Briefing: Seeking profit, Meituan Dianping crowds into express deliveries
May 7, 2019
China’s Meituan Dianping pushes its short delivery service to more customers in search for profit – South China Morning Post
What happened: Meituan Dianping, China’s leading food delivery and services platform, is offering short-distance deliveries to more customers and industries as a new service, Meituan Delivery (our translation). The services can be accessed on Meituan’s main app which now serves over 3.6 million merchants and 400 million users in China.
Why it’s important: With the launch of this service, Meituan aims to reduce its logistics costs and improve operating efficiency. In the fourth quarter of last year, the company recorded RMB 3.7 billion in operating losses, while food delivery costs increased 53.6% year on year to RMB 9.5 billion, mainly due to mounting salary costs for its delivery fleet. The short-distance delivery business will help the company’s more than 600,000 active couriers make better use of downtime, before and after peak lunch time, for example. Similarly, Chinese online retailer JD. com also opened up its logistics capacities to more customers recently in a bid to further monetize its in-house logistics capacity. The entry of two tech giants into the express delivery industry heats up competition in a sector already crowded with players like SF Express and Shansong Express. In addition to increasing the efficiency of existing manpower delivery fleet, both of the companies are engaged in developing autonomous delivery vehicles.