Local on-demand delivery service Line0, which has a website and an app, just announced a multi-million USD series A round led by Sequoia China. In densely populated Chinese cities, there is no shortage of startups lining up to offer food delivery services. Some companies only offer a platform for restaurants to take delivery orders, like Ele.me (“are you hungry”). Others, like China’s Line0 and Daojia (“get home”), and US’s Wunwun and Postmates, work with local food services and have goods delivered by its own network couriers.
As the food delivery battle heats up, how does a startup differentiate from the pack? It may come down to two questions: 1) How does the company speed up delivery while ensuring quality of the food? 2) What type of food merchants is it working with?
To deal with 1), Line0 standardizes a framework to guide its network food merchants, covering areas of logistics, food quality, and customer services. For instance, restaurants have to separate noodles from soup when packaging. To speed up delivery, it has an algorithm that works out the best routes for couriers.
For 2), Line0 has observed the fast growth of tiny food merchants in its network since it launched. These merchants usually target the white-collar with a narrow menu option. This works perfectly for food delivery since chefs can prepare orders in a batch to cut costs and increase efficiency. Focusing on specific dishes give merchants the luxury of polishing the package of the delivery. Having extra delivery help may bring more business to these small merchants who can’t afford a larger physical store despite having the ability to accommodate more orders.
Line0 charges a 6-yuan for deliveries within an hour, 10 yuan for 60-75 minute-deliveries, and 15 yuan for 75-90 minute-deliveries. As of now, Line0 hits a 30% conversion rate per unique visitor, 45% repeat purchase rate, grows at 15-20% monthly, and 40% of its orders are mobile-based. Its delivery speed averages 40-45 minutes and achieves an approval rate of 95% under normal weather conditions.
Currently operating in Shanghai, Suzhou and Nanjing, Line0 plans to roll out service in 10 other major cities across China the coming year. Globally, we are yet to see a company that disrupts the food delivery industry like Airbnb does to housing accommodation.