Superficially, this was due to O2O platforms’ higher commission fees on restaurants as well as an increase in delivery fee both led to increased production costs and resulted in higher product prices. The platform has been inevitably requiring higher intermediate business income. The Sina Finance report also mentioned that all parties in the O2O food industry have entered a cost recovery period, including labor, rent, social security, disability insurance, and third-party delivery service platform fees. According to the Sina Finance report, O2O platform has raised their prices of delivery food, some are even more expensive than the dine-in food produced from the same restaurants. However, food prices with O2O service had been on an upward trend since 2018. The majority of O2O delivery platforms expanded their markets by attracting businesses through generous subsidies and enticing consumers with low, affordable prices during the O2O food industry’s early development period. The O2O food delivery industry’s quick rise in China may be accredited to its early business strategies. This possible explanation is consistent with the rising demand of O2O service with higher food quality and price. We assume that highly educated individuals would be able to accept the increasing price of O2O service as long as it is able to meet their needs on healthy and high-quality food. Research has shown that highly educated individuals are more aware of their health than the less-educated ones. A recent study concerning Chinese undergrads points out that frequent O2O food delivery consumption is tied to a relatively high education level. It is worth pointing out that there might exist a causal connection between a customer’s level of education and their O2O food delivery service consumption level. It is observed that delivery orders above 40 RMB made up 32.9% of all O2O delivery orders in the fourth quarter of 2018, as opposed to 22.7% in the first quarter of 2017. This changing makeup of the O2O customer population may in part explain the increase of higher-priced delivery orders. The percentage of white-collar workers among O2O costumers have increased from 63% in 2015 to 86% in 2019.
Data show that the percentage of student customers on O2O decreased from 33% in 2015 to less than 10% in 2019. Customers born in the 90s chose food delivery services primarily because they considered cooking a nuisance, while for customers born before the 90s weather was the deciding factor. Surveys reveal that some of the major reasons O2O customers chose to use food delivery service include “bad weather”, “convenience of delivery”, and “not wanting to cook”. A prominent O2O food delivery platform in China had 86.3% of its orders placed by customers of between 20 and 34 years old in the first half of 2019. This new pattern demonstrates novel developments in O2O customers’ consumption habits.Ĭustomers born in the 80s and 90s dominated the consumption of O2O food delivery services. These findings suggest that the growth of the Chinese O2O industry was more driven by the increasing frequency with which customers used its service than by the increase in customer number. Moreover, O2O customers used food delivery services more frequently in 2019 than they ever had before, with the average number of orders placed by an individual customer growing from 18.8 in 2018 to 25.5 in 2019.
It is evident that the O2O food delivery customer population has been growing steadily. Within this period, O2O food delivery customers grew steadily by 22.7%, from 343 million to 421 million. From December 2017 to June 2019, internet users in China grew from 772 million to 854 million. Developments in China’s O2O food delivery industry, along with the increased use of internet, have led to changes within the Chinese food delivery customer population as well as in their demands.
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