On March 9, according to LatePost, China’s leading ride-hailing giant, Didi Chuxing, debuted a courier service in an attempt to capitalize on a period of restricted mobility for normal citizens. Since due to the COVID-19 outbreak emergency measures were enforced, the volume of rides on Didi’s platform has diminished, leaving many drivers without work. In absence of normal lifestyle behaviors demand, the company has entered the delivery courier space to compete against the likes of Meituan Dianping and others.
The courier service is only currently operational in Chengdu and Hangzhou, and will expand to a second batch of cities on March 16. Meanwhile a source told LatePost that Didi will not go public in 2020, and will have more time and resources to focus on potentially developing new services.
Many of the couriers Didi’s employs for this new service were previously working for the platform as designated drivers to drive intoxicated users home, a function which completed an average of 380,000 transactions per day. However, with normal social events restricted due to the virus, as many as 100,000 designated drivers working for Didi needed a new source of income. The courier service provides a large chunk of Didi’s labor force with a renewed revenue stream as the demand for delivery intensifies across the country.
However, the competitive landscape is already saturated. The food and parcel delivery space in China is dominated by forces including Meituan Dianping, JD.com, Suning, Ele.me, and Dada. To make the competition even more intense, the margins and profits for delivery across these different platforms are largely similar. While Didi’s new courier service is only in the pilot stage, the company hopes it can bolster the company’s fortunes during a turbulent period in China’s economy.