Every day at about 10am, Zhou Jian gathers with dozens of other young men wearing the same design of blue shirt at a crossroads in Shanghai’s Xujiahui area.
Each rides an electric bicycle with a blue box on the rear rack and the team holds a brief meeting before heading out to deliver lunchboxes from restaurants to office buildings and flats.
With tens of millions of mainland consumers ordering their meals from online food delivery platforms each day, Zhou and workers like him have become a familiar sight in cities like Shanghai and Beijing.
Zhou is among the 1.3 million delivery men employed by Ele.me, one of the three leading companies in the booming sector.
About 12 million orders are made each day on the three platforms. The other two big players are Baidu Waimai and Meituan Waimai.
The value of transactions has grown 2½ -fold over the past three years, according to the consulting firm iResearch.
But while there is still huge potential for growth in lower-tier cities and rural areas, poor monitoring of food safety at restaurants and narrowing profit margins have already started to threaten the sector’s long-term prosperity, according to analysts.
It’s also grappling with an image problem. In state television’s annual programme to mark World Consumer Rights Day in March, Ele.me was accused of partnering with unlicensed restaurants, mostly home kitchens with poor sanitary conditions.
They became known as “black restaurants”, outlets accused of buying fake licenses or using connections to bypass loose supervision on the online platforms.
Ele.me told the Sunday Morning Post it was introducing a series of measures to ensure partner restaurants were qualified. It had ordered its marketing department to visit restaurants and would carry out stricter checks, it said.
Third-party organisations would be asked to sample food at the restaurants. It is also adopting new technology to screen out restaurants with fake licenses, it said.
The online delivery sector started to take off in 2013 and the business saw revenues of more than 160 billion yuan (HK$185 billion) last year.
But it had thrived in part due to heavy spending on cheap promotional offers, said Yang Xu, an analyst at the consulting firm Analysys International.
The strategy might attract customers in the short term but could backfire later.
“Subsidies will make it difficult to build customer loyalty. Instead, consumers will become more sensitive to price,” he said.
Companies should instead focus on the quality of service to differentiate themselves from others, he said.
Zhou Xiaoqian, an analyst from iResearch, said narrowing profit margins due to growing logistics and labour costs were also a big issue.
“As wages for delivery men rise quickly, smart devices like unmanned aerial vehicles may take over the job,” she added.
Article source: http://www.scmp.com/news/china/society/article/2020326/black-restaurants-how-chinas-online-delivery-websites-are-trying