O2O food delivery platform sees revenue tripling next year

By Yu Xi Source:Global Times Published: 2015-12-29 21:43:02

Baidu Waimai launches plan to raise funds as it pursues expansion

A Baidu Waimai booth at the 2015 China-Beijing E-commerce Conference on October 12. Photo: CFP

Baidu Waimai, a food delivery online-to-offline (O2O) platform launched by Baidu Inc, aims to raise $300 million to $500 million in a new round of financing, news portal caixin.com reported on Tuesday.

The company's revenue is expected to surpass 8 billion yuan ($1.23 billion) in 2015, and it forecast revenue of more than 25 billion yuan in 2016, the caixin report said.

About 40 percent of the proceeds will be used in building the food delivery O2O platform, 20 percent in product research, 20 percent in category expansion and the rest in marketing, the report said.

Baidu declined to comment on the caixin report when reached by the Global Times on Tuesday.

As of the end of October, Baidu Waimai served 109 cities and had 16 million users, said the report.

China's O2O food delivery market has been growing rapidly since 2014, and the boom will persist, Liu Xuwei, an analyst from Analysys International, told the Global Times on Tuesday.

"Booming demand in the market is the major reason why the O2O food delivery sector is so popular in the capital market," Liu said. "These food delivery platforms really need a lot of money to gain consumers, establish a sound logistics system, build professional teams and carry out marketing."

Baidu CEO Robin Li Yanhong announced in July that Baidu Waimai would develop independently. Baidu launched the business in May, 2014, mainly focusing on the white-collar market.

Compared with Alibaba Group Holding Ltd and Tencent Holdings Ltd, Baidu is a latecomer in branching out into the food delivery O2O sector, but it still has some advantages, Wang Danqing, a partner at Beijing-based ACME Consultancy, told the Global Times on Tuesday.

"For instance, Baidu Map could be a good tool for the company to develop its food delivery business, because the mapping function can provide accurate positions of both delivery employees and consumers," Wang said. "It would be helpful to provide better services to customers."

Internet giants like Alibaba and Tencent have entered the market and hope to gain a competitive edge, but it's still too early to judge which one will be the winner, Wang noted.

It's also possible that the Internet giants will cooperate if they can find profitable opportunities to do so, Wang said, noting that more companies will continue to raise funds to develop these businesses.

For instance, Shanghai-based ele.me received $350 million in investment from Internet giants such as Tencent and JD.com Inc in January. Also, Alibaba is going to invest $1.25 billion in the company, becoming the major shareholder, caixin.com reported on December 25.

Beijing-based waimai.meituan.com, an O2O food delivery site owned by China's leading group-purchasing platform meituan.com, is another rival in the food delivery market.

Meituan.com, backed by Alibaba, completed a round of fundraising worth $700 million in January 2015, which raised the company's value to about $7 billion, a report from news portal tech.sina.com.cn said in January.

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