HONG KONG, CHINA – MAY 22: A poster selling ‘KeeTa’ is seen on Could 22, 2023 in Hong Kong, China.
Chen Yongnnuo | China Information Service | Getty Photographs
Chinese language meals supply big Meituan has launched a sister app in Hong Kong, its first roll-out exterior of mainland China — however some analysts are skeptical it may possibly rapidly carve out a big market share.
“I am not very optimistic about Meituan’s enlargement in Hong Kong,” Shawn Yang, managing director of Blue Lotus Analysis Institute, advised CNBC. “I do not suppose the market is giant sufficient the place Meituan will make investments numerous assets into.”
The meals supply service — named KeeTa — launched on Could 22 in two residential areas: Mong Kok and Tai Kok Tsui.
A month later, KeeTa introduced it was increasing to Sham Shui Po and Yau Tsim Mong districts in Hong Kong after its preliminary market launch “exceeded expectations,” it mentioned in a press launch shared with CNBC.
KeeTa plans to cowl your entire Hong Kong market by the tip of this 12 months, Meituan mentioned on the time of its launch.
I don’t suppose [the launch of KeeTa] impacts Meituan’s revenues very a lot since it is just gaining one other 7 million in customers probably and it already has 700 million in China.
Kai Wang
Senior fairness analyst, Morningstar Asia
The enlargement comes as Meituan faces elevated competitors from new gamers reminiscent of TikTok’s sister Douyin in its dwelling market, and as hopes of a robust post-Covid restoration in China fade.
Meituan is the market chief in China’s meals supply sector, taking nearly 70% of the market share within the mainland China, knowledge from trade analysis agency ChinaIRN confirmed.
“We now have acquired a lot of enquiries and appeals from diners and eating places exterior Mong Kok and Tai Kok Tsui, which has vastly strengthened our confidence in additional increasing the area,” a KeeTa spokesperson advised CNBC.
The corporate will “proceed to supply the takeaway service and develop its companies to extra components of Hong Kong as quickly as doable,” the spokesperson mentioned.
Kai Wang, senior fairness analyst for Morningstar Asia, does not suppose the enlargement into Hong Kong could have a big impression on the corporate’s earnings.
He mentioned KeeTa’s enlargement into Hong Kong is “solely gaining one other 7 million in customers probably” in comparison with greater than 678 million customers Meituan already has in China.
If there has already been like two or three main gamers on this market, then it is really very troublesome to vary shoppers’ mindsets, except they do numerous subsidy campaigns.
Shawn Yang
managing director, Blue Lotus Analysis Institute
“I do not suppose [KeeTa] impacts Meituan’s revenues very a lot,” mentioned Wang.
Meituan declined to touch upon the analysts’ views.
“I believe Meituan needs to discover a market that’s culturally near mainland China, [build] a group and expertise and attempt to see if they’ll additionally take some market share in abroad markets in the long term,” mentioned Yang from Blue Lotus. He was referring to Hong Kong as a testing mattress for Meituan which can ultimately develop internationally.
Stiff competitors
The penetration charge of meals supply in Hong Kong just isn’t significantly excessive.
At present, about 10% of the general restaurant trade faucets on meals supply companies — that is in comparison with a median of 21% throughout China two years in the past, in accordance with a report from analysis agency Momentum Works.
That is as a result of “ordering meals supply just isn’t as frequent a behavior in Hong Kong as it’s in mainland China,” mentioned the report, including that the Asian monetary hub has a excessive density of meals and beverage institutions on each avenue nook.
Hong Kong’s meals supply market is at the moment dominated by Foodpanda and Deliveroo, which held shares of 64% and 36% respectively in Could earlier than KeeTa’s launch, in accordance with knowledge supplier Measurable AI. The information takes into consideration each supply and pickup orders.
KeeTa doesn’t at the moment provide meals pickup companies, solely supply companies.
Uber Eats exited Hong Kong on the finish of 2021 after 5 years of working within the territory. It held about 5% market share on the time of its exit, in accordance with Measurable AI.
The meals supply market in Hong Kong stays lukewarm, even through the pandemic, with reasonable progress charges.
“If there has already been like two or three main gamers on this market, then it is really very troublesome to vary shoppers’ mindsets, except they do numerous subsidy campaigns,” mentioned Yang of Blue Lotus Analysis.
″[KeeTa’s expansion into Hong Kong] ought to result in extra vouchers and reductions for shoppers. And it ought to profit shoppers in the long run,” mentioned Wang from Morningstar.
Individually, Hong Kong has launched a probe into anti-competitive conduct from Deliveroo and Foodpanda. Meaning gamers can’t have interaction in practices reminiscent of proscribing eating places or penalizing them for switching to partnering solely with different platforms.
This might imply smaller gamers reminiscent of KeeTa could possibly construct market share.
Doling out subsidies
In a bid to accumulate new customers, KeeTa is providing 300 Hong Kong {dollars} ($38.30) value of free vouchers for every new consumer that can be utilized to offset meals and supply charges. The corporate “plans to additional launch numerous advertising actions within the new district” reminiscent of free supply for all, in addition to referral reductions and meals offers.
KeeTa can also be providing set meals from HK$60 together with supply charges to handle the painpoint of shoppers who dine alone. Foodpanda and Deliveroo’s minimal order necessities sometimes vary from HK$50 to HK$80 excluding supply charges, in accordance with a CNBC verify.
To entice clients additional, KeeTa launched an “on-time promise” coverage to all customers. Clients get compensated in vouchers if their orders are greater than quarter-hour later than the unique estimate.
Ryan Lai, managing director of Foodpanda Hong Kong, advised CNBC that short-term promotions are usually not sufficient to determine buyer loyalty within the longer run.
“In such a aggressive market panorama, we discover that constructing robust buyer stickiness is a key success issue,” mentioned Lai.
“In our opinion, the entry of a brand new participant within the native supply area displays the untapped progress potential of this trade out there,” he mentioned, including that Foodpanda will proceed to serve its clients higher.
On the brand new entrant, a Deliveroo Hong Kong spokesperson mentioned, “Since Deliveroo first entered the Hong Kong market seven years in the past, now we have at all times been optimistic in regards to the prospects of the native meals and grocery trade, and as such, we see competitors as a driving pressure for innovation.”
Not too long ago, the platform additionally launched the “on-time promise” coverage for paid customers — which compensates them with vouchers if their orders are late by quarter-hour or extra.
Nevertheless, the meals supply market in Hong Kong “stays lukewarm,” mentioned Momentum Works within the report, which identified that even through the pandemic, progress charges had been reasonable.
However KeeTa can faucet into its mum or dad firm’s experience in China, mentioned the analysis agency.
“So long as Meituan has decided management, selects the best individuals, and organizes its inner construction successfully, they need to not fear about competitors from the 2 incumbents.”