Baidu, one of China´s giant internet companies, is making big inroads into the take-out delivery market for white collar workers, writes startup investor Andy Mok at LinkedIn. “Baidu Takeout Delivery has an estimated market share of almost 80% in Tier 1 cities.”
The white collar market is an industry bellwether because this market segment not only uses third party takeout platforms most frequently but also spends the most money per order. Specifically, the white collar segment on Baidu Takeout Delivery orders on average 4.2 times per week with 31% ordering more than five times per week and 40% of customers with an order average of more than RMB30. In addition to being the most frequent users and delivering the highest average revenue per transaction, the white collar segment is also the least price sensitive. There are two reasons for this: First, they have high incomes and so have more money to spend on takeout. Second, according to Future X/DCCI this market segment cares most about food safety, delivery speed and accuracy of delivery time. As a result of this focus on the white collar market segment, Baidu Takeout Delivery has an estimated market share of almost 80% in Tier 1 cities.
Baidu Takeout Delivery also has one of the most vertically integrated third-party take out delivery offerings with more than 40,000 delivery people serving about 30 million users in 140 cites throughout China. Also, Baidu Maps with more than 300 million monthly active users and Baidu’s leadership position in search provide it with important advantages in efficient routing for food deliveries and large scale lead generation, respectively. According to TechInAsia, a leaked Baidu document suggests that Baidu Takeout Delivery did RMB 8 billion ($1.2 billion) in transactions in 2015, and that its target for 2016 is a total transaction volume of over RMB 25 billion ($3.8 billion).
Baidu Takeout Delivery is well-positioned to reap significant financial gains as a leading third-party takeout delivery platform due to its strengths in customer acquisition and to-the-consumer “last mile” urban logistics. However, its potential impact on the supply chain of its merchants is less obvious but perhaps more profound. Internet+ (or IoT in American parlance) is based on providing every imaginable object with an IP address. With respect to food production and delivery, there are significant areas of wastage and inefficiency as well as food safety issues for which Internet+ applications are uniquely well-suited to address.
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