In the 17 years since China’s first online food order was placed in 2008, migrant delivery riders have become vital to sustaining urban life. This algorithm-driven workforce, now dubbed “new blue-collar workers,” has grown to more than 10 million nationwide by January 2025—surpassing Switzerland’s population. While many veteran riders have families in cities they serve, their social security status remains precarious. 

A breakthrough came this February. On Feb. 19, JD.com became the first major platform to mandate the “Five Social Insurance and One Housing Fund” (五险一金), a comprehensive social security program covering pension, medical, unemployment, work injury, and maternity insurance, as well as housing funds for full-time riders starting March 1, alongside accident and medical coverage for part-timers. Rivals quickly followed: Meituan pledged full benefits for stable riders by Q2 2025, while Ele.me expanded pilot programs.

For family providers like 36-year-old Peng Ding (pseudonym), the benefits of insurance are undeniable. “One of my colleagues was involved in a traffic accident and broke his leg  last summer. He has been resting at home ever since,” he said. Yet there are younger riders who are questioning it. During a Shanghai legislative forum on March 25, 2024, a delivery rider in his 20s expressed his reluctance to pay for social security. He explained that paying RMB 700 ($96) monthly for insurance means delivering 100 extra orders. I’d rather send that money home for my daughter’s toys.” Like many rural migrants, he relies on the New Rural Cooperative Medical Scheme (新农合) in his hometown.

The long wait for protections​

At 3 p.m., after the lunch rush, a group of Meituan riders from Anhui province gather outside a Heytea shop in Shanghai’s Caohejing district. Having delivered for over a decade — some predating the rise of Meituan and Ele.me — they unanimously endorse social insurance. “The colleague who broke his leg is still at home with no resolution from Meituan,” said Peng, 36. Currently, platforms largely rely on commercial accident insurance — Meituan deducts 180 yuan monthly per rider, while Ele.me charges 3 yuan daily. The dangers of the job are well-documented. As highlighted in a 2020 investigative report by Renwu (The People), titled “Delivery Riders, Trapped in the System,” traffic police in Guangzhou alone penalized nearly 2,000 delivery-related violations in September 2018. The hashtag ​#DeliveryRiders, One of the Most Dangerous Jobs# has repeatedly trended on Chinese social platform Weibo, underscoring the perilous reality of the profession. Yet for riders like Jia Hui, the platforms’ 3-yuan daily accident insurance — roughly 40 cents — is a drop in the bucket. “Even if you file a claim, the best you’d get is 200 yuan ($28) per day for five days of absence from work,” Jia said. “But what if you’re bedridden for months? No compensation, no income. We’ve seen it happen.”

Data shows 77% of Meituan and 75% of Ele.me riders hail from rural counties. For migrant families, social insurance is a lifeline to urban integration. “Without Shanghai social security records, your child can’t enroll in local schools,” Jia explained. Many of them leave their children with grandparents back home. 

Healthcare access is equally fraught: Rural insurance reimburses less in cities, forcing riders to haul medical bills to hometowns or avoid hospitals altogether. “A simple blood test costs 500 yuan. We can’t afford to get sick,” Jia said.

When gig work becomes a lifeline​

To many, food delivery seems like a transient work. Yet for millions of riders across China, the platforms have become an inescapable anchor — whether by choice or necessity. The burden of childcare, elderly medical bills, social obligations, and other familial responsibilities glues them to their apps. “Single riders can afford a day off, but breadwinners can’t risk skipping work,” said Jia. “Unlike salaried jobs where you still get a base pay if you rest, every day we miss means less cash for next month’s rent or groceries. That’s why most of us never stop.”

The post-pandemic years have deepened this dependency. Before COVID-19, riders could earn RMB 300 ($ 41) daily—roughly RMB 10,000 ($ 1,380) monthly — with relative ease. Now, hitting that same daily target demands marathon 12-hour shifts. Plummeting wages amplify the pressure: Taking time off feels financially reckless, while switching careers appears prohibitively costly.

Riders often hailing from rural counties and small towns—typically enter the gig economy with limited formal education and scant technical or cross-industry experience. While the physically demanding work offers minimal job requirements and quick employment access, transitioning to alternative careers remains prohibitively difficult for many, as retraining and adapting to new professional environments present steep personal and financial challenges.

A 2022 Ele.me report shows that 43% of delivery riders were doing food-delivering jobs while scouting other urban livelihood options, whereas nearly a third see no exit from the industry. As food delivery evolves from a stopgap job into a permanent occupation for millions, the meaning of a comprehensive social security system is self-evident.

Hope and Skepticism

Several veteran riders I interviewed, each with years of experience across multiple platforms, recounted cycling through now-defunct services like Baidu takeaway and Gearbox, an early player. While new platforms lure riders with initial subsidies, most riders agreed that “they all eventually prioritize profits and become indistinguishable,” as Cao Lijun (pseudonym), a Meituan rider, put it.

Cao described arbitrary pay deductions during his time at Ele.me: orders marked late and penalized despite arriving on time, a discrepancy riders later traced to mismatched delivery clocks on customer and rider apps. He also noted how subcontractors—middlemen between platforms and workers—often skim profits layer by layer.

When asked about JD.com’s recent entry into food delivery, riders called it a positive shift. Many praised JD’s reputation for providing locally Five Social Insurance and One Housing Fund, contrasting it with rivals that enroll workers in cheaper, out-of-region insurance plans which are often unusable locally. After a few riders showed their concerns that their salaries would drop due to social security  costs, JD.com clarified immediately that it would cover all contributions—including employees’ share—for new hires.

“Many have already jumped ship from Meituan to JD,” said Cao, though he worries about the sustainability of JD’s current offer: “What if they cover all social insurance costs now, but make us pay more later?”

The progress on riders’ social security could trigger broader societal shifts. When the first wave of insured riders begins retiring in the coming decade, the real-world impact of these policies will come into focus. Simultaneously, platforms’ evolving approach—from viewing workers as expendable “traffic” to valuing them as human capital—may recalibrate the entire gig economy’s priorities.

On Feb. 11, 2025, JD.com officially announced the launch of a new food delivery service, recruiting “quality dine-in restaurants” to join its platform with a significant incentive: zero commission fees for all merchants who sign up before May 1. JD’s bold entry into the highly competitive food delivery space is a direct challenge to industry leaders such as Meituan.

Why it matters: JD’s entry into the food delivery sector could reshape the competitive dynamics of the market, with the firm’s strong logistics infrastructure and differentiated approach of targeting “quality” merchants. By focusing on “quality dine-in restaurants” rather than competing in the budget segment, JD appears to be aiming to avoid direct price wars with China’s established food delivery giants Meituan and Ele.me, while still offering attractive terms to merchants burdened by high commissions. For consumers, this expanded choice might lead to better service and quality options.

Details: With Meituan and Ele.me already having established deep market penetration and extensive supply chains, JD’s entry into food delivery is an attempt to disrupt the status quo. Although JD is focusing on differentiating itself through its quality merchant strategy, it will need to ensure that its service delivery matches the high expectations set by Meituan and Ele.me’s well-oiled operations.

• JD has specifically limited its merchant recruitment to “high-quality” restaurants, ensuring these establishments meet strict criteria. According to 21st Century Business Herald, JD plans to conduct comprehensive vetting, including photo verification of store locations and on-site visits by sales representatives to ensure the authenticity of its partners. 
• By offering zero commission fees for the first year, JD is hoping to entice merchants who are looking to reduce the burden of commissions that typically eat into their margins on platforms like Meituan and Ele.me.
• Compared to JD.com’s offer of zero commission for the entire first year, Meituan’s merchant commission rate currently ranges from 6% to 8%, with delivery service fees incurred when merchants choose Meituan for delivery.
• JD’s food delivery service is an extension of its broader push into instant retail. The company has been progressively expanding its reach in this space, with services such as JD Daojia (JD Home) and JD Seconds aiming to offer instant deliveries in various sectors, including groceries and fast food. This new food delivery service is expected to integrate seamlessly with JD’s existing logistics network, which has been a key advantage for the company in its push for higher operational efficiency.
• JD’s logistics advantage — particularly its ability to leverage the existing JD Logistics infrastructure — could help reduce operational costs and improve delivery efficiency. Yet, as demonstrated by the challenges faced by other e-commerce players such as Douyin, building a scalable delivery network is not an easy task. JD’s ability to recruit a sufficient number of riders and integrate them into its existing logistics framework will be key to its success.

