Will Uber and Doordash follow the suit of Meituan?
China’s online food-delivery market is growing fast. The market has gained from 21.68 billion yuan to 205.27 billion yuan from 2011 to 2017. Meituan is one of the food-delivery giants in the market. It has 310 million users and delivering 11 million meals daily last year.
As China’s app-for-everything, Meituan doesn’t have an exact parallel elsewhere because its business ranges from food delivery to travel booking. Although two-third of revenue comes from its food-delivery business, the domestic hotel room booked through Meituan has increased to 205 million. And more than 80% of those hotel bookers ordered their food-delivery business.
However, Meituan is still not a profitable company. Though its business crosses many industries, Meituan is facing strong competition from Alibaba’s Ele.me in food delivery, and significant challenge from firms such as Crtip.com in the travel booking business.
Meituan is an oligopoly company in China’s food-delivery market and travel booking market, where there are relatively few large firms in the industries. China’s food-delivery market is a Bertrand Oligopoly. In this model, consumers have perfect information, and zero transaction costs and since the products…
