China's food delivery apps adapt to older users
Two-thirds of new Meituan Dianping users after people returned to work in February were in their 40s and 50s, forcing Meituan and competitor Ele.me to adapt their services
Stuck at home, can’t go to the store to buy food, too tired to cook – “Let’s get a food delivery!”
That has been an increasingly common refrain for millions of people around the world confined to their homes amid the coronavirus crisis, with lockdowns and social distancing measures forcing more into online consumption.
In China, which has the largest food delivery services market in the world, worth over 603 billion yuan (US$85.4 billion) in 2019, it has not been a simple case of more demand and increased sales – the impact has been more nuanced.
Delivery platforms such as Meituan Dianping and Alibaba’s Ele.me, which together dominate 90% of the market in China, have had to evolve. Many people have opted for groceries over meals for fear of being infected, and platforms have had to innovate with "contactless deliveries" and "semi-finished products."
The grocery delivery services market had an estimated 70 million monthly active users in the month after the Lunar New Year holiday in China, up 59% from the same period a year ago, according to QuestMobile.
Beyond the core of food delivery, Meituan and Ele.me have expanded into books and cosmetics as people diversify their consumption habits amid stay-at-home policies. In early April, Ele.me announced that consumers could buy Huawei smartphones via its delivery service, hot on the heels of Meituan offering to deliver beauty products from Sephora.
Platforms are also seeing an increase in middle aged and elderly customers.
According to Meituan, 36% and 31% of new users of its delivery service in the two weeks after a return to work in late February were people in their 50s and 40s respectively. MissFresh, a Beijing-based grocery delivery start-up, said that users above 40 jumped 237% from January 23 to February 23.
Li Xiaoying, a 68-year-old resident in Wuhan, had never used WeChat until February this year when the Covid-19 pandemic brought her hometown to a standstill.
Quarantined at home for over two weeks, Li had to find ways to buy food, which led her to download the super-app operated by Chinese gaming giant Tencent Holdings.
“Group buying, organized by local communities, was the only way for us to buy vegetables in early February when all stores in Wuhan were closed,” said Li. “Each WeChat user at that time could only buy one package of 10-yuan vegetables.”
Many elderly people in China have used online platforms and delivery services for the first time in their life during the coronavirus outbreak.
“Now there is a chance for the [service delivery] industry to educate and cultivate users, and to let people know the service exists and experience the convenience of it,” said Yang Xu, a senior analyst at research firm Analysis. “But it remains to be seen whether these new users will be retained after the pandemic subsides.”
To tap into the booming on-demand community buying market, Chinese ecommerce firm Pinduoduo launched a new location-based team purchase product called Kuai Tuan Tuan in March, which allows neighbors living in the same housing development to team up to buy groceries and daily necessities from nearby shops and merchants.
There have been other changes too – with increased demand for "semi-finished" dishes as well as the wider application of smart lockers and unmanned deliveries by drones and robots.
“[Elderly] people who used to go to physical stores to buy groceries have started doing it online,” said Wang Jun, partner and chief financial officer of MissFresh. “While young people, who ordered food online before the pandemic, have now started to buy fresh produce to cook.”
So-called semi-finished products are an easy way for young people like Beijing resident Amber Li to feed themselves while under quarantine. For example, sautéed beef fillet with black pepper can be pre-prepared – so all the customer has to do is throw the fresh ingredients into the frying pan.
“There are many semi-finished dishes you can buy on apps,” said 28-year-old Li, who has been cooking these kind of meals herself for two months already. “They cut fresh meat into pieces so you only need to fry it. It’s easy and doesn’t take too much time… just 10 minutes.”
“According to big data analysis, semi-finished dishes will be a hotspot, so we are providing such dishes and cooperating with other restaurants to launch semi-finished signature dishes,” said MissFresh’s Wang.
The food delivery phenomenon has literally been a lifesaver for many restaurants in China too.
Wang Lewu is one Beijing restaurant owner who has resorted to technology-enabled online marketing channels to avoid going bust.
Revenue at Wang’s Cottage Barbecue, a chain restaurant which has 39 branches in Beijing, plummeted 90% year-on-year in early February, bringing it to breaking point.
“We lost about 1 million yuan every day,” said a weary Wang. To rescue the situation Wang has “digitized” large chunks of his business to boost offline takeaway orders.
Wang pushed his team to build a mini-program for WeChat. He also added the restaurant to a WeChat group with about a hundred influential food bloggers that help with online promotions.
Wang’s restaurant saw a significant turnaround in the 20 days after February 13 when the change was made, with daily revenue up about 20 times to 20,000 yuan per store thanks to a surge in orders placed through the WeChat mini-program and food delivery service Meituan.
Many people have followed Wang’s example. In February, more than 5,000 hotpot stores and around 2,600 barbecue shops joined Meituan’s delivery platform, according to the company. Analysts think this change could be long-term.
“As the pandemic eases, restaurant owners will put more effort into moving online, and online channels will become a basic and essential platform for them,” said Yang from Analysis.
Another trend has been “contactless deliveries” to minimize the risk of driver-to-customer infections. This innovation allows users to have their food delivered to a designated area without having to interact with a courier in person.
Alibaba launched contactless deliveries in Hubei in late January, covering its Ele.me, Freshippo and Tmall Mart platforms, and it has now been introduced nationwide. Chinese ecommerce giant JD.com announced in February it was delivering medical supplies and groceries to hospitals and communities using driverless vehicles in the city of Wuhan.
Meituan deployed unstaffed cars to send grocery orders to customers in Shunyi district in Beijing for the first time in January. The company has also installed contactless lockers, which can help to disinfect delivered goods using ultraviolet light before the customer picks them up, in office buildings and hospitals since February.
Couriers leave the orders in a secure cabinet and customers unlock it using a QR code supplied by the app.
“We’re still a long way from realizing full unstaffed deliveries because of the technology challenges in real-life scenarios… and for now the cost of human labour is less than for an autonomous machine,” said Meng Pengfei, senior analyst at Newtimes Security. “Compared to autonomous vehicles, smart lockers are a better approach.”
Meituan has deployed about 1,000 smart lockers across the country and almost 200 orders on average are delivered every day through them, according to the company.
To be sure, it has not been all plain sailing for the delivery companies. Ele.me has set aside 1 billion yuan to subsidize its supply chain and courier businesses, and to provide compensation for deliverymen affected by the health crisis and lockdowns.
Meanwhile, several restaurant associations across the country have publicly called for fee reductions by delivery platforms to help them recover from the downturn. In early April, the Guangdong Restaurant Association published an open letter saying high fees and what it described as “unfair” exclusivity agreements with Meituan, were hurting the catering business.
Meituan denied this allegation and said it was investing most of its income to help merchants develop professional delivery services, acquire orders, and improve digital infrastructure during the health crisis.
Putting technological innovation to one side - for now, the millions of human deliverymen like Liu Bin are still essential and many have risked their lives during the Covid-19 crisis to bring food to people.
Liu, who has worked for Ele.me in Wuhan for two years, was among the few people allowed to walk the streets in the city during February. Liu said he spent much longer waiting to deliver each order during the pandemic as he was not allowed to enter certain communities and customers needed to meet him at gates.
Working from 9am to 8pm every day, Liu delivered only groceries as all restaurants in the city were closed. He also had to brave icy temperatures.
“I’ve been working for two months non-stop. Safety issues do concern me but I’ve had no choice, it’s my job,” said Liu, a native of Wuhan.
Ele.me is owned by Alibaba Group Holding, the parent company of the South China Morning Post.
(Abacus is a unit of the South China Morning Post.)