Context: JD’s aggressive foray into food delivery is part of a broader strategy to bolster its position in China’s highly lucrative local services market, an area where Meituan has long reigned supreme. Meituan, with its extensive rider network and mature infrastructure, holds a dominant position in the market, which includes everything from food delivery to ride-hailing services.

Meituan, which owns one of China’s largest food delivery platforms, is trialing a new policy to log off delivery workers who work excessively long hours. The initiative, aimed at safeguarding workers’ well-being, comes amid increasing scrutiny of labor rights and algorithm-driven management in the gig economy. 

Why it matters: Algorithmic management has become a new standard in regulating digital labor, replacing human oversight with platform-driven algorithms. While this makes regulation smarter and more efficient, it also makes it pervasive. Platforms typically increase compensation after a certain order volume, and this mechanism turns earning money into an addictive cycle, which led to frequent safety incidents caused by workers pushing themselves to the brink. In an academic survey with a sample size of 1,209, more than one-third of the riders had been involved in an accident. The log off mechanism is one step toward addressing this issue.

Details: Meituan’s policy includes automated rest prompts for riders who exceed a certain cumulative working time. If the time limit is further breached, the platform enforces a mandatory log-off, preventing riders from taking new orders until the following day. Riders already in the middle of a delivery will be allowed to complete it before being logged off.

• According to Meituan, approximately 7.45 million delivery riders were registered on its platform in 2023.
• The tiered salary system of food delivery platforms has created intense competition among riders, pushing them to work at an unsustainable pace. According to a report by LatePost, delivery riders in first- and second-tier cities now earn more than the average annual salary of recent college graduates. In some first-tier cities, top riders can make over RMB 10,000 ($1372) per month during peak seasons. However, these riders often work over 10 hours a day, leading to significant physical strain.
• Beyond working hours, concerns around labor relations, contract signing, and occupational injury protection are also critical issues. The food delivery industry widely adopts an outsourcing model, where delivery services are contracted to different companies based on regions. These contractors then hire riders to complete the deliveries. At the same time, riders rarely sign formal labor contracts, and the types of contracts vary greatly. This creates challenges for riders in accessing occupational injury protection and benefits.
• According to Jiemian, Ele.me implemented a nationwide rider rest policy in August of this year. The 2023 Ele.me Rider Rights Protection Report reveals that between May 2022 and September 2023, the platform had over 4 million active riders.
• A Meituan spokesperson stated that the company is actively listening to feedback from various parties, including riders, and continues to explore ways to improve its rider fatigue prevention mechanisms. However, regarding the specific duration for forced log-off, Meituan clarified that the current plan is still in the pilot phase, and the detailed rules will be announced after further refinement.

Context: In 2017, China’s food delivery platforms began to expand, leading to rapid market growth. In 2024, Meituan reported a revenue of RMB 93.6 billion ($12.8 billion) in the third quarter of 2024, marking a year-on-year increase of 22.4%, with an adjusted net profit of RMB 12.83 billion ($1.8 billion), up 124% compared to the previous year.

Chinese food delivery giant Meituan has reduced commission fees for merchants to help alleviate the operational pressures they face following the pandemic prevention measures enacted in the past two years.

Why it matters: Meituan, which counts on food delivery as its main source of revenue, made the move less than two weeks after Chinese regulators suggested in a guideline that food delivery platforms cut fees for restaurants suffering from the coronavirus outbreak.

• Meituan’s shares plunged 15% on Feb. 18 when the new guideline was issued. But a commentary from the state media Economic Daily said the market was “overreacting” (in Chinese). The guideline aimed to drive consumption and recovery after Covid rather than crack down on platforms, the commentary said. Investment bank Jefferies maintained its “buy” rating for Meituan after the release of the guidance.
• Meituan’s commission cut may well trigger similar moves from rivals such as Alibaba-backed platform Ele.me.

Details: Meituan rolled out six supportive measures both to lower the costs and increase revenue for merchants operating on its platform, according to a Tuesday statement.

• The company will cut half of its technological commissions, capping them at RMB 1 ($0.16) per order, for restaurant owners from pandemic-hit areas who suffer a daily sales drop of more than 30%. The policy will be effective as soon as a region is placed in full or partial lockdown and will end once the lockdowns are lifted.
• More than one million merchants facing operation difficulties will be eligible for a commission rate of less than 5% by the end of this year, lower than the average 12% commission usually charged. 
• The company added that it aimed to bring more transparency to its commission structure this year. Last May, it changed its previous flat fee policy to a flexible one that’s based on various factors such as order price and delivery distance. 
• In addition, Meituan is offering customized operational services to 100,000 merchants, helping them to improve storefront designs, develop food delivery menus, and launch marketing strategies. It will also provide free hardware, such as order printers and scanners, to merchants facing operational difficulties.

Context: Chinese food delivery platforms, such as Meituan and Ele.me, have been criticized for charging small merchants excessive rates over the past few years.

• Meituan still faces regulatory risks after receiving a $534 million antitrust fine last October.

READ MORE: There are no food delivery winners

Meituan, a Chinese life services and food delivery platform, is testing a social feature for food-ordering users, Chinese media Tech Planet reported (in Chinese) Thursday.

Why it matters: The social feature is part of Meituan’s effort to find new growth areas. The move comes as the food delivery sector becomes more crowded—social media giant ByteDance has been reportedly testing a food delivery feature through its short-video app Douyin since last month.

Details: Named “Fanxiaoquan,” the new feature allows users to share orders with their contacts on the Meituan app, in a format that is similar to WeChat’s Moments or Facebook’s News Feed. 

• Users can comment and like posts, access merchants’ shops through posts, and place similar orders.
• Users can add friends either through WeChat contacts or phone contacts. The platform also recommends new contacts based on users’ past behavior on the Meituan app, such as the mobile games they have played. 

Context: After years of fast growth, China’s food delivery industry is now growing at a slower pace. The market expanded 15% yearly in 2020, the slowest growth in the past decade, according to market consultancy Zhiyan (in Chinese). 

• Meituan hit a record in the number of transacting users and active merchants using its flagship app in the first quarter of the year, 569.3 million and 7.1 million, respectively, according to its financial statement. The growth is partly driven by the company’s popularity in lower-tier Chinese cities. 
• Meituan is seeking new growth areas in recent months by introducing social and content features, including a Pinduoduo-like group buying feature in its Meituan-Dianping unit and a short video feature in its flagship app.

A new commission system for Meituan food delivery has lowered the platform’s cut of short-distance orders, but raised fees for long-distance, merchants told the leading food delivery platform.

Why it matters: Meituan has been criticized for charging excessive commissions to small merchants. The company is trying to ease public frustration and bring more transparency to the company’s operations amid a wider regulatory crackdown on Chinese tech firms.

• Since May, Meituan has moved away from a fixed commission fee to one that charges restaurants different rates based on factors including store exposure, IT services, delivery distance, order price, and delivery time.
• Meituan came under the spotlight of China’s antitrust crackdown in April, shortly after Alibaba was hit with a record-breaking $2.8 billion fine.

Details: Under the new system, merchants say, fees for orders within a three-kilometer delivery distance are lowered, but that they are paying more on longer-distance orders, according to a notice (in Chinese) published by the company after a meeting with merchants held May 20.

