More app developers tap into food market
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E-mail CNTV, December 16, 2015
The online-to-offline (O2O) catering sector in China is now a multi-billion dollar industry. It is estimated that users will order about US$23 billion worth of meals online in 2015. This would not have been possible without the fast development of mobile apps. And to expand their market share, developers are connecting with more traditional catering businesses.
Jennifer Yeh has been running her bakery for eight years. From a little known shop to a well-reputed choice among bread lovers, she has been content managing her business the traditional way. But lately she has tried to expand her bakery presence online.
She made the decision after being approached by a few O2O companies, all trying to add her to their online catering services. It is a baby step for Jennifer and her bakery. But in contrast, the O2O catering industry is seeing a great leap forward in business growths.
From 2010 to 2014, its market size expanded by 10 times, from 9 billion yuan to 95 billion yuan. And observers estimate that number will soar to close to 140 billion yuan this year.
It is estimated that 260 million people, one fifth of the entire Chinese population, will be ordering food online in 2015, and this large appetite is being satisfied with a growing number of O2O companies targeting the catering industry.
A startup company called Wonderworld launched a catering app last month. Although long-time market players like Meituan or E-le.me have taken most shares, Wonderworld's strategy is not just about low prices and fast delivery. They believe quality wins loyal customers.
"Unlike existing apps, our orders are more expensive because we focus on the quality of the food. We only hire the most skilled chefs, bakers and give users an exquisite experience so they're willing to pay more," said Zhang Youxin, founder & CEO of Wonderworld.
"We've only been online for two weeks so far. We have about 100 orders per day and most orders are over 100 yuan. It means people are willing to pay more for better taste."
Despite rising competition and lowering profit margins, the sector still looks attractive to venture capitalists. The startup has already got its first cash injection, while bigger players such as Dianping and Meituan were recently valued at billions of dollars. China's hunger for online catering services is far from sated.
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