Students’ lazy lunch provides food for thought and fires China’s meal-ordering platform, ele.me
The mainland's leading online platform for ordering meals handles two million orders every day in 260 cities across the country
Seven years ago, two graduate students at Shanghai Jiao Tong University were so busy playing computer games in their dormitory one day that they ordered lunch from a nearby restaurant.
That night, inspired by their laziness, Kang Jia and Zhang Xuhao chatted until the early hours about setting up their own food delivery business.
I believe that in five years you will see fewer and fewer people opening restaurants, but more offering more diversified door-to-door services
Yet they were inspired to take action immediately – contracting the delivery services of several restaurants near their campus, sending out brochures, and hiring a couple of staff to take phone orders and several others to carry out the deliveries.
Sometimes they even carried out deliveries themselves to the similarly lazy students at the small campus. How times have changed.
Today their company, ele.me – which means “are you hungry” in Chinese – is the mainland’s leading online platform for ordering meals. They handle two million orders every day in 260 cities across the mainland.
Internet giants such as Tencent, JD.com and state-run retailer Beijing Hualian Group, have shown a strong appetite for ele.me, too, after providing some of the five rounds of investment totalling US$500 million (HK$605 million).
Kang, 30, ele.me’s co-founder and chief operating officer, said the company planned to refocus its services on quality rather than quantity – and also team up with new restaurants to deliver foods that posed more of a challenge – ice cream and hotpot.
He said the biggest complaint from customers was over the long time it often took for deliveries to arrive. So he and Zhang, 30, the company’s chief executive, now want to focus on “instant deliveries” to improve customer service.
“From now on we are no longer focusing on volumes or the number of orders, but rather the quality of service,” he said last weekend at a press conference in Shanghai during which he invited individuals and small businesses to join the company’s expanding delivery team.
He said its instant delivery meant that, unlike rival food courier services, it would offer a timely, face-to-face service to ensure the food’s optimum temperature and taste were maintained.
Last year was ele.me’s boom year with a turnover of 7 billion yuan. “This year will be a year for recreating value for us,” Zhang said.
“I believe that in five years you will see fewer and fewer people opening restaurants, but more offering more diversified door-to-door services,” he said.
He estimated that in five years the mainland’s food delivery industry would have grown to 30 million orders a day.
A recent report by Beijing-based consulting company Analysys International, said that during this year’s first six months 12 billion yuan was spent on the mainland’s online food delivery market.
This compares with 15 billion yuan spent on mainland online food deliveries over the whole of last year, which was a 60 per cent increase on total spending in 2013.
Ele.me went shoulder to shoulder with mainland e-commerce website, meituan, during the first six months of this year, with the companies sharing more than 30 per cent of the mainland’s overall turnover and about 40 per cent of the total online orders made.
“Instant delivery caters to a basic characteristic found in many people in so many different cultures all over – laziness – and also a basic need – for convenience,” Kang said.
He said ele.me had now teamed up with entrepreneurs from across the mainland to enhance its “infrastructure” so that it could improve its delivery service.
Sun Mengzi, an analyst at Analysys, who specialises in the online food ordering market, said ensuring customers enjoyed an improved delivery service would be a new trend of the industry.
“Up to now the major problem facing the online food ordering industry has been with the delivery, as it needs to be done quickly to maintain the taste of food,” she said.
Most of ele.me’s business partners are small restaurants in first-tier cities, such as Beijing and Shanghai.
In the past year alone it has seen larger clients, including international brands such as Pizza Hut and Burger King, and also up-market restaurants, joining its online platform.
Sun said she expected white-collar workers to replace university students as the main driver of growth for such websites because they were more loyal and financially capable.
“Another opportunity lies in delivering special foods, which are more demanding in terms of deliveries, such as hotpot and duck blood pudding and vermicelli soup – the local favourite in Nanjing,” she said.
Sun said the turnover of customers at hotpot restaurants was often low because people often wanted to spend a long time eating – so providing such foods as a delivery service was a good idea to improve turnover.
Ele.me is already talking to Hai Di Lao Hot Pot, regarded as the mainland’s best hotpot restaurant chain, about teaming up in the future.
