. However, Ele.me has always maintained independent operation and is not completely controlled by Alibaba.

However, the signs that Alibaba intends to control Ele.me have become increasingly obvious. First, in August this year, Taobao Waimai announced that the Koubei food delivery service will soon be provided by Ele.me, further accelerating the business integration between Koubei and Ele.me. Secondly, Ele.me recently completed a strategic cooperation with the crowdsourcing logistics company Dianmida, and the two platforms have been deeply connected to form a complete distribution chain from online to offline and from upstream to downstream.

This cooperation can be regarded as a joint layout of Alibaba. Alibaba is the main investor of Ele.me and Dianmida. The latter received 1 billion yuan in the D round of financing last year, in which both Alibaba and Ele.me participated. A source close to Ele.me told the Times Weekly reporter that it is not ruled out that Alibaba companies such as Hema Fresh and Yiguo Fresh will also be connected with Ele.me to form Alibaba's new retail matrix.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.