Meituan’s preferred performance

Yibang Original On March 25, Meituan released its Q4 and full-year financial report for 2021. Data show that in 2021, Meituan’s annual revenue was 179.1 billion, an increase of 56.14% over last year; however, losses further expanded. In 2021, Meituan will have an adjusted loss of 15.6 billion, an increase of 400% over last year. In addition to continued investment in new businesses (optimization, shopping, flash sales), Meituan was fined 3.442 billion yuan by the antitrust law last year, which was also the main reason for its losses.

For a long time, this local life service company started with takeout, and in the following years, it quickly weaved a collaborative system with catering takeout, hotel in-store, and tourism business. As Meituan's preferences continue to sink, attracting a large number of users from non-first- and second-tier cities, can these new groups who come to "9 yuan, 9 dishes" create synergy with Meituan's original takeout and in-store businesses?

What have tens of billions of new business losses brought to Meituan?

Since Q3 of 2020, Meituan’s total new business losses have reached 46.4 billion. Although the new business includes three businesses: grocery shopping, optimization, and flash sales, it can be considered that the losses come from optimization to a certain extent. This is a community e-commerce business launched by Meituan in July 2020.

As preferences sink further, Meituan’s investment is also increasing. In Q2, Q3, and Q4 of 2020, Meituan’s new business losses were 1.4 billion, 2 billion, and 6 billion respectively; one year later, the corresponding losses were 9.2 billion, 11 billion, and 10.2 billion respectively, which doubled.

Correspondingly, there is the rapid growth of active users. Meituan’s financial report shows that as of the first 12 months of Q2, Q3, and Q4 in 2020, the number of annual active users of the platform was 450 million, 480 million, and 510 million respectively; one year later, the corresponding annual users have reached 630 million, 670 million, 690 million.

At a time when traffic is at its peak, optimization has brought new growth opportunities to Meituan.

Are there any synergies created by new users?

With the continuous influx of traffic, can these new customers who originally came in for the grocery shopping business generate food takeout, hotel in-store, and travel consumption on Meituan?

Let’s take a look at the growth of Meituan’s takeout and in-store business.

Take Meituan Hotel’s arrival and travel business as an example. Full-year revenue in 2020 reached 21.3 billion, reaching 32.5 billion last year, a year-on-year increase of 52.58%. In terms of specific time periods, Meituan’s in-store business revenue from Q2 to Q4 2020 was 4.5 billion, 6.5 billion, and 7.1 billion respectively; the corresponding figures this year were 8.6 billion, 8.6 billion, and 8.7 billion respectively. It can be noted that since the launch of Meituan Select, that is, starting from Q3 of 2020, the revenue of store-to-store business began to grow rapidly, but this growth gradually stagnated last year (part of the stagnant growth may be affected by the epidemic).

Similarly, since Q2 of 2020, Meituan’s food delivery revenue has also begun to explode. According to Meituan’s financial report, in 2020, Meituan’s food delivery revenue in Q2 was 14.5 billion, but after entering Q3, its corresponding revenue rose to 20.7 billion and 21.5 billion. For the whole of 2020, Meituan Catering's takeaway revenue was 66.3 billion yuan. Last year, this number became 96.3 billion yuan, an increase of 45.24%.

In fact, in recent years, food delivery giants have been working hard to expand into lower-tier markets. Data from the Qianzhan Industry Research Institute shows that in June 2019, the installation penetration rate of food delivery platforms in sinking markets was 12.9%, an increase of 5.78% compared with the same period last year. Correspondingly, the number of installed users of the merchant version in China’s sinking market has reached 3.836 million, and the monthly active users (MAU) of the Meituan Takeout merchant version in the sinking market are 1.1 million. When Ele.me and Xingxing Routine are combined 820,000.

It can be found that at the same time that Meituan Select was launched last year, Meituan’s two core businesses began to grow explosively. One possible reason is that Meituan’s community e-commerce business has a synergistic effect with the above two businesses.

Data show that in 2021, Meituan’s preferred GMV is 120 billion, and the planned goal of 150 billion has not been completed; buying more food has completed 80 billion GMV, and shopping for food has completed 20 billion GMV. From the data point of view, Meituan is the first choice.

Another interesting point is that with the influx of us

A possible explanation is that users in non-first-tier cities have slightly weaker spending power on catering and takeout than in first-tier cities and users in second-tier cities, but the difference is not significant. From this perspective, it seems that there is no need to worry too much, because there are gaps in the consumption capabilities of users in different regions, resulting in gaps in collaboration. It does not rule out that the business scope defined by Meituan (catering, takeout) is local life, so it is difficult to reflect the large gap in consumption power. Related Q&A: Why does Meituan Selection remove meat from its shelves? In order to ensure quality and shelf life, Meituan Shopping will first remove some fresh food, such as pork, from its shelves within a specified period of time. It’s not that we won’t sell meat anymore. Meituan Selection is the community e-commerce business of Meituan. It adopts the "pre-order + self-pickup" model to enter the community e-commerce track, further explore community fresh food retail formats, meet differentiated consumer needs, and promote the online fresh food retail line. Accelerate fusion.

Related Q&A: Meituan Selection, Duoduo Grocery, how long can it last? Is there really no profit margin?

As long as there are people financing community e-commerce platforms, every community e-commerce platform will not go bankrupt. The platform must make money, the team leader must also make money, the driver must also support his family, and the consumer must save money. The community At the beginning, group buying was frantically subsidizing consumers, but now it is a mess, and consumers no longer pay for it. Since the platform has no money to finance and cannot subsidize consumers, consumers will not buy it. Some living community group buying is also dying. , for example, Shihuituan and Chengxin Youxuan have no money in their books, so they can only lay off employees or close some city warehouses and cancel the authority of the group leader, and fend for themselves. As for Meituan Youxuan, Duoduo Maicai and Taocaicai, there are big bosses financing them. Generally speaking, they are not easy to go bankrupt. Xingsheng Youxuan may not be able to go all the way. I am most optimistic about Meituan Youxuan because its prices are cheap and its quality is good. However, the commission given to the group leader is too small. Duoduo’s grocery shopping is the worst and the price is the lowest. The consumers are ordinary people or elderly people. The group leader’s income is lower than Meituan.com. Duoduo’s grocery shopping is not worth doing. Xingsheng Youxuan The commission is the highest and the goods are of good quality, but the price is a bit high and there are few people shopping.