• Many merchants asked during the meeting why they have adapt to a new and complicated system rather than take a flat cut on commission rates, according to the notice.
• Meituan argued that the thins margins of food delivery would make lower commissions across the board unsustainable. “Structural adjustments for the fee system can help the entire food delivery ecosystem to develop in a more profitable and healthier direction,” the company wrote.
• Delivery costs represent around 83.1% of commission revenues, and Meituan records a profit of just RMB 0.28 ($0.04) per order, according to data from the company’s 2020 annual financial results.
• The company also wrote that it plans to expand its food delivery business development team by around 30% this year in order to better address the demand of merchants.

Context: In an open letter published April last year, the Guangdong Restaurant Association accused Meituan of exploiting merchants by charging excessive commission rates that “most restaurants can’t endure.”

READ MORE: There are no food delivery winners

Xiao Yu, the owner of a Nanjing sandwich restaurant has a bittersweet feeling about food delivery services, an industry that feeds or creates jobs for millions of Chinese. The longer he uses delivery platforms like Meituan and Eleme, the more bitter his sentiment becomes. 

Yu, who asked to be identified by his nickname, understood that cheap, quick food—sandwiches with chicken, pork, omelets, or salad—would rely mostly on delivery orders, at lower margins than dine-in. But even so, he was surprised how hard it’s been to make ends meet. “The number of food delivery orders is generally three or four times that of dine-in orders, but the profit margin is far lower,” he told TechNode.

As merchants’ dependence on food delivery increases along with the popularity of the service, it has become more and more difficult for vendors like Yu to make a living, despite the ever-increasing number of orders.

A commission fee of around 20% per order, plus logistics fees and other marketing expenses charged by food delivery giants eat up an increasingly large share of the merchant’s profits.

The delivery platforms are drawing complaints from the drivers too. The stressful working conditions endured by two-wheeled food delivery drivers drew public ire after a Beijing official exposed issues involving low wages and impossible delivery deadlines. Wang Lin, a deputy director at Beijing’s Bureau of Human Resources and Social Security, earned merely RMB 41 ($6) on a 12-hour undercover shift last month.

For the past few years, frustration with the platforms has been building among small merchants and delivery drivers, two integral parties involved in the booming industry that brings them relatively little benefits. 

With an announcement from China’s national watchdog last month, we learned that the biggest delivery platform of them all is finally being investigated for monopolistic practices. If the Alibaba investigation is any model, Meituan could end up paying a penalty of billions of dollars. The company’s stock closed Thursday at HK$ 273 ($35) when the Hong Kong market closed, down nearly 40% from its peak.

Meituan under antitrust probe

An offer you can refuse: One focus of the Meituan antitrust probe by China’s State Administration for Market Regulation (SAMR) will be the issue of “choose one of two,” also known as forced exclusivity. The term describes practices that attempt to get merchants like Yu to sign exclusively with one platform. 

The Meituan probe comes shortly after Alibaba was given a record RMB 18.2 billion fine for practices including forced exclusivity. Analysts are looking for parallels between the companies’ competitive practices.

In the case of food delivery, exclusivity is more incentivized than forced. Yu lists his restaurant on both Meituan and Ele.me, which has meant that each app deducted 20% of an order price as a commission fee, with a minimum of RMB 4.5. The commission rate would be 15% if he agreed to list on only a single platform. Representatives of both platforms call Yu and pay visits to his store “all the time,” he said, asking him to drop the other platform. However, with an average order size of RMB 16, he’d still be paying almost a quarter of each order owing to the minimum charge.

In an unscientific survey, TechNode staff checked 30 restaurants they had ordered from recently and found that 27 were listed on both apps. 

READ MORE: What is ‘forced exclusivity’? And why did it get Alibaba fined $2.8 billion?

Monopoly or duopoly? A key factor in any antitrust investigation is to determine who has a monopoly. Chinese law defines any company with more than 50% of a “relevant market” to be a dominant player, subject to more stringent oversight.

Meituan easily meets that definition. Its share of the delivery (in Chinese) market increased to 65.8% in the third quarter of 2019, up from 60.1% during the same period of 2018, according to a report by local research agency TrustData released in February. Over the same period, the share held by rival Ele.me declined from 29.3% to 27%.

As a non-dominant player, Ele.me is unlikely to be fined for forced exclusivity under the anti-monopoly law. However, the practice may also be forbidden under other laws, such as the e-commerce law and price law. We’ve also seen regulators get creative with market definitions to bring smaller companies under the law.

Penalty size: Meituan could face a penalty ranging from RMB 4 billion to RMB 12 billion, according to a report by investment bank Bank of Communication International. Alibaba was fined RMB 18.2 billion, or 4% of its domestic revenue in 2019, although the maximum fine allowable for antitrust violations is up to 10% of domestic revenues. Meituan reported revenue of RMB 114.8 billion in 2020. Bloomberg analysts predict that Meituan will get a smaller fine in keeping with its size. Four percent of the company’s 2020 revenue would be RMB 4.6 billion.

Share movement: Like Alibaba, Meituan’s shares rose slightly after the announcement of the probe, probably because it eliminated a major source of uncertainty for the company. Meituan shares had plunged more than 40% from record highs in February as China’s sweeping antitrust campaign gathered steam and investors anticipated losses from investment in new businesses.

The antitrust probe ultimately will have only a temporary impact on Meituan shares, although the fine could amount to billions of RMB, according to Mark Meng, an analyst from Tiger Brokers. “The goal for the investigation is to strengthen monitoring of the tech market and improve fair competition, rather than shake or dismantle a business,” he said.

Why forced exclusivity?

History of fines: Meituan has already been fined at a local level for forced exclusivity on multiple occasions.

• June 2017: Jinhua city’s market watchdog, in eastern China’s Zhejiang province,  issues RMB 526,000 fine to Meituan for unfair competition.
• February 2021: The Intermediate People’s Court of Jinhua, Zhejiang province, rules (in Chinese) that Meituan should pay Ele.me RMB 1 million for asking merchants to list exclusively on its platform.
• April 2021: Ele.me ordered to pay Meituan RMB 80,000 for unfair competition by a court in Wenzhou, Zhejiang province.
• April 2021: Intermediate People’s Court in Huai’an, Jiangsu province, orders Meituan to pay RMB 352,000 in compensation to Ele.me for forcing vendors to shut their outlets on its Alibaba-backed rival.

“I don’t think these platforms thought too much about regulatory scrutiny before,” a market analyst told TechNode, asking to stay anonymous because the matter is sensitive. “The fines were too small to worry about, and by the time the regulator does anything, you’ve already screwed over a key competitor,” the source said.

Compared with e-commerce, forced exclusivity matters more in food delivery, “as a narrow range of food options can lead users to abandon a particular app,” he said.

Spilled milk? There’s not much competition to protect in food delivery, with 93% of the market taken by Meituan and rival Ele.me, according to TrustData.

There’s little space for small, specialized platforms to find a niche in food delivery, which is a much smaller market compared with e-commerce. There are e-commerce platforms focusing on cross-border business, maternity, fashion, but it’s hard to imagine a food delivery platform that serves only one cuisine.

Michael Norris, research and strategy manager of Agency China, argued that the implications for consumer choice and platform competitiveness are higher for food delivery than e-commerce. “The impact is amplified when you exclusively sign up whole restaurant chains across the country.”

However, Norris says, “I do wonder whether the multiplicity of forced exclusivity fines at a local level will lead to a higher penalty level.”

“Fair competition in food delivery will benefit the consumers and incentivize enthusiasm in merchants. It will also prevent platforms from overdraft their management resources, credibility and values for the society,” said Zhang Yi, consulting CEO and chief analyst at iMedia Research.

Will anything change?

With little competition, an end to forced exclusivity won’t necessarily bring much relief to merchants like Yu. The two dominant platforms face little pressure to lower commissions for restaurants that have no choice but to rely on delivery.

Meituan made a change (in Chinese) to its commission system this month. Instead of a set percentage of order value, it now charges vendors according to distance, order price, and delivery time. Merchants also say there has been less pressure from both Meituan and Ele.me to sign exclusive deals.

