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Business

Net-based food delivery service thriving in China

Chinese consumers are quickly embracing the convenience of home-delivered food offered by three major players in a growing market.

SHANGHAI -- Bao Chunyang tends to order lunch using food delivery apps and sometimes has dinner delivered to her doorstep, especially on cold winter days. Bao, a 27-year-old employee at a Japanese company in Dalian, Liaoning Province, normally uses the popular app Ele.me, which allows users to choose from a wide range of snacks and fast foods, such as noodles. When traveling, she looks for restaurants via the food app Meituan Waimai.

There are three dominant players in China's food delivery app market: Ele.me, Meituan Waimai and Baidu Waimai.

Ele.me was the first to enter the market, doing so in March 2012. The company initially targeted students with cut-rate prices and has gradually expanded its customer base to include office workers. It operates in more than 1,000 Chinese cities, and its roughly 70 million users place more than 5 million orders every day. While a large number of restaurants are registered on Ele.me catering mainly to students, its business partners are mainly small, family-owned restaurants.

Founded in November 2013, Meituan Waimai provides delivery services initially introduced by Meituan.com, China's major group buying website. In 2015, it merged with Dazhong Dianping, which operates the largest restaurant review website in the country. Chinese internet company Tencent Holdings invested in the newly combined entity, helping the company fully utilize its customer base through the social media app WeChat. More than 50,000 restaurants have teamed up with Meituan Waimai, giving users access to a wide variety of food. It operates in over 100 cities, with a daily order volume surpassing 4.3 million.

Their close rival, Baidu Waimai, was a latecomer to the sector, launching its business in May 2014. However, the company is quickly catching up with its competitors by taking advantage of its expertise in combining internet users' two most commonly used functions: search and map.

From the get-go, Baidu Waimai provided high-quality service targeting office workers. Many popular restaurants and chains have teamed up with the company, which operates in more than 140 cities around the country and serves 50 million customers. It holds the third-largest share in China's food delivery market, but is ranked first in terms of market share for white-collar users in 40 major cities. Baidu Waimai has established a proprietary distribution system, and the company's quick speed and polite manners have earned it a solid reputation.

Competition is fierce among these three major players in China's food delivery market. Time will tell which one prevails.

Kosuke Okame is a Shanghai-based business and market research consultant.

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