China-based Alibaba Group-backed Internet food delivery platform Ele.me has recently received license from Chinese authorities to deliver food by fleet of drones along 17 newly approved delivery routes in JinShan Industrial Park area. The move, which marks the first food delivery via drones in Shanghai, is set to heat up competition in the Chinese food delivery market, says leading data and analytics company GlobalData.
As lifestyles in urbanised cities become increasingly chaotic, Chinese consumers are increasingly looking for more ways of convenience. Indeed GlobalData’s Q4 2017 consumer survey reveals that for 61% of Chinese consumers, convenience factor makes purchases through online services more attractive.
In line with this trend, in early 2016, the Chinese start-up unveiled a ‘future logistics’ plan to replace its human courier network with other more innovative transport methods over the next five years. With well-managed drone deliveries, Ele.me hopes to realise massive growth in orders, particularly from rural-dwellers, and reduce operating costs and pollution.
Automation covers 70% of the delivery route, with two delivery personnel taking charge to load the takeaway onto the drone and unpack and deliver to the customer’s front door. Humans would only need to cover 15% of its routes in turn lowering the operating costs in the process.
On the other hand, several reviews of Ele.me’s delivery service have been poor in urban areas of China especially in tier-1 cities Shanghai, Beijing, Guangzhou and Shenzhen due to high levels of congestion on the road.
Meanwhile, Tencent Holdings-backed Meituan Dianping’s food delivery arm Meituan Waimai has also been working on robotic delivery for the past two years and ride-hailing giant Didi Chuxing announced its entry in March this year by advertising for riders across several cities in the mainland, heating up competition in the already crowded food delivery market.
Xinyi Wu, consumer associate analyst at GlobalData, said: “With the introduction of automated drones for delivery to be able to cover congested areas or the most rural areas in such a big country is a step forward. It not only meets requirements of a time poor urban consumer but creates new opportunities for consumers in rural areas to be able to access products and services that are not readily available in the area.
“However, automation of food delivery should not be seen as a replacement for workers however as a helping hand to those in labour intensive jobs, to become more efficient and better placed to cost-effectively meet the convenience of today’s consumers.”