“Meituan will separate these fees out. This also helps regulators understand how Meituan charges merchants, and the extent to which those respective fees are increasing,” said Norris.

Meituan CEO Wang Xing argued in the company’s Q4 2020 earnings call that these details will show that the company’s high take rate is “reasonable,” rejecting comparisons to the much lower portion of sales collected by e-commerce platforms like Taobao. “That’s an unfair comparison because we are providing merchants a market-based transaction service. Also, we are fulfilling the actual physical delivery,” Wang said.

Under the new system, the commission rate for Yu’s restaurant orders dropped slightly, but still represents a substantial portion of his sales. 

“We still haven’t seen changes that could bring material benefits to the industry or merchants. The only benefit is that agents of the platforms no longer bug us to sign an exclusive deal. It seems that merchants are the only ones who care about this,” Yu said.

In China’s competitive e-commerce industry, group buying is becoming increasingly popular—and more diversified.

The e-commerce giant then launched its own community group buying platform Kuaituantuan in March 2020, selling groceries and daily necessities. The service currently covers more than 10,000 apartment compounds around China. 

Enter Meituan

Now, Pinduoduo faces competition from another young tech giant. On July 7, Chinese food delivery platform Meituan launched a community group buying platform called Youxuan, which means “best pick.” 

The platform sells fresh food, including fruits and vegetables, as well as alcohol and beverages. As of July 27, the service had launched in several cities around the country, including Beijing, Dongguan, Guangzhou, Jinan, Shanghai, Shenzhen, and Wuhan. Meituan also recently began piloting a group buying function for take away deliveries. 

The community group buying model usually centers on a group of residents who live in the same compound. Meituan’s Youxuan recruits a leader from these communities, who then creates a Wechat group and starts posting product links for residents of his or her community. The links direct consumers to Youxuan’s Wechat mini program to place their orders. Community residents are not required to buy the same products as one another and only need to pay for their order once the collective bill exceeds a designated value. 

Youxuan carries limited inventory and the products are typically sourced from selected suppliers (in Chinese). The produce is sent to regional central distribution centers after an order is placed. Youxuan staff then delivers the orders to collection points in communities the next day.

This form of group buying is reminiscent of one that became popular after Covid-19 began spreading across China earlier this year. Many communities designated a team to pick up groceries amid citywide lockdowns,  in which residents had their movements limited to curb the spread of the disease.

Why are the platforms pushing this approach? 

As with standard group buying, the community-based model relies on offline social ties. The model helps to quickly establish consumers’ trust in the platform, as residents typically know the community leader. 

In the standard model, consumers from different cities can form a group to purchase goods—it is not restrained by geography. This standard model is often more spontaneous in the way that a shopper can share product links with anyone in their network.

But community group buying is more intentional and organized. This model usually has a community leader who takes responsibility for maintaining relationships among the residents in the buyers’ Wechat group. Consumer trust in the community leader is the foundation of this purchasing model. 

The community leader often receives a commission based on how many orders are made within their community. This provides more motivation to socialize with the residents in the WeChat group.

The community model not only ends up being cheaper for buyers but the platforms, too. Since all members of one buying group live within the same community, platforms can replace individual deliveries with daily bulk deliveries to service a community.

Community group-buying is more established in lower-tier cities, where tight neighborhood communities are prevalent and mutual trust between community leaders and residents is easier to build. Some 60% of community group buying platform customers are from lower-tier cities, according to data from QuestMobile, a business intelligence company.

What is ahead for community and standard group buying?

China’s grocery market is huge. Sales in the sector are expected to reach RMB 5 trillion ($713 billion) in 2020, representing year-on-year growth of 5%, according to financial firm Pingan Securities.

Currently, around 10% of all grocery sales are made through e-commerce platforms, with wet markets accounting for 50% and retail supermarkets 40% of these sales. This provides great room for growth.

Both community and group buying share the idea of buying groups but the goals of each of fundamentally different.

Standard group buying focuses more on incentivizing consumers to become salespeople.  Without geographical limitations, shoppers can reach as many people as possible to access good discounted rates. This type of buying also applies to more discretional categories, such as apparel and jewelry. Residents from the same compound might not all need products such as these at the same time, so there is still a role to play for standard group buying platforms. 

Meanwhile, the community group-buying model centers on bulk delivery. The aim is to get people who live close to one another to order together. This results in increased efficiency and lowered costs for the platforms, allowing them to order in bulk instead of dispatching legions of delivery people on electric scooters. 

This model focuses on selling groceries and daily necessities, and building trust among shoppers who are looking for healthy consumable items. Community buying also allows consumers to voice their concerns about products they have bought more easily, as their community leader is just a Wechat message away. 

Correction: An earlier version of this article incorrectly stated that Pinduoduo invested in group buying app Chongmalinlitua.

A deliveryman for food delivery platform Meituan stabbed a Miniso store employee to death on Sunday following an argument about an order, the police for the central Chinese city of Wuhan said, highlighting issues around increasingly popular lifestyle delivery services in the country.

Why it matters: The incident has sparked heated discussion on Chinese social media over the working conditions for the millions of food delivery drivers powering the rise of major internet lifestyle platforms.

Food delivery: Drivers take the risks. Platforms reap the rewards.

Details: Local police received an alert around 2 a.m. on Dec. 22 when witnesses reported that 32-year-old deliveryman, surnamed Chen, was attacking a store employee in a shopping mall in the Hongshan District of Wuhan, according to a post from its official account on microblogging platform Weibo.

• Chen had a dispute with the employee, surnamed Zhou, when picking up orders from the chain store where he worked, although additional details were unclear.
• Following the incident, the deliveryman was put into criminal detention after struggling to escape (in Chinese).
• Miniso, a Chinese low-cost chain retailer, confirmed that the victim was one of its employees at its Wuhan outlet.
• Local media reports speculated that Chen was angry after Zhou wrote him a bad review on the Meituan platform. A Meituan announcement refuted the rumor, saying that Chen did not get a bad review for the order and the platform did not receive a complaint call about him.
• Meituan added that they have set up an investigation group for the case and pledged to improve their services.
• Comments on Weibo, or China’s version of Twitter, were mixed. Some sympathized with Chen, whom they speculated was working under intense pressure.
• “It’s easy for people to go extremes when fined after days of hard work for only one bad review,” (our translation) a Weibo user going by the handle “Zhaoxiaopi Mulinsen” said, referring to delivery platform policy to dock pay for poor user feedback.
• Others argued that no excuse should justify murder. “I only see a murder in this case,” another Weibo user nicknamed “Heibaihui Guduhuanzhe” commented.

Context: Delivery drivers are frequently migrant workers from remote areas who send money home to support family, and lack protections that come with an employee contract such as social and health insurance.

• China’s food delivery market is now dominated by two top players—Meituan Dianping and Alibaba’s Ele.me—which employ a total of 6 million registered couriers.
• Such market domination can translate into to low wages, leading to labor strikes.
• Transaction volume for China’s online food delivery market in 2019 is set to expand at its lowest rate in four years, according a report from mobile intelligence platform Trustdata.
• In addition to couriers, small restaurant owners that initially benefited from online platforms when they began to catch hold now face pressured margins by cooperating with food delivery platforms.
• The news dealt a blow to the Chinese food delivery giant after it recorded a second quarter of profit in the third quarter.

If you can’t see the YouTube player above, try watching here instead. 

Around half of all China’s netizens or an estimated 421 million people ordered takeout delivery on their smartphones last year, bringing in revenues of RMB 240 billion ($34 billion). The market is dominated by two major players—Meituan Dianping and Alibaba’s food delivery subsidiary, Ele.me.

Propping up this industry is an army of food delivery drivers, who work long hours rushing around China’s megacities to keep up with customer orders. Meituan said (in Chinese) that in 2018 it employed 2.7 million drivers.

