Recently, according to media reports, Meituan's food delivery platform KeeTa, launched in Hong Kong, has expanded its supply categories to include convenience stores. 7-Eleven has taken the lead in joining the platform, but currently only supports users in ordering hot food, snacks, beverages, and other food categories.

According to insiders, if the convenience store food categories perform well, KeeTa may subsequently support the launch of non-food items, and KeeTa is also seeking to increase categories for newly signed merchants.

In fact, before KeeTa, the two established food delivery platforms in Hong Kong, Foodpanda and Deliveroo, had already offered grocery delivery services in addition to food, but both are still in the exploratory phase and do not contribute significantly to revenue.

Opening up convenience stores sends a signal that Meituan is actively expanding into non-food categories in Hong Kong and has ambitions to expand its instant retail footprint there.

In 2023, the instant retail sector grew rapidly in mainland China, with the concept of "everything can be delivered" becoming increasingly popular. The convenience and localization of instant retail are changing consumers' spending habits and gradually shaping a new lifestyle. According to the "White Paper on the Development Trends of Instant Retail in 2023," China's instant retail market exceeded 590 billion yuan in 2022 and is expected to increase to 3.6 trillion yuan by 2030, equivalent to 6% of the total retail sales of consumer goods during the same period.

As Meituan's first overseas foray into food delivery, Hong Kong holds significant pilot value for the company. In the future, the model of first experimenting with food delivery and then monetizing through retail is expected to emerge in more countries and regions.

01

KeeTa Catching Up

In May 2023, Meituan tested its food delivery business in Hong Kong, officially launching it under the name "KeeTa."

Since its launch, KeeTa has adopted a strategy of steady expansion, initially piloting in Mong Kok and Tai Kok Tsui in May 2023. These locations were chosen because they have a sufficient number of residential buildings and a high demand for food delivery from single users, with a target customer base of 160,000 individuals. By September 2023, KeeTa's market share of orders in Hong Kong had reached 11%, marking a successful first phase of testing.

From August to September, KeeTa gradually expanded to most areas of Kowloon and Hong Kong Island, and by the end of 2023, its business covered the entire city.

KeeTa's advertisements on the MTR

Before KeeTa arrived, Hong Kong's food delivery market was characterized by a typical "duopoly" structure, with Foodpanda and Deliveroo occupying 63% and 37% market shares, respectively.

Upon its arrival in Hong Kong, KeeTa targeted Foodpanda and Deliveroo's issues, such as high customer order values, high delivery fees, and unstable fulfillment times, gradually winning over consumers.

Addressing the issue of high customer order values (with an average order value of around HKD 170-180), KeeTa launched a "Solo Meal" section on its homepage to cater to single diners, with a minimum spend of HKD 50-60, significantly lower than other platforms. Regarding delivery fees (currently averaging around HKD 45 per order), KeeTa introduced various discounts, including billion-dollar rewards, free shipping on Thursdays, Fridays, and Saturdays, daily half-price deals, and universal free shipping. In terms of delivery times, KeeTa leveraged Meituan's mature and refined operational experience and algorithms, as well as timely rewards for riders and subsidies for special weather conditions, to build an efficient fulfillment team.

Image source: Measurable AI

Through these efforts, KeeTa achieved rapid growth in order volume and GMV. According to Measurable AI data, as of March 2024, based on food delivery order numbers (excluding groceries and pickup services), Meituan's Hong Kong business, KeeTa, had a market share of 44%, compared to 35% for Foodpanda and 21% for Deliveroo.

In other words, KeeTa successfully emerged as Hong Kong's top food delivery platform in less than a year.

KeeTa is not only generous to users, offering "red envelopes" to pave the way, but it is also equally generous to riders, at one point advertising monthly salaries of up to HKD 35,000 to attract talent.

In conversations with food delivery riders, we found that the news of "monthly salaries exceeding HKD 30,000" was generally true.

According to KK, who delivers for KeeTa, he previously worked as a part-time food delivery rider for two other platforms. Last September, he switched to KeeTa as a "motorcyclist" (referring to riders who deliver orders on motorcycles). He typically delivers for 2-3 hours after work on weekdays, earning around HKD 300 per day on average. On weekends, when he delivers full-time, he completes around 35-40 orders per day, earning over HKD 30,000 per month if working full-time (after deducting commissions).

KK's income from 3 hours of delivery on July 8

Wang You, a master's student in Hong Kong, registered as a "KeeTa Pedestrian" (referring to riders who primarily complete short-distance orders on foot) in March of this year. According to him, he chose KeeTa because Foodpanda and Deliveroo have complex application processes and equipment fees, making them unsuitable for student populations like himself who need to spend money before earning it.

On his first day as a pedestrian, Wang You received three orders, earning around HKD 120. Since then, KeeTa Pedestrian has become a stable source of income for him, delivering for 1-2 hours each night and earning an average of around HKD 25-35 per order, sometimes reaching HKD 300 in a single night.

For Meituan, exploring the Hong Kong market is not just about competing for rankings and market share; it is also a valuable experience accumulation. Meituan CEO Wang Xing stated clearly during an earnings call that Hong Kong is an excellent testing ground for experimenting with their global infrastructure and practices.

Recently, it was reported that following its success in Hong Kong, KeeTa plans to expand its business to Riyadh, the capital of Saudi Arabia, demonstrating its ambition for global expansion. Since April of this year, Meituan has opened multiple positions in Riyadh and has already recruited a considerable number of staff, including local and international talent, while also transferring some personnel from its Hong Kong office to support KeeTa in Riyadh.

