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Food commitment motorcyclists from ele.me and Baidu Waimai on the streets in Beijing. (Photo by Da Wei for China Daily)

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Sheng Kun rarely acclimated to accept breakfast. But back March, he has been acclimation it online at ele.me every day, acknowledgment to the aliment commitment bang in China.

“Placing orders online is so acceptable and cheap. I can adjustment breakfast on my buzz the day afore and aces it up at a atom abreast my appointment the abutting day,” said Sheng, 26, a bold artist in Beijing.

Last Monday, for instance, Sheng ordered via his buzz a basin of clay bean borsch and two aflame buns for 3 yuan (US$0.47), at 30 per cent of the amount if he had bought them at a restaurant.

“Why bother to band up at the restaurant for a meal anytime again?” Sheng added. “These online aliment acclimation sites action such bargain commons and acceptable aliment commitment services.”

Sheng is not alone. In the additional quarter, online-to-offline, or O2O, accouterment industry affairs hit 8.2 billion yuan ($1.29 billion), up by 89 per cent from aftermost quarter, according to Beijing-based Internet Consultancy Analysys International.

Although online aliment acclimation alone accounts for a baby admeasurement of the accouterment industry, as added bodies about-face to adaptable apps and websites for aliment commitment services, its bazaar aggregate is accepted to hit 40 billion yuan in 2017, analysis aggregation iResearch Consulting Group forecasts in a report.

One of the capital affidavit for the accelerated billow in China’s online aliment acclimation area is a amount war led by Internet companies.

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Heavyweights Baidu Inc. and Alibaba Group Holding Ltd both launched their own O2O platforms to advance aliment commitment services. Startups, such as ele.me, which is backed by Tencent Holdings Ltd and JD.com Inc., and Groupon-like meituan.com, are additionally eyeing the sector.

“Currently, these online platforms are alms agnate casework in agreement of partnered restaurants and commitment qualities,” said a adventure backer who beneath to be identified.

“Their differences are not big abundant to allurement barter abroad from competitors, so a able weapon is to barrage a amount war to vie for price-sensitive users.”

So far, the action has worked.

Due to abundant subsidies, meituan.com has apparent its bazaar allotment acceleration by added than 7 per cent to 34.5 per cent in the aboriginal six months of this year in agreement of transaction values, demography the acme from ele.me, which now has a bazaar allotment of added than 33.5 per cent, according to Analysys International. While the aliment commitment casework launched by Baidu and Alibaba authority 12.7 per cent and 4 per cent respectively, they aisle bazaar leaders because of their backward admission to the market.

However, acceptable an added bazaar allotment absolutely through afire banknote is not a acceptable strategy. “Customers accept no loyalty. They aloof accept platforms that action the better discounts. When subsides disappear, consumers are additionally acceptable to acknowledgment to the acceptable way of bistro at brick-and-mortar restaurants,” Liu Xuwei, an analyst at Analysys International, said.

Also, the online action leaves apprentice companies financially overstretched. Earlier this month, ele.me appear that it had aloft $630 actor from investors, a accord that ethics the aggregation at $3 billion. But the advertisement has triggered doubts from industry analysts who accept the aggregation is overvalued.

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Meituan.com, which accustomed $700 actor in allotment at the alpha of the year, is additionally reportedly analytic for a new annular of funding, while Baidu’s aliment acclimation belvedere Baidu Waimai additionally managed to allure $250 actor from deep-pocketed investors in July.

“After months of bang competitions in handing out subsidies, the industry is now attractive for money,” said Tao Jingqi, arch analyst at big abstracts close TalkingData.

What complicates the affair is that except for ele.me, best Internet players that annex out into the area do not accept licenses for carrying food. These businesses are now adverse authoritative barriers.

Despite these difficulties, bazaar players are accession up efforts to advance and alter their services. Kang Jia, co-founder and arch allied administrator of ele.me, said that the belvedere is accretion its aliment commitment casework to bristles peak-time phases in one day.

“Unlike our aeon which alone focus on the approved three meals, we are abacus desserts and candy in the afternoon back best white-collar workers tend to accept a tea break,” Kang said. “Now about 19 per cent of orders are for afternoon services.”

The aggregation is additionally rolling out appropriate candy to accommodated people’s growing appetence backward at night.

“Offering candy at night is the best able alcove because it covers a continued time ambit which starts from 8pm to maybe 2am the abutting day,” Kang added.

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While meituan.com is channeling added assets to body up the account on its platform, Wang Huiwen, who is in allegation of aliment commitment casework at the company, said, “We are now demography accomplish to add added items such as fruit, flowers and added accessories awash at supermarkets.”

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