TechNode recently shadowed 26-year-old Ding Liang, who has been a driver for four years, on his daily routine.  Most drivers work around 10 hours a day while others work 15 hour-shifts every day, he said. All of them have to compete fiercely to get orders, especially during the lunchtime rush.

Drivers get anywhere between RMB 5 ($0.71) to RMB 7 ($1) for each order, depending on the time of day, distance, and other factors. He works as a crowdsourced or “zhongbao” (literally, crowd outsourcing in Chinese) delivery worker so he has a more flexible schedule and type of orders he receives varies greatly.

Ding takes 30 to 40 orders a day, earning him an average of between RMB 11,000 and RMB 13,000 per month—a decent income compared with the average salary of food delivery workers in China, around RMB 7,750 per month in 2018 (in Chinese). But other contract food delivery workers, those who have a fixed contract with a company, earn RMB 7,000 to RMB 8,000 a month for the same amount of orders.

Falling wages

However, as the two major platforms fight to consolidate their market position, drivers are seeing their wages fall. “The pay is now too low. I can’t stand it anymore,” said Liu, a full-time Ele.me driver, who requested his given name not be used for fear of possible repercussions.

As wages are getting lower, drivers struggle to deliver more orders within the 30-minute window the apps allow them. They have to drive faster and faster to make ends meet within a limited time frame, often breaking traffic rules and working in extreme weather conditions, which can lead to accidents.

“If everyone abides by the law and also tries to deliver orders as specified by the platforms, it means that they can only complete 8 to 15 orders a day,” which is not enough for them to make a living, said Aidan Chau, a researcher at China Labour Bulletin, an NGO based in Hong Kong that monitors working conditions in China.

Shanghai police reported a spike in road accidents for the first half of 2019, and food delivery workers were involved in more than 80% of them. In August, one driver died (in Chinese) in Shanghai when he was electrocuted by his own scooter during the typhoon.

Ding said he doesn’t take a day off even in bad weather conditions. “I work every day, even in snow, and heavy rain,” he said.

But the drivers are often not entitled to work injury compensation.

There are two kinds of drivers, formal and informal. The formal ones are contractually bound to their jobs, either directly to the app provider or to an agency that is in turn contracted by the app. Their contracts typically don’t provide social security or work insurance.

The informal ones are those who adhere to the most common conception of the gig economy—they simply sign up to the app and select orders at will. Being free agents, they are not entitled to any compensation for accidents.

In terms of regulation, “the first step is to help all these platform workers become formal workers,” said Chau.

With contributions from Eliza Gkritsi and Nicole Jao.

Baidu Waimai, China’s third-largest takeaway service, announced today that it’s rebranded as Star.Ele, more than one year after being acquired by its major rival Ele.me, our sister site TechNode Chinese is reporting.

Retaining a former red color scheme for its new logo, Star.Ele will run as a sub-brand of Ele.me to offer premium food and local services from selected vendors. Wang Jingfeng, vice president of Ele.me, will be appointed as CEO of the new unit.

For over a year after the acquisition, Baidu Waimai has been operating under its old brand. But rumors about its rebranding prevails while Ele.me promised to continue operating the two brands separately during the takeover.

The merger between Baidu Waimai and Ele.me, two of China’s top food delivery platforms, wasn’t a smooth one with the former has seen both internal and external turmoil during the transitional period.

The rebrand comes among a series of structural adjustment of Ele.me, which itself has been taken over by Alibaba which bought the remaining shares in the company in April this year. Following the new retail trend, Alibaba announced that it has merged two of its food delivery services Ele.me and Koubei to a newly consolidated unit of Alibaba Local Service Company. In August, the company announced it has raised $3 billion for the unit alongside SoftBank.

Baidu Waimai’s rebranding represents a footnote for the changing landscape of China’s online food delivery industry, which shifts from tripartite confrontation among Tencent-backed Meituan, Alibaba-backed Ele.me and Baidu Waimai to head-on battle between the first two.

In terms of positioning, going after a higher-end market to diversify user base is a wise strategy in China, where food safety is a rising concern. As a leading player in the market, Ele.me has come under scrutiny in 2016 for allowing unqualified works to delivery potentially unsanitary food to customers. Meituan faces similar problems. In May this year, the three online food delivery platforms have launched their own investigation against unqualified food vendors, blacklisting thousands of vendors each.

Alibaba has announced that it has merged two of its food delivery services Ele.me and Koubei into the Alibaba Local Services Company.

According to CEO of Alibaba Group Daniel Zhang statement on October 12, the company represents a significant milestone for Alibaba’s attempt to reach consumers, The Paper reports. Following “new retail,” local services have become another highlight in Alibaba’s ecosystem strategy.

In August, Alibaba confirmed that it has invested $3 billion in the company along with Softbank. According to an earlier Reuters report, Alibaba is looking to raise between $3 billion and $5 billion for the entity which could be valued at up to $25 billion. Alibaba did not confirm these plans.

Alibaba acquired all shares from Ele.me in April this year in a deal that valued the food delivery platform at $9.5 billion. Alibaba has been an investor into the platform since 2016.

O2O is big business in China. Since the acquisition, China’s food delivery industry has plunged into another money-burning competition with Ele.me going after Tencent-backed Meituan Dianping. Ele.me announced in July its plans to spend more than $440 million from July to September to expand its market share to over 50%. Ele.me has also struck a deal with bike rental platform HelloBike for sharing user bases in order to strengthen themselves against competition from rivals such as Meituan-backed Mobike and ofo.

Another highly visible O2O turf war between Tencent and Alibaba is currently playing out between Starbucks and fast-rising coffee startup Luckin. After Starbucks announced cooperation with Alibaba in August followed by the launch of its Ele.me store, Luckin and Tencent signed a “smart retail strategic agreement” to explore the new retail trend.

On the other hand, Koubei, which is a joint venture between Alibaba and Ant Financial, has focused on commerce including fresh food and medicine delivery. According to the report, the two brands will continue to operate separately but they will cooperate. Ele.me’s has gradually begun cooperating with e-commerce platform Tmall, Hema Store, and Ali Health.

Ele.me’s Hummingbird delivery service (蜂鸟配送) is considered an important addition to Alibaba’s “new retail” strategy. The delivery service has since started providing distribution services for more than one thousand supermarkets in China. The ultimate goal is speeding up deliveries from Alibaba’s e-commerce platform Taobao and Tmall to same-day delivery, something that Alibaba’s main rival JD already provides through its in-house delivery system.

Koubei and Ele.me reach 3.5 million merchants in 676 cities while the goal is to expand the availability of Alibaba’s digital local services to 800 million urban Chinese citizens, according to the report.

Meituan Dianping, China’s online food delivery and O2O giant, made a robust debut on the Hong Kong Stock Exchange on Thursday (September 20). The company’s shares closed at HK$ 72.65, 5.29% above the initial offering price, according to Xinhua Net.

After Hong Kong’s second-biggest tech listing of the year, Meituan’s market value surged to HK$398.94 billion ($50.9 billion), making it worth more than the Nasdaq-listed Chinese e-commerce giant JD.com and the Hong Kong-listed smartphone maker Xiaomi. This means Meituan is now the fourth largest internet company in China by market value, behind only the BAT (Baidu, Alibaba, and Tencent).

The IPO also bumped the net worth of Meituan’s 39-year-old founder, Wang Xing, to $5.3 billion. “We often say: we need ‘long-term patience’. The more faith you have for the future, the more patience you have for the present,” Wang said in an internal letter to employees (in Chinese) after the debut.

Wang said going public is a milestone for Meituan, although that has never been the company’s goal. “The capital market will have fluctuations, we don’t need to pay too much attention to the short-term highs and lows of stock prices,” Wang urged his employees to focus on creating value for their customers. He believes that “in the long-term, the value [the company] creates will eventually be reflected by the stock prices.”

Tencent-backed Meituan started out as a Groupon-type service but has evolved into a super platform whose services span from food reviews and ride-hailing to on-demand delivery.

