China Focus: China's O2O catering industry makes eating easy

With the emergence of online to offline (O2O) catering, it's never been so easy to get quality food delivered to your door.

Driven by the "Internet Plus" plan, O2O services are taking over China's market with gusto, spanning fields including catering, taxis and car washing.

FLOURISHING INDUSTRY

Standing beside his bicycles, Meng Fanqiang stares at his cell phone, waiting for orders.

"Normally I take around 35 orders a day, and I am just one of over 1,000 Daojia delivery men in Beijing," said Meng, who works for one of China's leading food delivery companies.

According to research by Analysys, a major Chinese think tank on the development of new media, in the first quarter of 2015 there were 176 million orders fulfilled by China's O2O catering industry. For the whole of 2014, 376 million orders were placed.

"The industry shifted to a whole new level last year," noted Wang Jing on behalf of the Daojia public relations department. "Big discounts and offers by some catering delivery companies attracted lots of customers."

Baidu and Eleme collaborated with certain restaurants to pass on sizable discounts, sometimes as much as 50 percent off the bill, to hungry customers.

A recent survey showed that students and white-collar workers were most concerned with delivery prices.

Hang Su, a post graduate student at China Foreign Affairs University, said: "Most of the time I just choose the company with the best discounts."

IMPERFECT O2O PICTURE

Discounts aside, overall, the O2O catering industry is far from perfect.

Xie Wen, former president of Yahoo China, said that despite the convenience of O2O catering, it has done little to boost the economy.

"It truly is progress but it won't evolve the Internet or boost our economy," he said.

Some industry insiders are also unsure whether the long-term prospects are as bright as they seem.

"Customer loyalty is questionable under the circumstances," said Sun Hao, CEO of Daojia, who said the current surge holds a bubble.

"The discount war is putting the whole industry in jeopardy, and wasting a lot of resources," added Sun.

Some of the statistics might support his argument. According to data collected by Analysys, in the fourth quarter of 2014 the number of orders fulfilled in China's O2O catering industry was as high as 190 million, an increase of 140.9 percent compared to the third quarter.

Moreover, despite a small decline compared to the previous quarter due to the winter vacation, the aforementioned number of orders fulfilled in the first quarter of 2015 is over three times more than the same period in 2014. This is probably not the most natural increase seen in any industry.

There are concerns over the O2O service from some customers as well. Gao Yanqin, from Shanghai, questioned the the online-offline synergy.

"Sometimes when the delivery is late, all you can do was is wait as there is no way to contact the delivery man," she said.

WHERE NEXT?

Despite all these imperfections, China's O2O catering has a long road ahead. As an emergent industry, it not only faces a lot of potential risks, but also loads of opportunities.

According to Xie Wen, the prospects of the industry depend on whether it can continue to change with the times.

"Only by independent innovation and structural reform can the industry move up to the next level," he stated.

Similarly, Sun Hao spoke highly of innovation, as it would make a company stands out. However, he underscored that service was the core of the whole industry.

"The lifestyle of young people is changing, more and more people are living alone and spending more time commuting. That's going to have a huge effect on the industry," he said. "In this case, service is key to securing loyal customers." Endi