As a super platform with powerful network effects, Meituan Dianping will blossom and flourish, according to Kathy Xu, founder and president of Capital Today, one of the first independent private equity firms in China.
Meituan Dianping has expanded from group purchasing, to food delivery, hotel and travel booking, movie ticketing, grocery delivery, bike-sharing, car-hailing and other lifestyle services.
"If you are in a traditional industry, then you need to focus," Xu said. "In the Internet sector, however, you have to reach in different directions just like an octopus. In the internet business, it won't work if you focus."
"The more users you get, the more valuable they become because of network effects. The value of each user will show up in multiple businesses. As long as you manage well and choose the right markets, your network effect will keep magnifying," she said.
As a late-comer in food delivery market, Meituan learned and followed the tactics of Ele.me to attract users. After six months of learning and exploring, Meituan hired 1,000 people and sent them to 100 cities after one month of training.
The most important reason for Meituan to win the food delivery battle was that Meituan built its own delivery network, she said. As Meituan improved its food delivery efficiency with an average delivery time of about 30 minutes, Ele.me was busy with the upstream supply chain development.
Meituan Dianping saw its market share in on-demand food delivery increase from 31.7% in 2015 to 59.1% in the three months ended March 31, 2018, according to iResearch report.
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