China★Online Delivery Gains Popularity Among Busy Young People

NNA, which distributes economic and business information on Asia, reported that internet-based food delivery services are gaining traction in China alongside the spread of e-commerce. There is significant latent demand, particularly among busy young people. Restaurants also anticipate that this will accelerate the "O2O" (Online to Offline) business model, connecting online users with physical stores.

According to local media, foreign-funded online delivery services include specialized sites like McDonald's and KFC, which handle both cooking and delivery themselves, alongside platform-type services like Ele.me, Meituan Waimai, Taodian, and Baidu Waimai, which partner with food and beverage companies.

Platform-based delivery sites operate by having their own delivery personnel pick up orders from restaurants and deliver them to the consumer's specified location upon receiving an order. A key feature is that restaurants themselves do not operate their own delivery services.

According to a report compiled by the communications think tank Analysys, online food delivery sales reached 15.1757 billion yuan (approximately 300 billion yen) in 2014, a year-on-year increase of about 60%. On a quarterly basis, sales surged from 2.161 billion yuan in Q1 to 6.02 billion yuan in Q4, nearly tripling over the year, highlighting its rapid growth.

The driving force behind the expansion of online delivery is the younger generation, known as the "80s generation" (born in the 1980s) and the "90s generation" (born in the 1990s). Ele.me, which pioneered platform-based services in 2009, has already partnered with 200,000 food and beverage businesses and operates in approximately 260 cities nationwide. Daily order volumes peak at 2 million, with the majority of users being young office workers and university students. Mobile devices, such as smartphones, account for about 80% of orders.

With further market growth anticipated, companies are actively raising funds for business expansion and forming partnerships. Meanwhile, lesser-known food and beverage businesses also stand to benefit by listing on platform-based delivery sites, enabling O2O (online-to-offline) without advertising costs. This is likely to drive increased market entry.