On-demand delivery and in-home service apps saw massive adoption in China in 2015. Similar to the group-buying craze of 2014, the hype has been backed by venture money. Following several rounds of marketing wars, fuelled by massive subsidies, it’s not surprising to see consolidation in the market, especially in the wake of the Chinese stock market plunge.

One of the better outcomes of the market squeeze has been the pockets of business model innovation that have cropped up among on-demand services. While the nature of on-demand services already lends itself to a basic model of digital disruption, a handful of Chinese services are seeking to diversify in an increasingly competitive market. Here we’ve gathered a few case studies across logistics, mobile fintech and beauty supplies:

Wholesale Beauty Supplies

On-demand beauty services app Helijia requires freelance beauticians on its platform to purchase beauty products directly from the company behind the app. The company claims their products are direct imports, which implies a higher profit margin. At the same time Helijia makes product quality a selling point.

With a higher margin built on the status of quality imports, Helijia can afford to offer what is most attractive to beauty professionals: no commissions or surcharges. The app also allow freelancers to set their own prices. Beauticians on the app make an average of 30,000 yuan (about US$4600) in monthly income, according to the company, much higher than most could earn at a brick-and-mortar beauty salon.

The app started as a manicure service, which targets the growing disposable income of mid to high-income females in China’s big cities. The app later added skincare, makeup, hairstyling, workout routines and coaching, all are targeted at the same audience.

Helijia founder Meng Xing has no technical background. Before Helijia he was running restaurant chains and an essential oil business. The common aspect of all his businesses, according to him, is the rise of China’s middle class, a growing number of people willing to pay a premium for quality services. He argues that other categories of on-demand home services, such as house cleaning, will end up in price wars which he’d like to avoid.

The company’s operating costs, besides R&D and administrative expenses,  also include costs for training freelancers and custom made tools, and marketing. The company joined many other Chinese on-demand services by offering subsidies in 2014, but stopped in the first half of 2015 as they didn’t find subsidy programs effective. (source)

As of April 2015 the company had some one million registered users and over 2000 freelancers on its platform. The app’s daily orders peaked at some 10,000, with an average order value of about RMB150 (US$25), according to the company. (source)

Helijia believes they are the number one in the on-demand, in-home beauty service market. They announced a US$50 million Series C round funding in April 2015, valuing the company at approximately US$300 million.

Logistics Network

Meal delivery has become a popular service in China’ biggest cities over the past year or so, largely thanks to venture cash-fueled subsidy campaigns. Established tech giants are now competing alongside nimble startups, which has only increased competition. All the major players in the market are adding other categories, from groceries to pharmacy, but like group-buying, there’s little differentiation in what they offer.

Ele.me, in which Alibaba Group recently became the largest shareholder, is one of the leading players in the food and grocery delivery market. Different from its major competitors, the company is investing heavily to build a same-city delivery network.

In April 2015 Ele.me rolled out delivery software system Hummingbird Logistics (our translation) which allows third-party delivery fleets and outsourced delivery services to use their software.

The Hummingbird system assigns orders to delivery men based on location and tracks delivery real-time. Third-party fleets are able to manage their teams, orders and finances through the Hummingbird app. Not only the software system, Ele.me also provides training, marketing support and other resources to third parties.

JD.com, the online retail giant also backed by a powerful delivery network, and S. F. Express, the leading carrier in China, signed up at the launch of the Hummingbird system. Three months later Hummingbird had a presence in more than 300 Chinese cities with some 1000 delivery fleets on board, according to the company. (source)

In November 2015 Hummingbird launched its own crowdsourced delivery program.

At the end of November Ele.me unveiled a US$50 million investment from Didi, the leading ride-sharing service. It is expected the two companies will roll out a service similar to UberRUSH, the on-demand delivery service from Uber.

Mobile Financial Services

Chinese tech companies of almost all types are finding opportunities in finance. Many internet-based services haven’t figured out a feasible business model and financial services usually have high margins, at the same time, online finance is growing very fast in China.

Alibaba’s finance arm has been making loans to retailers on its e-commerce marketplaces for years. Sales and other data Alibaba is able to collect is very important a factor for credit evaluation.

Many on-demand services platforms are actually marketplaces for offline merchants or individual service providers.

It is reported that Ele.me will begin to offer loans to merchants on its platform by partnering with Yuanbaopu, an online small business lender (source). Meituan, a leading player in group-buying and food/grocery delivery, is building a team for financial services.

Some are also exploring consumer credit sector. In September 2015 Ele.me introduced Fenqile, which provides installment plans to college students. Meituan, Ele.me and many other on-demand services have introduced Huabei, the online credit service provided by Alibaba’s finance arm.