The online-to-offline (O2O) food delivery industry and its recent development in China | European Journal of Clinical Nutrition

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. From December 2017 to June 2019, internet users in China grew from 772 million to 854 million [2]. Within this period, O2O food delivery customers grew steadily by 22.7%, from 343 million to 421 million [3]. It is evident that the O2O food delivery customer population has been growing steadily [3]. (Fig. 1). 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 [4]. 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. This new pattern demonstrates novel developments in O2O customers’ consumption habits.

Fig. 1: 2017–2019 O2O food delivery customer population in China.

The figure demonstrates the increase in the customer number of O2O food delivery system between 2017 and 2019. The user scale is the total number of O2O service users in China for each time point (unit: ten thousand people). The usage rate shows the percentage of user amont in each time point (100%  = 500 million) in order to show the increase of users across these years. Data retrieved from the 44th Statistical report on the development of China Internet network by China Internet Network Information Center (CNNIC) in 2019. Available from: http://www.cac.gov.cn/2019-08/30/c_1124938750.htm.

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Customers born in the 80s and 90s dominated the consumption of O2O food delivery services. 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 [5]. 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” [5]. 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 [5]. Data show that the percentage of student customers on O2O decreased from 33% in 2015 to less than 10% in 2019 [5]. The percentage of white-collar workers among O2O costumers have increased from 63% in 2015 to 86% in 2019 [6]. This changing makeup of the O2O customer population may in part explain the increase of higher-priced delivery orders. 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 [7]. 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. A recent study concerning Chinese undergrads points out that frequent O2O food delivery consumption is tied to a relatively high education level [8]. Research has shown that highly educated individuals are more aware of their health than the less-educated ones [9]. 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. This possible explanation is consistent with the rising demand of O2O service with higher food quality and price.