Saturday, April 20, 2024

What is Lasée?

Welcome to the thrilling universe of Lasée!...

How Aoomaal Transforms Your Daily Habits

Setting out on an excursion of personal...

Absorbing Secrets: The Spongegirl Case

In the records of criminal history, certain...

Meituan KeeTa in Hong Kong’s food delivery race; analysts are skeptical

TechnologyMeituan KeeTa in Hong Kong's food delivery race; analysts are skeptical

[ad_1]

HONG KONG, CHINA – MAY 22: A poster promoting ‘KeeTa’ is seen on May 22, 2023 in Hong Kong, China.

Chen Yongnnuo | China News Service | Getty Images

Chinese food delivery giant Meituan has launched a sister app in Hong Kong, its first roll-out outside of mainland China — but some analysts are skeptical it can quickly carve out a significant market share.

“I’m not very optimistic about Meituan’s expansion in Hong Kong,” Shawn Yang, managing director of Blue Lotus Research Institute, told CNBC. “I don’t think the market is large enough where Meituan will invest a lot of resources into.”

The food delivery service — named KeeTa — launched on May 22 in two residential areas: Mong Kok and Tai Kok Tsui.

A month later, KeeTa announced it was expanding to Sham Shui Po and Yau Tsim Mong districts in Hong Kong after its initial market launch “exceeded expectations,” it said in a press release shared with CNBC.

KeeTa plans to cover the entire Hong Kong market by the end of this year, Meituan said at the time of its launch.

I don’t think [the launch of KeeTa] affects Meituan’s revenues very much since it is only gaining another 7 million in users potentially and it already has 700 million in China.

Kai Wang

Senior equity analyst, Morningstar Asia

The expansion comes as Meituan faces increased competition from new players such as TikTok’s sister Douyin in its home market, and as hopes of a strong post-Covid recovery in China fade.

Meituan is the market leader in China’s food delivery sector, taking almost 70% of the market share in the mainland China, data from industry research firm ChinaIRN showed.

“We have received a large number of enquiries and appeals from diners and restaurants outside Mong Kok and Tai Kok Tsui, which has greatly strengthened our confidence in further expanding the region,” a KeeTa spokesperson told CNBC.

See also  Food delivery apps Grab and Foodpanda expand into dine-in services

The company will “continue to offer the takeaway service and expand its services to more parts of Hong Kong as soon as possible,” the spokesperson said.

Kai Wang, senior equity analyst for Morningstar Asia, doesn’t think the expansion into Hong Kong will have a significant impact on the company’s earnings.

He said KeeTa’s expansion into Hong Kong is “only gaining another 7 million in users potentially” compared to more than 678 million users Meituan already has in China.

If there has already been like two or three major players in this market, then it’s actually very difficult to change consumers’ mindsets, unless they do a lot of subsidy campaigns.

Shawn Yang

managing director, Blue Lotus Research Institute

“I don’t think [KeeTa] affects Meituan’s revenues very much,” said Wang.

Meituan declined to comment on the analysts’ views.

“I think Meituan wants to find a market that is culturally close to mainland China, [build] a team and talent and try to see if they can also take some market share in overseas markets in the long run,” said Yang from Blue Lotus. He was referring to Hong Kong as a testing bed for Meituan which may eventually expand internationally.

Stiff competition

The penetration rate of food delivery in Hong Kong is not particularly high.

Currently, about 10% of the overall restaurant industry taps on food delivery services — that’s compared to an average of 21% across China two years ago, according to a report from research firm Momentum Works.

That’s because “ordering food delivery is not as common a habit in Hong Kong as it is in mainland China,” said the report, adding that the Asian financial hub has a high density of food and beverage establishments on every street corner.

See also  Apple Watch X reportedly coming next year with blood pressure tracking

Read more about tech and crypto from CNBC Pro

Hong Kong’s food delivery market is currently dominated by Foodpanda and Deliveroo, which held shares of 64% and 36% respectively in May before KeeTa’s launch, according to data provider Measurable AI. The data takes into account both delivery and pickup orders. 

KeeTa does not currently offer food pickup services, only delivery services.

Uber Eats exited Hong Kong at the end of 2021 after five years of operating in the territory. It held about 5% market share at the time of its exit, according to Measurable AI.

The food delivery market in Hong Kong remains lukewarm, even during the pandemic, with moderate growth rates.

“If there has already been like two or three major players in this market, then it’s actually very difficult to change consumers’ mindsets, unless they do a lot of subsidy campaigns,” said Yang of Blue Lotus Research.

″[KeeTa’s expansion into Hong Kong] should lead to more vouchers and discounts for consumers. And it should benefit consumers in the long term,” said Wang from Morningstar.

Separately, Hong Kong has launched a probe into anti-competitive conduct from Deliveroo and Foodpanda. That means players cannot engage in practices such as restricting restaurants or penalizing them for switching to partnering exclusively with other platforms.

This could mean smaller players such as KeeTa may be able to build market share.

Doling out subsidies

In a bid to acquire new users, KeeTa is offering 300 Hong Kong dollars ($38.30) worth of free vouchers for each new user that can be used to offset meals and delivery fees. The company “plans to further launch various marketing activities in the new district” such as free delivery for all, as well as referral discounts and food deals.

KeeTa is also offering set meals from HK$60 including delivery fees to address the painpoint of customers who dine alone. Foodpanda and Deliveroo’s minimum order requirements typically range from HK$50 to HK$80 excluding delivery fees, according to a CNBC check.

See also  Microsoft stock falls as analysts process a delayed AI ramp

To entice customers further, KeeTa launched an “on-time promise” policy to all users. Customers get compensated in vouchers if their orders are more than 15 minutes later than the original estimate.

Ryan Lai, managing director of Foodpanda Hong Kong, told CNBC that short-term promotions are not enough to establish customer loyalty in the longer run.

“In such a competitive market landscape, we find that building strong customer stickiness is a key success factor,” said Lai.

“In our opinion, the entry of a new player in the local delivery space reflects the untapped growth potential of this industry in the market,” he said, adding that Foodpanda will continue to serve its customers better.

Chinese tech stocks rebound after Meituan gets smaller-than-expected fine

On the new entrant, a Deliveroo Hong Kong spokesperson said, “Since Deliveroo first entered the Hong Kong market seven years ago, we have always been optimistic about the prospects of the local food and grocery industry, and as such, we see competition as a driving force for innovation.”

Recently, the platform also launched the “on-time promise” policy for paid users — which compensates them with vouchers if their orders are late by 15 minutes or more.

However, the food delivery market in Hong Kong “remains lukewarm,” said Momentum Works in the report, which pointed out that even during the pandemic, growth rates were moderate.

But KeeTa can tap into its parent company’s expertise in China, said the research firm.

“As long as Meituan has determined leadership, selects the right people, and organizes its internal structure effectively, they should not worry about competition from the two incumbents.”

[ad_2]

Source link

Check out our other content

Check out other tags:

Most Popular Articles