The IPO debut reflects investor confidence that the loss-making Meituan will eventually come out on top in the race against Alibaba-backed Ele.me and other on-demand delivery services. Big players in China’s food delivery market still rely on cash-burning tactics such as heavy discounts to win new customers and gain market share. Meituan said it plans to use money from the IPO to prepare itself against fierce competition in food delivery.

Ele.me, Koubei Holding Firm Funding Is Set to Top Meituan-Dianping IPO —Yicai Global

What happened: Alibaba has just recently formed a new overarching company for its food delivery platforms Ele.me and Koubei and already insiders are saying that the unit’s initial funding could exceed the amount its rival Meituan Dianping raised through its IPO. The unit received financing worth $3 billion from Alibaba and SoftBank and might raise even more while Meituan’s IPO raised $4 billion.

Why it’s important: Food delivery continues to be a major point of rivalry between Alibaba and Tencent-backed Meituan Dianping. A previous report from Reuters noted that Alibaba’s food delivery unit could raise up to $5 billion reaching a valuation of $25 billion. The food delivery industry can be seen not only as a proxy war for Alibaba’s and Tencent’s payment services but also a battle for supremacy in the more larger O2O industry. The value of O2O transactions in China jumped 72 percent last year to $146 billion, according to Chinese research firm Analysys.

饿了么否认与口碑网合并 称原20名高管仍正常汇报工作 – 证券日报

What happened: Ele.me denied the rumored merger with Koubei and said no Ele.me executives have left. Rumors started on Wednesday, August 8 that Alibaba, the holding company of Ele.me and Koubei, would merge these two companies and seek to raise $3 billion. Japan’s SoftBank was said to lead the investment.

Why it’s important: Despite Ele.me’s denial, there is evidence that the management level Ele.me has been marginalized after being bought by Alibaba in April 2018 for $9.5 billion. Currently, Ele.me and Meituan have been dominating the food delivery market and Baidu has exited. However, Zhang Xuhao, founder of Ele.me, was appointed chief executive officer of Baidu Delivery, which had been bought by Ele.me in August 2017, before Alibaba’s buyout.

Alibaba merging China food delivery units to counter Tencent-backed Meituan – Reuters

What happened: Alibaba intends to merge its food delivery units, namely Ele.me and Koubei, and raise funds for the new mega-entity. Alibaba is reportedly looking to raise between $3 billion and $5 billion for the combined business while SoftBank’s Vision Fund is expected to take the lead. The fundraising could value the new unit up to $25 billion.

Why it’s important: Combining existing businesses would put Alibaba in a better position to dominate China’s fiercely competitive on-demand services market, which is brimming with startups offering everything from food delivery to massage services. Ele.me and Tencent-backed Meituan are the biggest food delivery service providers in China and the rivalry between the two intensified after Baidu dropped out of the race last year and Alibaba acquired Ele.me in April.

Didi announced via their official WeChat account on May 24 that their food delivery service, Didi Foodie, will formally land in its second city, Nanjing, on June 1. On April 9, Didi launched its first foodie service in Wuxi.

According to the company, the service in Nanjing will follow strict food safety and delivery standards. Didi also hopes to cooperate with municipal administrative parties including traffic management department to improve service.

The company solicited ideas for their next city after Wuxi and Nanjing got the most votes (86,455). Meanwhile, Nanjing is the capital of China’s wealthy Jiangsu province – the province where Wuxi is located. Didi will leverage the marketing, channel, and administrative advantages it acquired in Wuxi. Nanjing is the first city where delivery service leader Meituan landed its ride-hailing business last year.

Read more: Fresh and driver-friendly: Meituan Dache’s first day in Shanghai

However, the announcement cannot guarantee business success. At the moment, expanding national landscape and pushing competitors to corners mean high commercial and even political cost. In April, with Didi entering Wuxi, a business war occurred as players sought to grab or consolidate market shares.

According to a local report, in Wuxi, Didi offered on average RMB 10 million financial support per day to sustain discount and cash deals. Meituan and Ele.me were forced to respond to Didi. The two strived to guard  their market shares and resources including both consumers and delivery staff.

As a result, prices of ordered food declined dramatically. RMB 2.6 (average price before discount was around RMB 20) for a regular size bubble milk tea and RMB 5.8 for a meal (average price before discount was around RMB 15) triggered food delivery mania in the city. A Wuxi resident said to a local reporter (in Chinese): “Take our community as an example, I did a rough research: in the first few days, around 80% of people ordered delivery services for regular meals.”

Delivery staff, on the other hand, earned money like “picking cash from the ground” (in Chinese: 捡钱). In the first few days, delivery staff earned around RMB 2,000 per day, around one-third of non-war monthly wage. Meanwhile, restaurants had to choose a side to take. Meituan and Ele.me both hold exclusive restaurant resources, creating steep barriers for any new entrant.

Read more: Didi’s food delivery is facing protests from its drivers

On April 11, the local market watchdog, the Administration of Industry and Commerce (AIC) of Wuxi, held talks with the 3 food delivery companies. The government urged the players to immediately suspend all activities that may result in unfair competition and monopolistic practices. AIC also required the 3 to cooperate with legal departments.

This doesn’t seem to be slowing Didi down. Already, there are rumors that Foodie is recruiting delivery staff in Chengdu.

After revelations that personal data of food delivery app users is readily available for sale through several channels for as little as RMB 0.10 per person, food delivery giants Meituan-Dianping and Ele.me have responded to the public.

An investigation into the data heist by local media uncovered that a startling amount of personal information was available for purchase. This included names, phone numbers, and address of thousands of orderers per day, including for orders going to hospitals and even to specific seats in internet cafes. The data was being sold through social platform QQ.

Meituan-Dianping announced yesterday that it has reported the case to the police adding that it attaches great importance to reselling user information, The Beijing News has reported.

According to their statement, the reason behind the leak is the company’s long chain of delivery and distribution which includes the platform, merchants, and third-party delivery companies. This opens many ways for lawbreakers to steal data. Meituan-Dianping also said that they have established a safety committee.

Ele.me said it was investigating the leak and that they consider themselves a victim along with their users. The company, which was recently bought by Alibaba, has promised to find the black sheep with the help of relevant government departments and join efforts from friends in the industry. Ele.me said it has a team of 200 people responsible for data security for businesses and individual users.

This just another incident in a string of online data theft scandals in China. A report by the Internet Society of China found that nearly 80% of web users had had their personal information leaked.

The QQ group involved in the sale of takeaway information has not yet been closed.

Ride-hailing firm Didi Chuxing recently changed lanes to enter China’s vibrant food delivery market. A fleet of mopeds was despatched in Wuxi for the beta testing week which began April 2nd. By day three, April 4, the platform had taken a third of the market in Wuxi then a week later, on April 9, Didi Waimai (Didi Takeaway) officially launched and handled 334,000 deliveries that day, making it the top food delivery firm in the city.

Didi’s move to food delivery mirror’s Meituan-Dianping’s move into the ride-hailing world, also starting in Jiangsu province. Meituan Dache quietly started taking passengers in nearby Nanjing in February then in Shanghai from mid March, where the company was called in by authorities over regulations. Didi later thanked Meituan for bringing competition to the market.  

Food delivery platforms have previously been hit by food safety problems, but Didi Waimai claims that all restaurants used are licensed and all drivers fully trained.

Didi reportedly threatened its drivers with a permanent ban from their ride hailing system should they switch to picking up rides for Meituan. Meituan is also thought to be offering drivers generous subsidies (in Chinese) to start working for them. Details are yet to emerge of how the battle between Didi and Meituan is being fought for securing food delivery drivers and customers.

TechNode was first alerted to Didi’s plans to start food delivery when job ads for drivers were noticed in Wuxi in early March. The city of around 7 million residents in eastern China’s Jiangsu province is wealthy and a manageable size by Chinese standards. Drivers were offered a minimum of RMB10,000 a month for full time work of over 48 hours a week. While Nanjing, Changsha and Fujian are the hottest contenders to be the next locations for Didi Waimai, job hunters could be the first to find out.

