Are you hungry? That’s the question asked by Ele.me, China’s biggest food delivery startup. The company, which until now has offered only a traditional B2C online-to-offline (O2O) food delivery service, has just announced that it plans to expand into B2B with an offering called Youcai.
Solving problems for small restaurants
Ele.me sees Youcai – which roughly means “have food” in Chinese – as being another link in the O2O food delivery chain. Youcai is a B2B platform that links food ingredient vendors with restaurants. The idea is that by leveraging all of the data Ele.me has on restaurants and delivery demand all over China, Youcai should be able to link ingredient sellers, logistics providers, and restaurants efficiently to ensure that everyone has the fresh meats and veggies they need to keep China’s masses fed. Youcai also aims to eliminate consumer concerns about food safety by making it easy for restaurants to get their ingredients from safe sources.
Ele.me CIO Xin Jingbo says that efficiently sourcing and obtaining quality, safe ingredients can be a problem for many of China’s smaller restaurants, which don’t have the connections or logistics resources of bigger chains. By simplifying the ingredient-sourcing process, Ele.me hopes Youcai will enable restaurants to focus more on serving their delivery customers (who are also Ele.me’s customers, of course).
Although Ele.me has only just officially announced it, Youcai actually began an operational beta back in July. Since then, Xin says that Youcai has processed more than RMB 4 million (US$629,000) in transactions, and is now available in eight cities. That’s not too shabby for a product that hadn’t even been officially announced! And Ele.me is planning rapid expansion, with aims to have many of China’s large and medium-sized cities covered before the year ends.
It’s an ambitious plan, but Ele.me can afford a little ambition. The company has been raising borderline-crazy sums of money this year, having started 2015 off with a US$350 million series E and then followed that up with a US$630 million series F just a couple of months ago.
Ele.me has lots of competitors in China, of course, but the recent Dianping-Meituan merger may mean that Ele.me has one less serious foe to look out for. Meituan does operate a food delivery service like Ele.me’s, but given that Dianping has a US$80 million stake in Ele.me, the new Dianping-Meituan hybrid probably won’t be looking to destroy the startup. In fact, there are rumors that Ele.me could merge with Meituan too, although for the moment neither company has confirmed that’s in the offing. Its biggest competitor going forward is likely to be Baidu’s food delivery arm, Baidu Waimai.
Do you think Ele.me can beat Baidu in the long run?
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