SF Express, the largest courier and ecommerce delivery company in China, has just launched a service called 丰食, or ‘abundant food’, where companies and individuals can order food delivery.

The focus of the service seems to be group orders from companies. Many famous food chains, including Yoshinoya, Domino’s Pizza, Pizza Hut, Xibei, have been onboarded.

Compared to food delivery platforms like Meituan, SF’s service seems to differentiate by high delivery fee but lower commission charged to restaurants.

SF has the delivery network and prowess. It is probably testing the ability of expanding these into food delivery, where (profitable) Meituan dominates, using catering as an entry point.

It is a big enough entry point, domestic research firm iiMedia estimates the market size to be CNY1.5 trillion (US$211 billion) in 2019. The same firm predicts 12.67% growth in 2020 – that was before Covid-19 of course.

The market is highly fragmented. Delivery actually makes sense cost point of view because usually dozens if not hundreds or thousands of meals are delivered at the same time. However, companies tend to have stable working relationships with caterers, who often handle their own delivery.

We are not sure how much market share SF can really grab. It will become probably more of a delivery service provider for caterers, rather than a marketplace linking both sides.

And to challenge Meituan, as many media reports in China have portrayed? We are highly doubtful. Meituan is run by a great strategist and operator, and more importantly, a survivor, they would not let anyone challenge them that easily.

Remember, both Baidu and Didi failed to challenge it – even the almighty Alibaba is still struggling to put a meaningful fight against Meituan in food delivery and local life.

 

 

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 hello@mworks.asia.

 

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