(Yicai Global) Dec. 13 -- Leading Chinese ride sharer Didi Chuxing is branching out into meal delivery in a seemingly retaliatory move after Meituan-Dianping crept onto the former's turf by rolling out cab-hailing services.
Didi is infiltrating the meal distribution market and has been working on the service for a while, but the company conducted the business internally on a need-to-know basis, a source close to the firm told Yicai Global yesterday.
The ride-hailing firm will develop a food delivery business in collaboration with Ele.me, a meal distribution service backed by e-commerce giant Alibaba Group Holding Ltd. [NYSE:BABA]. Speculation suggests that Didi will plow USD2 billion into the platform and that Japanese multinational telecoms firm SoftBank Group Corp. [TYO:9984] will also be involved in the deal.
On top of that deal, it will also look to set up its own meal delivery platform, possibly inspired by Uber Eats and Uber Rush in the US, which are already turning profits and have outpaced cab-hailing in sales growth.
Food delivery platform Meituan entered the mobility market with the low-profile launch of a cab-hailing service in Nanjing, Jiangsu province in February. Within two weeks, Didi unveiled a new service, 'youxiang,' which offered ride-hailing at fares priced between standard taxis and chauffeured cars.
"The cab-hailing service is still in a trial phase," Wang Huiwen, Meituan's senior vice president, said in a statement in October. "The firm is piloting many new services, some of which started two or three years ago, but it's too early to draw conclusions on them. The ride-hailing tryout has been relatively short." On Dec. 1, Wang Xing, chief executive, announced in an internal email that mobility was one of the company's key business areas and it was setting up a new division to cater to it. Wang Huiwen became head of the new unit.
The rationale behind the decision to branch out into mobility was that Meituan wants to offer a one-stop solution where users can employ the app to order taxis to and from bookings made within it, such as restaurants, hotels and movie screenings.
Didi has expanded quickly over the past three years. It pumped USD200 million into bike-sharing platform Ofo, run by Beijing Bikelock Technology Co., and invested in second-hand car trading platform Renrenche, operated by Renrenche Internet Technology Inc., in September. Cheng Wei, chief executive, plans for the firm to roll out a million new-energy vehicles across its service network by 2020.
It recently partnered the Global Energy Interconnection Development and Cooperation Organization to set up a joint venture named Global New Energy Vehicle Service. The new company is well underway with plans to release an electric car charging system, Xiaoju Chongdian.
Zhu Xiaohu, an early Didi investor, previously said that he was monitoring the development of a 'new retail' project, but didn't disclose a name for it. "Its main application is to turn every car on Didi's service network into a convenience store, where passengers can buy drinks, snacks and umbrellas," he added.