Alibaba announced today that it will acquire all outstanding shares that it does not already own in food delivery platform Ele.me. The transaction implies the enterprise value of Ele.me at US$9.5 billion. Alibaba and its financial arm Ant Financial are already the largest shareholder in the company with approximately 43% shares.

Rumors of Alibaba’s acquisition of Ele.me have been circulating since December last year with the peak hitting at the end of February when Beijing Hualian Department Store, a shareholder in Hong Kong-based Rajax which owns and operates Ele.me, announced that Rajax is indeed talking to Alibaba about increasing its stake in Ele.me.

Read more: What does Alibaba’s takeover of Ele.me mean? This is what China is saying

According to Alibaba’s statement, Ele.me will continue to operate in its own brand while the founder of Ele.me, Zhang Xuhao, will become Chairman of Ele.me and special advisor to Alibaba’s CEO on New Retail strategy. Wang Lei, Vice President of Alibaba Group, will become chief executive of Ele.me. 

As of June 2017, Ele.me covers 2000 cities in China including 130,00 restaurants and 260 million users. The company has more than 15,000 employees and its army of registered deliverymen has exceeded 3 million as of April 2017. Ele.me’s Hummingbird delivery service (蜂鸟配送) will an important addition to Alibaba’s new retail strategy.

Daniel Zhang, CEO of Alibaba Group, commented the acquisition in a statement:

“We are excited for Ele.me to become a part of the Alibaba ecosystem. Under the leadership of its founder and management team, Ele.me has achieved leading market share in China’s online food delivery and local services sector. Our shared belief that New Retail will create more value for customers and merchants has brought us together. Looking forward, Ele.me can leverage Alibaba’s infrastructure in commerce and find new synergies with Alibaba’s diverse businesses to add further momentum to the New Retail initiative.”

China’s ride-hailing giant Didi Chuxing is recruiting deliverymen in Wuxi, a city in southern Jiangsu province, for its new food delivery arm “Didi Waimai” (滴滴外卖 in Chinese), meaning that it’s probably rolling out take-out delivery service soon.

A job post of Didi Waimai has been circulating online since yesterday and a customer service line has been made available with regards to the recruitment. TechNode has reached out to Didi but they declined to comment.

TechNode Chinese, our sister publication, has talked with a customer service representative on the customer service line, and was told that “Didi Waimai will be available soon, but please refer to Didi’s future announcement on which cities specifically the service will be available in.”

TechNode, however, played around with the hiring page, and found that the only option for city choice is Wuxi, where Didi Waimai may first land. According to the job post, Didi is hiring “loyal deliverymen,” basically full-time delivery riders, to work at least 48 hours a week with a minimum monthly salary of RMB 10,000 (roughly $1,576). Other openings include part-time riders for those who can take orders freely and earn double compensations per order, says the job advertisement.

Didi has been looking to enter the food delivery sector as early as last December, and sources have pointed out that Didi had been engaged in the R&D of food delivery service. Now the recruitment message has again proved Didi’s ambition to take on Meituan on home turf—food delivery business. Meituan, known as the Chinese Yelp, owns businesses spanning from food delivery, restaurant reviews to booking tickets and hotels. Meituan was also rumored to roll out ride-hailing services soon in seven cities, including Beijing, Shanghai, Chengdu, Hangzhou, Wenzhou, Fuzhou and Xiamen. It seems that the war of “food delivery + ride hailing” has just gotten started and is expected to get even more heated.

Chinese ride-hailing giant Didi has a group of employees who are secretly working toward the launch of a food delivery service, local media reports, citing people familiar with matter.

The source pointed out that Didi has been engaged in the R&D of food delivery service for quite a while. Product development and technical staff on the project have been relocated to a new office and their details have been removed from Didi’s internal communication contacts, the source added.

Didi has not provided any comment in response to our inquiry into the matter. But a previous conversation with CEO Cheng Wei shows that the firm is at least open to such areas. “Everything is possible. The most important issue is whether it will create value for our users,” said Cheng when asked by Tencent News about the possibilities of entering catering and local life sectors.

Also, there are earlier signs of Didi’s interest in the sector. As early as 2015, the firm partnered with Ele.me for a program similar to ‘UberEATs’, the food delivery service run by Uber. The partnership has potential synergy given that both companies exist within Tencent’s strategic investment ecosystem.

Didi’s new food delivery service will put it in direct competition with Meituan, China’s top O2O titan that itself added a car-hailing function to its app in February this year.

As Chinese internet giants are increasingly blurring the boundaries between sectors, it’s getting harder and harder to define them by a single industry. Alibaba is no longer just an e-commerce giant and search engine has long ceased to be Baidu’s only pillar of business. Such business expansions will cause business overlap between top tech firms, and thus intensify competition in these verticals.

Baidu’s food delivery service Baidu Waimai has accused the company of making them lose thousands if not millions of RMB when promised subsidies never came through as well as misleading them about future prospects of the service. Baidu Waimai published a letter today saying that more than 90% of its contractors suffered serious losses (in Chinese).

More than 95% of Baidu Waimai’s operations are contracted out to exclusive agents within cities, while Baidu runs a few of its own operators outside of the cities. The agents are responsible for handling city logistics and covering staff wages, welfare, clothing and equipment, and even traffic accident risks. Some agents pay up to 20% commission to use the Baidu Waimai platform.

In the letter, Baidu Waimai stated difficulties with its parent started in the second half of 2016 when Baidu started gradually reducing promised investments. Baidu said that promised investments will be resumed as soon as possible but that agents will be required to subsidize themselves for a while. Agents were also asked to renegotiate terms with merchants.

However, the subsidies from Baidu never came. Quite the opposite, at the end of August the company sold its takeaway business to its rival Ele.me in a deal reportedly valued at around $800 million. On November 20th, Baidu Waimai confirmed that all of its partners will continue operating under the same conditions and that Ele.me will help integrate them into its own service.

Baidu Waimai added in its letter that agents have communicated with the Baidu Group several times in hopes to achieve a reasonable solution but with to no avail. Baidu claims there is no legal basis for their claims. The exact amounts in question are still undisclosed due to confidentiality agreements.

Baidu said in a statement forwarded to TechNode that the merger of Baidu Waimai is entirely compliant with the law. Baidu Waimai is currently engaged in the process of negotiation with Baidu’s Beijing Xiaodu Xinxi Technology Ltd. and Ele.me’s Shanghai Lazasi Xinxi Technology Ltd.

“We hope to solve the dispute properly and protect the legitimate rights and interests of the partners to the maximum extent under the premise of legality and rationality.”

Baidu thanked its partners for their hard work and its customers for their trust and support and promised to continue providing its services to customers.

Updated, 28 Nov 2017: Now includes a statement from the company.

China’s food inspection authorities on Thursday released new regulations for O2O food delivery services. The new rules require the restaurants registered on the apps to have offline stores and to be licensed with certifications to run food-related businesses.

On top of that, the authorities stated in the regulations that food providers need to publicize more accurate details about ingredients, cooking process, and containers.

The rules specifically point out that the food delivery companies should make sure the food is not contaminated during the course of delivery and should deal with consumers’ complaints in a timely manner. China Food and Drug Administration (CFDA) will reinforce inspection both online and offline.

Meituan-Dianping, one of the major food delivery apps, told local media that the company has started asking the local restaurants to upload relevant certifications onto its system. The company also said that it will cooperate with cleaning companies to run sanitization tests at some of its hottest delivery spots and restaurants that see large delivery demand.

Local media reported that Ele.me, another top player in food delivery, will also take more actions with regards to the new regulations. The company will tighten up the quality of the registered restaurants by implementing a categorizing system for both Ele.me and Baidu Waimai, which was sold to Ele.me last month.

