Posted on / by Peter Chen / in Consumer Trends, Data Insights, Social Listening, Transport

Joyride: Virtually free fares for China’s e-hailing customers as price war intensifies

As a self-confessed shopaholic and lover of all things luxury, I rarely think money goes far enough these days. But thanks to the ongoing battle on Shanghai’s ridesharing scene, I now feel like a millionaire each morning as I hail a car to take me to the Convosphere office. To be driven door to door, I pay a measly 0.01 CNY (approximately 0.001 GBP).

 

 

What’s made the super-low fares possible?

On March 21st, consumer app Meituan Dache, which dominates the takeaway service market in China, geared up to challenge Didi Chuxing, the world’s largest ride-hailing company. In expanding into the lucrative ride-sharing sector, Meituan Dache is doing everything in its power to lure customers away from Didi Chuxing. To kick off, they’re giving away vouchers to new users that gets them the first three rides under 14 CNY virtually free. This is how the magic 0.01 CNY ride has become available to me as rides under two kilometres fall into that price bracket. In addition to this, Meituan Dache’s superior driver assignment system and remuneration scheme have resulted in many of Didi Chuxing’s drivers jumping ship. That Meituan Dache is asking for a smaller commission is likely to further boost the mass-move to this new player.

Until the arrival of Meituan Dache, I used Didi Chuxing up to five times a week. During these journeys, I would often get chatting to the drivers. Recently, several of them told me that, because of the way the driver assignment system is designed, they would be assigned pickups three to four kilometres away, despite there being waiting customers in the immediate neighbourhood. This is allegedly down to the ‘complicated’ system which ranks drivers and gives high-performance orders, i.e. the most profitable drives, to the favoured drivers.  During my first ride with Meituan Dache, the driver told me his new employer appeared to be assigning drivers to the customers closest to them, which, for obvious reasons, is a fairer and more efficient system for both sides.

Because of their long-standing market dominance, Didi Chuxing has had little motivation to keep fares down. This has been particularly apparent in recent months, with the basic price for some journeys being on par with that of a regular taxi service. Some drivers even told me they heard customers complain about being charged differently depending on the phone used, with iPhone users allegedly worse off than those on Android.

Didi versus Meituan: Conversation Volume Timeline

Using Social Listening to identify relevant online conversations, we can see that mentions of Meituan Chuxing were relatively low until news spread that they were entering Shanghai, one of Didi Chuxing’s core markets. Initiating their entry into ride-hailing sector last year, Meituan piloted their services in the country’s so called tier 2 cities. But their first attempt to launch in tier 1 city Beijing earlier this year suffered a setback due to licensing issues. With the problems now resolved, Meituan is determined to break into the massive capital to further challenge Didi’s dominance. This intense competition between the arch-rivals has been closely followed by the media. The revelation that 200,000 drivers had already registered with Meituan in Beijing, and that the company had prepared a budget of 1 billion USD in a bid to win the war, contributed to the spikes towards the end of March.

Didi versus Meituan: Sentiment breakdown

Looking at the sentiment breakdown of Didi Chuxing conversations on social media this March, positive mentions largely covered the favourable aspects of the new competitive climate. Negativity was generated by customer complaints about rides becoming more expensive, extremely long waiting time and rude drivers.

 

Sentiment Breakdown for Didi Chuxing

 

Chaotic management of Didi with drivers threatening and dropping off customers half way
Meituan Dache has officially kicked off. Will it cause Didi to lose its market dominance?

The sentiment breakdown for Meituan Dache for the same period closely matches Didi Chuxing. On inspecting the negative mentions, common triggers appear to revolve around the regulation of drivers’ licenses, in particular concerning non-local drivers operating in the city. This is linked to the newly implemented requirement for drivers to have a local license plate when applying for ride-hail work in Shanghai.

 

Sentiment Breakdown for Meituan Dache

 

Translation: Meituan Dache examined for management issues on driver verification on its first day.
Translation: I’m not going to drive for Didi for least three months!

Breaking down the sentiment of posts by the core attributes – safety, price and service – it is fairly even overall between the two competitors. However, drilling deeper into the insights, it’s clear that Meituan Dache has scored slightly higher levels of positive mentions as users referenced them in discussions about the cheap rides.

 

Share of Voice & Core Attribute Sentiment Breakdown: Didi versus Meituan

Shift to experience-sharing online

Whereas previously, users of ride-hailing services would have been more likely to share their experiences offline with friends and family, the fierce competition and its coverage in domestic media have seen a shift towards people turning to social media to get feelings off their chest. Tracking these mentions can help brands to identify any gaps or disconnect in terms of service and offering.

In a bid to keep their customers, Didi Chuxing has now begun to offer vouchers to compete with Meituan Dache. But it’s not stopping there. In expanding its services, similar to the model pioneered by “Uber Eats” in other markets, the transport giant Didi Chuxing has announced it will enter the food takeaway sector. How will Meituan Dache react to the new competition? It’s a case of wait and see. But if the effect on the ride-hail industry is anything to go by, I’m looking forward to some cut-price meals being sent my way!