Food delivery apps record fastest growth in China’s online market

By RJ Whitehead

- Last updated on GMT

© iStock
© iStock

Related tags: Mainland china

Heavy discounting by start-ups backed by internet majors Tencent and Alibaba have made online food delivery the fastest-growing online segment in China.

In the first half of this year, services like Meituan Dianping, the segment leader, delivered orders to nearly 300m Chinese, according to a market snapshot by Beijing internet monitors. 

This surge of 42% since January is far ahead of other digital markets which have also been thriving in China. These include online payments, which grew by 7.7%, and ride hailing, which saw a 24% increase in business in the first six months of 2017.

Over 92% of the customers used smartphones to place an order, the China Internet Network Information Centre (CINNC) said in its report. 

Though delivery services are not new in, they have been grappling for market share by offering millions of discount codes in a bid to gain greater visibility for funding rounds and acquisitions.

Bloomberg recently reported that Tencent-backed Meituan is in talks for a US$5bn injection. If the funding round is successful, it could become the world's fourth largest startup, according to Bloomberg. 

Chinese online search giant Baidu, meanwhile, is said to be negotiating the sale of its loss-making Waimai unit to Alibaba-backed Ele.me. 

With 28m monthly active users, Ele.me is in a battle for supremacy with Meituan. 

As the industry matured while profitability remains low, it became an obvious choice for the platforms to explore other related businesses​," the CNNIC said. 

There were 751 million internet users in mainland China as of June, almost 20 million more than at the end of 2016, according to the report.

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