On Tuesday, Meituan-Dianping, widely considered China’s top online-to-offline (O2O) platform, quietly launched a new ride-hailing service in the second-tier city of Nanjing. The new service surprised many, as it pits Meituan against China’s ride-hailing giant Didi Chuxing (formerly Didi Dache)—a company so well-connected and entrenched in the country that it managed to run off Uber.
Meituan already has a solid position among O2O services. It allows its users to book or purchase a range of goods and services online—usually on a mobile device—that are then picked up or accessed at an offline physical location. Meituan customers can order food, buy tickets for entertainment events, make reservations at restaurants and hotels, and purchase tickets for travel. TechNode, citing a company official, reported that the service now has more 600 million users, and 180 million monthly active users (MAUs) on mobile devices.
Consumer interest in O2O services like those from Meituan is expected to continue to grow, according to forecasting data. In a January 2016 report, iResearch Consulting Group projected that O2O ecommerce sales in China will surge from RMB 521 billion ($78.4 billion) this year to RMB 626 billion ($94.2 billion) in 2018.
Chinese news service Caixin reported that Meituan decided to move into ride-hailing services after noticing that many of its customers sought rides to businesses after making a purchase through its platform. Those who book rides can pay for them through bank cards, as well as two digital payment services offered by Tencent—QQ Wallet and WeChat Pay. Fares are comparable to those found on Didi Chuxing’s low-end private car service, Kuaiche.Meituan’s new service provides a seamless transition from O2O purchasing to ride-hailing, eliminating the need for customers to open a new app to get to their desired location.
Meituan’s new service has a clear advantage over Didi, in that it provides a seamless transition from O2O purchasing to ride-hailing, eliminating the need for customers to open a new app to get to their desired location. But Didi already commands an impressive market share in China, making Meituan’s potential battle against this competitor an uphill one.