02

Bringing Solutions to Hong Kong

In addition to offering maximum "discounts," Meituan has also brought its experience from the mainland food delivery market to Hong Kong.

Firstly, by providing digital solutions to merchants, Meituan improves online and offline fulfillment channels while attracting more merchants to join its food delivery platform.

Fan Weiwei's Japanese restaurant has joined Foodpanda, Deliveroo, and now KeeTa. According to Fan Weiwei, KeeTa's commission rate of 20%-30% is about 10 percentage points lower than the other two platforms, which was one of the reasons she decided to join.

More importantly, before KeeTa arrived, merchants in Hong Kong's food delivery market often struggled to find contact staff from food delivery platforms, relying solely on inefficient email communication. However, since Fan Weiwei's restaurant was invited to join KeeTa through its BD team's "door-to-door" outreach, she has received regular follow-ups and tracking. KeeTa has also launched a 24-hour online customer service, allowing her to promptly contact staff through the backend, with most issues resolved within 24 hours.

KeeTa's introduction to its service capabilities on its official website

Secondly, Meituan has replicated its localized marketing service experience in Hong Kong.

At the end of last year, Meituan's takeaway management service launched the industry's first service standard, covering ten standard service actions such as business diagnosis, store decoration, review management, and customer follow-up, allowing merchants to run their businesses effortlessly. In April of this year, Meituan takeaway officially launched the "Brand Satellite Store" million-store rebate program, including commission rebates, over HKD 100 million in traffic support, and free AI location selection, product selection, precision marketing services, and other support measures.

After this solution was refined in China, it was also applied to KeeTa. Since joining KeeTa, Fan Weiwei's store has seen increased exposure, with its rating consistently stable at 4.5 stars. Moreover, with orders being received simultaneously from three platforms, takeaway orders now account for around 40% of total revenue (including takeaway pick-ups).

Finally, Meituan's experience in organizing, operating, and managing a large takeaway rider team in China has also been brought to Hong Kong, helping KeeTa improve its delivery competitiveness and operational efficiency. From a delivery perspective, Foodpanda and Deliveroo have average delivery times of around 30 minutes, while EqualOcean reports that KeeTa's average delivery time in Hong Kong is around 27 minutes. Furthermore, KeeTa's "Punctuality Guarantee" service has achieved an on-time rate of over 98%.

KK also mentioned that KeeTa's rider-end algorithm is highly efficient and fast. Initially, riders were only assigned one order at a time, receiving the next order only after completing the previous one. However, now riders are increasingly assigned multiple orders at once, with reasonable route planning.

A KeeTa employee revealed that to keep up with the rapid development of its Hong Kong business, the Hong Kong team has drawn a significant number of BD personnel from the mainland to support operations, and the overall staff size has expanded rapidly over the past year, with three local offices leased.

With efforts across multiple fronts, KeeTa ranked first in terms of GMV market share in March 2024 but still faces competitive pressures from Foodpanda and Deliveroo in terms of subsidies, advertising, and "either-or" choices.

In the broader context of Hong Kong, food delivery encompasses not only the delivery of food products but also daily necessities, dine-in takeaways, and same-city express delivery services. Before KeeTa announced its integration with convenience stores, competitors Foodpanda and Deliveroo had already launched grocery delivery services and expanded into Pandamart and DeliverooHop physical stores, but their grocery businesses accounted for only around 10% and 2% of their respective GMVs.

These figures suggest that Foodpanda and Deliveroo have devoted limited resources to grocery delivery, making it an opportune time for KeeTa to enter the market.

In the mainland market, Meituan, which started as a food delivery service, relies on its rider team built around its food delivery business and has a large-scale advantage in terms of order volume and GMV in the instant retail sector. According to a report from consulting firm JQ Central, in terms of GMV, Meituan Flash, Ele.me (non-food segment), and JD.com Daojia accounted for 34%, 26%, and 15% of the instant retail market share in 2022, respectively.

Meituan's financial report shows that the number of instant delivery orders reached 21.9 billion in 2023, an increase of 24% year-on-year, while the number of Meituan Flash orders increased by more than 40% year-on-year.

Wang Xing also holds high hopes for instant retail and stated, "We believe that in the future, instant retail will continue to drive consumption and empower offline merchants, and we remain confident in the growth potential and leading position of Meituan Flash."

However, in the mainland market, instant retail has become a "must-win" area for internet giants. After Meituan Flash took the lead, e-commerce platforms such as Ali Group and JD.com, short video platforms like Douyin and Kuaishou, and travel platforms such as Gaode and Hello Bike are all making layouts around instant retail. To withstand pressure from all competitors, Meituan's expansion into instant retail overseas is expected to bring a new round of growth to the company.

Industry insiders analyze that daily necessities, household items, alcohol, pharmaceuticals, cosmetics, flowers, and other categories are the most concentrated SKUs for instant retail orders, and these are precisely the categories where Meituan has accumulated the most experience. Therefore, integrating convenience stores into the Hong Kong market through KeeTa may pave the way for a comprehensive rollout of instant retail services in the future. Moreover, by increasing delivery categories, Meituan's computing power and delivery capacity can be reused, helping to reduce the gap between peak and trough delivery volumes, improve profitability, and lay the foundation for achieving a positive return on investment sooner.

GF Securities believes that Meituan's long-term experience in front-end operations and back-end R&D in China, combined with the new regional expansion experience gained from its Hong Kong pilot, will effectively support the company's future overseas business development.