The food delivery business has boomed around the world in recent months thanks to COVID-19, with delivery experts SF seeking to try their hands at the lucrative and necessary service.
McCafe' takeaway. Image Credit: Erik Mclean/Unsplash
► SF Express has long-term relationships with many companies, including catering merchants with whom they cooperate closely. As an intermediary, the giant hopes to complete the entire process of distribution in a closed loop through its own logistical advantages.
► FengShi still has a long way to go as Eleme and Meituan have been working in the whole takeaway business for almost a decade.
As a giant in China’s express delivery industry, SF Express’s current market value has exceeded CNY 200 billion, and it has long been reluctant to be labeled as just a ‘courier company.’ By internally launching a takeaway platform, ‘Fengshi,’ which focuses on food delivery services for enterprise employees, it seems that the firm wants to grab a chunk of a booming market.
Unlike typical delivery platforms, FengShi focuses on group meals. At present, the platform only accepts internal orders, and nearly 100 well-known catering companies have settled in the platform, including popular brands such as fast-food chain Dicos and the famous Pizza Hut.
Retaining huge brands and attracting new merchants is a hurdle every takeaway platform needs to tackle. There are a couple of subsidy options for merchants within the Fengshi platform. Users can obtain corresponding rewards in two ways: invite enterprises to settle in and recommend other enterprises.
Another powerful measure for such firms is to grab merchants through low commissions. A person in charge of the platform said, “Merchants settled in ‘FengShi’ before July 1 this year will only need to pay 0.3% commission whereas merchants joining the platform after July 1 will have to pay as much as 2% commission.”
It is worth mentioning that, on April 16, the Shenzhen Consumer Council issued a survey letter to Meituan, Eleme and other food delivery platforms. Meituan is required to immediately reduce the commission for all restaurants selling outdoor services in Guangdong Province during the entire epidemic period by 5% or more due to its previous high commissions of around 20%.
Undoubtedly, the commission policy puts pressure on Meituan and Eleme. In addition, the platform also has a major highlight: personalized calendar order allows users to book meals on a specified date. However, according to users who have used it, there is indeed a series of details that might be better if changed. The convenience and intelligence of the consumer experience have not yet reached a satisfactory level.
We believe that, in the short term, SF Express won’t pose a great threat to Eleme and Meituan as the new platform is only used internally. Meituan’s market share in the Chinese food delivery industry is close to 60%, and as for the Eleme, backed by Alibaba, it is 36%.
In the long run, the scale of the takeaway market is still relatively small, and according to the statistics of iiMedia Research, it is expected that the size of the Chinese group meal market will increase by 12.67% in 2020. There is still enough space for SF Express to realize its potential.