Huan-Po knows it’s about lunchtime when his colleagues start to circulate an online menu in their WeChat group at around 11 am. “We’ll have our lunch delivered and find a meeting room to dine together,” he says. Huan-Po is an MBA student at Peking University and interns at a startup in Beijing. He enjoys the convenience of food delivery so much that he even gets food brought to his student dorm.

“You’ll often see lots of deliverymen waiting outside of the dorm for the students to come down and pick up the food,” he says.

The O2O (online to offline) food delivery sector has been booming in China over the past year. Once an online order is placed through a mobile app, food from local restaurants can often be delivered within 30 minutes to an hour. The fast service at the press of a smartphone screen has encouraged more and more urbanites to use the various services.

The user base of online food delivery surged by 41.6% to 295 million users over the first half of 2017, said China Internet Network Information Center (CNNIC) in a report released in July. It’s worth noting that over 90% of the customers placed orders via a smartphone.

“As the industry matured and profitability becomes low, it is obvious for the platforms to explore horizontally in other relevant businesses,” said CNNIC in the report.

Another proxy battle between Tencent and Alibaba

Just last month, China’s internet giant Baidu sold its food delivery service Baidu Waimai to rival Ele.me, backed by Alibaba. The acquisition is valued at around $500 million and was funded by a combination of cash and equity.

Baidu Waimai will continue to operate as an independent entity for a year and Ele.me can still use the brand name for 18 months, as part of the deal. Ele.me will also pay $300 million to leverage Baidu Maps, Baidu Search, and group-buying service Baidu Nuomi. Earlier this year, Ant Financial, Alibaba’s financial affiliate, invested $1 billion in Ele.me’s Series G financing.

The deal marked Baidu’s official walk-off from the food delivery arena, leaving Tencent-backed Meituan-Dianping and Alibaba-backed Ele.me the only two major players on the field.

After the merger, Ele.me is expected to draw in more orders and lead the food delivery market in China. Baidu Waimai, long branded itself as a delivery provider for high-end restaurants, can be a nice complement that fills up Ele.me’s market share on high-end food delivery.

Here’s what the market share is like in the first quarter of 2017. Ele.me secured 36.5% of the market share based on the volume of transactions, according to the Chinese market research firm BigData-research. Meituan-Dianping, however, closely followed its rival, taking up 33% of the market. Baidu Waimai came in third with a 17.3 percent share.

It’s a smart move for Alibaba to help Ele.me acquire Baidu Waimai to gear itself up for the battle against Meituan-Dianping, a complex rival given its large scale of offerings. From food delivery, group buying, booking hotels to purchasing movie tickets, Meituan-Dianping provides a wide range of services in the O2O sector that continue to challenge Alibaba.

Behind the merger, it’s even more important to underline the fact that Alibaba is making efforts to bring up its overall O2O businesses to full strength while facing off against Meituan-Dianping over its various services. Talk in the industry suggests the e-commerce giant is expected to leverage Ele.me together with Alibaba’s local lifestyle unit, Koubei, to compete against Meituan-Dianping. Also, Alibaba’s movie ticket app, Taopiaopiao (淘票票), is taking on Meituan-Dianping’s Maoyan, the largest player in the movie ticket selling sector in China.

The war in the O2O sector doesn’t just stop there. With the launch of Hema supermarket (盒马鲜生) a couple of months ago, Alibaba aims to provide a seamless blend of online and offline shopping experience as part of its New Retail strategy. Meituan-Dianping also opened a Zhangyu store (掌鱼生鲜) in Beijing, providing delivery service for fresh produce just like those Hema stores.

Mobile payment businesses continue to thrive thanks to food delivery

The slipping of Baidu behind both Alibaba and Tencent in the takeout delivery sector once again demonstrates how vital mobile payments can be in China. Both Ele.me and Meituan-Dianping have direct ties to China’s major payment platforms—Alibaba’s Alipay and Tencent’s WeChat.

While food delivery services can be cash-burners by offering discounts to draw in new users, Alibaba and Tencent may as well see a significant increase in mobile payment transactions. Both tech giants are aiming to broaden their reach of payment services with the help of food delivery businesses.

According to analysis from the Wall Street Journal, it makes sense for Ele.me to acquire Baidu Waimai. Even if the purchase doesn’t do much to help the company increase market share, the tie-up will help Alibaba to drive more users to buy food with Alipay (paywall).

Are deliverymen safe on the road?

In the first half of 2017, Shanghai has seen 76 accidents on the road related to food delivery, local media reported. For those deliverymen, they face pressure from both the platforms and consumers, where they may get penalties if failing to deliver food within the given time. Also, due to the order-based compensation structure, deliverymen could possibly take in as much delivery requests as possible in a single ride, leading to even more time on the road.

To tackle overall safety concerns, the China Council for the Promotion of International Trade (CCPIT) drafted new rules earlier this month jointly with companies like Baidu Waimai to ensure a smoother and safer experience for consumers, local restaurants, platforms, and deliverymen. New rules include that the restaurants need to accept the orders within 10 minutes and that deliverymen should not enter consumers’ properties or receive tips.

In addition, Meituan-Dianping says they have prohibited the delivery companies from penalizing the deliverymen for delays and considered the delivery time only as one of the factors of the performance evaluation of the deliverymen.

Packaging waste: The ugly by-product of convenience

A Chinese environmental NGO this month sued the country’s three major food delivery platforms—Baidu Waimai, Ele.me, and Meituan—over their environmentally harmful practices. This is the first lawsuit against food delivery companies over pollution in China.

The NPO claims in an open letter that one delivery company can end up eliminating 6700 trees with its 13 million orders within one day, and alleges that the companies do not let consumers easily opt out of disposable utensils, which is in fact not directly outlined by Chinese laws.

In response to this, Meituan-Dianping announced to add a utensil opt-out button onto its app (in Chinese) to increase its green efforts.

The sprawling sector indeed brings convenience to consumers who have become more comfortable with cashless transactions. However, the relevant safety issues, as well as environmental harm, must be tackled as the food delivery apps expand.

“I use food delivery service almost six times a week now, mostly at work,” says Huan-Po. “It’s very convenient, though it should be more environmentally friendly.”

The year of 2016 has witnessed the most dramatic changes of China’s food delivery industry with the continuous influx of hefty capital pitted against food security scandals.

However, as the country’s food delivery industry begins to wind down, the market is becoming more consolidated with a few leading players controlling a dominant share, with an expected worth of 165.29 billion RMB ($24.71 billion USD) in 2016, according to analytics institute iiMedia Research.

Ele.me, Meituan Waimai and Baidu Waimai, three leading companies of China’s food delivery industry, represent 37.5%, 30.5% and 15.0% respectively of the total market as of May this year, the report pointed out.

As one of the earliest entrants, Ele.me is still the largest player in the industry, but its advantage over Meituan Waimai and Baidu Waimai is narrowing. According to data from Quest Mobile, Ele.me’s monthly active users climbed 124% to 17.46 million in May this year, a slower growth rate compared to Baidu Waimai’s 531% (16.62 million MAU in total) and Meituan Waimai’s 293% (14.94 million MAU in total).

Although the services the three companies provide are quite similar, they do have differences in the target clients and markets.

In terms of regional distribution, Quest Mobile’s data shows Baidu Waimai and Ele.me take the lead in first and second-tier city coverage respectively, while Meituan Waimai has a stronger presence in third and fourth-tier cities.

The white collar market is the competitive focus of all companies thanks to higher purchase frequency, user loyalty and price per order. Ele.me and Baidu Waimai are similar in terms of white-collar user coverage. Meituan’s user demographic leans more toward grassroots consumers.

The three companies take a combined 83% of the market. A wide range of quirky food delivery options emerged like home style cuisine (Home Cook), chef on-demand services (Haochushi, Jinshisong, Idachu) and food delivery services that focus on a special food ingredient (Call A Duck, Call A Chicken).