We mentioned this week that Meituan, the leading O2O company in China, is claiming to have grabbed (for the lack of a better word) 30% ride-hailing market share from Didi in Shanghai.
We do not know how real these numbers are, and how they have tackled fraud, amid heavy incentives. Nonetheless, passengers and drivers seem to be jubilant. Anything that breaks the ‘monopoly’ in such a vital service seems to be welcomed by the general public.
Now, it seems Meituan is not the only big weight joining the fray. Amap.com (高德地图), an Alibaba portfolio company, has announced that it would introduce “hitchhiking“ service, allowing commuters to find a ride pretty much the same way as they have been using ride-hailing apps such as Didi.
Is hitchhiking really that popular?
Didi charges commission of 10% from drivers of its hitchhiking service – and many users have posted screenshots online claiming that the fee deducted from passengers is higher than total ride cost the driver sees, with Didi allegedly pocketing the difference.
And it is open secret that many ‘hitchhike’ drivers are actually full time drivers who fetch passengers for a living, rather than office employees carpooling with passengers going the same direction.
The trick here is NOT to be recognised as a taxi, thus avoiding the regulations imposed on metered and private taxis.
Amap.com’s hitchhiking service is first launched in the cities of Chengdu (population: 15 million) and Wuhan (population: 11 million). They have also started recruiting drivers in bigger cities of Beijing, Shanghai, Guangzhou, Shenzhen and Hangzhou.
Alibaba is behind this latest assault
AutoNavi, the company which develops and operates amap.com, was acquired by Alibaba for US$1.5 billion in 2014. Over the years, its user base has grown to more than 700 million.
Amap.com has been consistently topping the App Store Navigation category in China, followed by Baidu Map & Tencent Map. (Well, as usual, BAT owns this space).
Assault as well as defence
Interestingly, in the launch release, the hitchhiking service is labelled as “public welfare” – i.e. the company is not intending to make any profit out of it.
Why? Not hard to understand – data. Amap.com already has massive amount of data on travelling and traffic, combining that with a real use case (taxi hailing) will significantly strengthen their utility.
And if that trial is successful, the same data & customer traffic could be channeled to Koubei, another Alibaba portfolio company that is in direct competition against Meituan.
It is an assault on Didi, but it is also defensive in the scenario that one day Didi might venture into other areas that threaten Alibaba’s empire, or reinforce Tencent’s.
It seems in China you really need to be paranoid to thrive.
Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected]