Alibaba And Meituan Racing for The Food Delivery Service Industry

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As of late, fast, affordable delivery of food has become a life-changing event for many working people in China, although there are plenty of others who prefer to prepare their own food.  Many people in the working class do not have time to pick up fresh ingredients from their local stores.

This has brought about many startup companies as well as larger companies trying to create home-cooked meals that are easy to prepare and very affordable for those with very busy lifestyles by sending fresh vegetables and meats directly to their doors.

Huge Market Growing

According to the fresh grocery sector in China, there was a total of 4.93 trillion yuan or $730 billion, total sales last year alone.  The growth has steadily grown from 3.37 trillion yuan in 2012 according to the data collected by Euromonitor and Hua Chuang Securities.

Most of these transactions are taking place inside the wet markets and supermarkets.  Online retail has only accounted for 3% of the total sales in 2016 and shows there is plenty of room for growth.

Alibaba and who are e-commerce leaders have already incorporated groceries to their online shopping malls, along with established markets that are focused on players like Tencent-backed MissFresh, which has raised $1.4 billion to date.

Adding to these numbers, the field has become even more crowded with the entrance of Meituan which is a Tencent-backed food delivery service and hotel booking mega giant that has raised $4.2 billion in the Hong Kong listing last year.

Meituan Maicai is a new app along with Meituan grocery shopping which are both separated from the company's all-in-one app.  They entered Shanghai in January and then pushed their way into Beijing last week.  This move followed Maicai's announcement back in mid-2028 to get a strong hold on the market of grocery delivery.

According to TechCrunch, Meituan has a plan for taking the grocery delivery market to a much higher level which is very much like the other players in this field.

Users can choose from 1,500 items in stock ranging from yogurt to pork loin. They can fill their in-app shopping carts and pay using their phones.  Then, the company will dispatch their delivery fleets to people's doors within as little as 30 minutes.

Intricate Infrastructure

The fast delivery is possible using satellites of physical service stations stretching across neighborhoods that serve warehousing, packaging, and delivery purposes.  Placing offline hubs along with customers, allows data-driven internet firms to increase warehouse stocking, based on local user's preferences.  In other words, those who are living in an upscale area probably eat and shop differently from those in other areas of the city.

Meituan's incursion into the grocery shopping world has intensified its battle with Alibaba to have control over how people in China eat.  Alibaba's Hema Supermarket has a similar setup that uses neighborhood stores as warehouses and fulfillment centers to be able to delivery within 30 minutes within a set radius.

For many years now, Meituan's food delivery has been battling neck and neck with which Alibaba purchased last year.  Both Alibaba and Meituan are now focusing on restaurants to get them to sign up for their proprietary software which could give owners more insight into diners and increase customer awareness.

Although Meituan wants to be the “everything” app, it has tried several new initiatives that will lead to public offerings but has been known to put them on hold in a short period of time.  This firm acquired the bike-sharing service Mobike last April but in under a year, they shut it down, due to costs.  They also placed a hold on their much-anticipated ride-hailing business.

Putting it in their word words, Meituarn's eating business seems to be at the heart of this company.  It seems they are tapping their existing infrastructure by reaching their goals summoning its food delivery drivers to serve groceries during peak hours.  As of last year, the company noted their earnings and the grocery field could leverage its massive user base creating the largest intra-city on-demand delivery network.