Fantuan soars on delivery app

Firm launches expansion blitz in North America to 40 cities

Fantuan, one of North America's largest Chinese and Asian food delivery app service providers, revealed an ambitious plan to boost its presence among foreign consumers and diversify its business amid the ongoing COVID-19 pandemic.

"Fantuan doesn't want to stand still on its business tailored for the Chinese community in the region, and it's optimizing its English-only app," Zhu Xiang, Fantuan's chief technology officer, said in his office in North China's Tianjin, rather than at the company's headquarters in Vancouver, Canada.

"With the move to launch an English-only app, the company has seen orders grow almost 900 percent within three months in Vancouver and the trend is being copied in other areas in North America," Zhu said.

The move followed Fantuan's expansion from Canada to San Francisco, Chicago and Boston in the United States last year, increasing its presence in North America to 40 cities.

"Last year, the company's revenue surged nearly 400 percent and the COVID-19 pandemic is actually accelerating the growth," he said.

This year, the company expects its gross merchandise volume to hit $800 million, double the figure posted in 2020. It began to make a profit just two years after it was set up in Canada in 2014 by Chinese student Wu Leping.

Previously, international students and young office workers from China were among the largest users of the app. However, the pandemic has encouraged many local families to use a food delivery service.

Fantuan expects to optimize its business in terms of reviews, coupons, errands, content marketing and more－a full string business model thriving among Chinese food delivery apps such as Meituan, Zhu said.

Fantuan's co-founder, Feng Yaofei, said the company envisions that "amid the trend that the COVID-19 pandemic is waning, the 'dine-in business' (referring to consumers selecting a restaurant after reviewing comments on Fantuan and arriving at the restaurant) could rise to one-fifth of the total consumers who click on a mobile device and order a food delivery service".

Zhu attributed Fantuan's rapid growth to the model of "Copying from China".

Meituan, one of China's most popular online meal-ordering and food delivery services, saw its revenues hit 114.79 billion yuan ($17.78 billion) last year, a rise of 17.7 percent year-on-year.

Meituan makes a profit not only from deliveries, but also from restaurant reviews and its dine-in business, in China's first-tier to fourth-tier cities.

In addition, Fantuan's development has benefited from its research and development and central control centers in Tianjin, thanks to business cost cuts and leading R&D teams.

"We are riding on the tides that the R&D teams of many leading internet companies are now based in China, so we started to make our move in 2016," Zhu said.

For example, the US-based online meeting service provider Zoom Video Communications founded by a Chinese entrepreneur has set up three R&D centers in Hangzhou, Zhejiang province, Suzhou, Jiangsu province, and Hefei, Anhui province, since 2011.

The Singapore-based e-commerce company Shopee, also founded by a Chinese entrepreneur, has set up its R&D centers in Shenzhen, Guangdong province, Beijing and Shanghai since 2016.

"The Tianjin government has rolled out favorable policies for foreign entities, and the city has a talent pool from which we can hire people providing R&D support services," he said.

Tianjin launched the Haihe Elite Project in 2018, which lowered the threshold to achieve a hukou, or permanent household registration, for university graduates and leading technology personnel who will be dedicated to R&D in the city.

A recent move to upgrade the project announced in August is that a Chinese citizen who has obtained a bachelor's or a higher degree from an overseas university can be granted a hukou in Tianjin, without conditions.

Cheng Muge, an analyst from 36Kr, a Chinese science and technology information provider, wrote in an online article: "Fantuan demonstrates that the model of 'Copying from China' has driven enormous profits overseas. More businesses could move the successful business models of leading Chinese apps to overseas markets and allow local ethnic Chinese or international students from China to run the businesses, as these people have a good understanding of the local market."

Cheng also wrote that in North America, delivery apps founded by Chinese immigrants have flourished although the competition is fierce.

"Fantuan is facing supply-related challenges. The industry has changed significantly as many restaurants have shut down, but some are ready for reopening. How to educate restaurant owners about the importance of online operations will be our next long-term project," Zhu said.

Statista, a provider of market and consumer data, projected that revenue in the online food delivery segment will reach $306.81 billion worldwide and $31.91 billion in the US in 2021.

In 2020, the four largest food delivery service apps in North America, namely DoorDash, Uber Eats, Grubhub and Postmates, all saw their revenues double.