Meituan-Dianping, the world’s largest O2O platform, officially kicked off its ride-hailing service in Shanghai on Wednesday, as the company seeks to further diversify its services.
Earlier this year, Meituan-Dianping told Chinese media The Paper that it has obtained relevant licenses for ride-hailing services from local authorities in Shanghai and Nanjing. China, in an aim to regulate the market, has tightened its control over the sector to allow only licensed companies to engage in the practice.
In addition to Shanghai, Meituan has also gotten go-ahead from the municipality of Beijing, Hangzhou and Nanjing.
Meituan is already providing ride-hailing in the city of Nanjing.
Branching out to the transportation sector reveals Meituan-Dianping’s ambition to diversify its O2O service ecosystem. The lifestyle e-commerce platform now covers everything from restaurant review, food delivery to online ticketing. Integrating the ride-hailing service to its existing offerings makes sense as after finding a diner on the Meituan app, users could naturally use the same app to hail a taxi, saving them the hassle of switching to a dedicated ride-hailing app.
“Meituan-Dianping seeks to help users eat better and live better,” said WANG Huiwen, chief of Meituan-Dianping’s ride-hailing business, “Our ride-hailing service aims to improve the efficiency of the transportation space. Meituan-Dianping is complying with regulations and guidance from the local administration to facilitate the development of the sector.”
Wang earlier told media that Meituan-Dianping has 250 million daily active users and 30 percent of them has needs for ride-hailing services, that’s 75 million potential users.
75 million sounds to be a considerable user base, still it is dwarfed by the operating figure of China’s largest ride-hailing platform Didi Chuxing. Per data disclosed earlier by the #1 ride-hailer by market share, the company runs over 7.4 billion rides for 450 million passengers across 400 Chinese cities in 2017, that’s 20 million rides per day.
Meituan-Dianping’s newly launched service might ignite a blood-bleeding price war. Currently, Meituan-Dianping is waiving drivers any fees for 3 months. Didi Chuxing now charges drivers for about 20% of their income.
Didi Chuxing, at the same time, is also mulling opportunities to expand its business scope. Market rumor has it that the ride hailer is launching its food-delivery pilot in Wuxi on April Fool’s Day, eyeing to get a piece of pie from Meituan-Dianping and Ele.me. GONG Zhenbing, ex-chairman of Baidu’s food delivery subsidiary Baidu Waimai, is also said be joining Didi Chuxing’s food delivery arm.
A Didi Chuxing spokesperson declined to comment on the matter when approached by KrASIA. And Meituan hasn’t responded to our request for comment at the time of publication.