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Text / Han Xing
Source/Snow Leopard Finance and Economics (ID: xuebaocaijingshe)
Tmall supermarkets are delivered the next day, JD.com is delivered in one hour, and Meituan is delivered in 30 minutes. When it comes to competing for delivery speed, the giants are taking it to the extreme.
They are targeting the same track that is thought to still have huge potential: instant retail.
This business developed from food delivery can be traced back to 2008. After 14 years of development, the boundary between instant retail and e-commerce has become more and more blurred, which makes Wang Xing, who is good at “crossing the line”, see an opportunity. Wang Puzhong, president of Meituan Daojia Business Group, predicted in 2021 that the instant retail market size will reach 1 trillion in the next five years, and Meituan flash sales will take away 400 billion of the cake.
Recently, the homepage of the Meituan App has added a top-level section “Gourmet Department Store, On Call”, which integrates five major businesses: takeaway, Meituan grocery shopping, supermarket convenience, department store and medicine shopping. They have one thing in common: the time limit for performance is within one day.
Intra-city delivery capability is the core advantage of Meituan, and it is also the biggest confidence to bet on instant retail. In the second quarter financial report of this year, Meituan adjusted its business disclosure caliber and included flash sales and takeaways in the “core local business” section. On the battlefield of instant retail, Meituan provoked a local war with e-commerce giants.
After 12 years of groping for directions, Meituan focused its firepower on big retail. Will Wang Xing’s dream of “all things come home” will come true this time?
Only fast is not broken
Just after the Apple conference in early September, Meituan announced that it has cooperated with more than 1,000 Apple authorized stores, and the iPhone 14 will be delivered in as little as half an hour.
Meituan, which has been a retail company since its inception, has made no secret of its ambitions.
In September 2021, Meituan upgraded its strategy from “Food + Platform” to “Retail + Technology”. A year later, the Meituan App homepage changed its face, and five business groups with “fast” as the core selling point ascended to the C position.
The newly added top module is called “Gourmet department store, on-call”, in short, everything is at home. In addition to the four old faces of takeout, grocery shopping, medicine shopping, and supermarket convenience, Meituan has added a “quality department store” to the top module. The payment function that was originally on the top was integrated into the search bar, and the three major travel-related businesses of cycling, taxi, and train tickets were moved down together with “running errands”.
Comparison before and after the revision of the Meituan App homepageThe products sold in the quality department store section are divided into 7 categories: makeup and skin care, mobile digital, maternal and child products, pet products, household daily necessities, personal care, clothing, shoes and bags. Meituan cooperates with offline brand stores. After consumers place an order on the platform, Meituan will deliver the order. The fulfillment time is 30-90 minutes. At present, the brands that have reached cooperation with Meituan’s quality department store business include Xiaomi, Apple, Muji, China Mobile, and Chenguang Stationery.
From takeaways to grocery shopping to department stores, Meituan continues to expand the category coverage of instant retail. Compared with the takeaway business, the purchase frequency of high-quality department stores is lower, but the unit price per customer is higher, and the business format is closer to e-commerce.
Snow Leopard Finance and Economics noticed that on the eve of Teacher’s Day and Mid-Autumn Festival on September 10, the entrance of Quality Department Store was once replaced with “Romantic Flowers”. Conspicuous location.
The adjustment of the app’s homepage layout is not without a trace.
In the Q2 financial report released last month, Meituan adjusted its business structure disclosure method. In the past, the three major business sectors of food delivery, in-store and wine travel, and new business were adjusted to core local business and new business. Among them, flash sales are classified as core local commerce.
The flash sale is an expansion of Meituan’s core food delivery business. From food delivery to delivery of everything, the two share user groups and instant delivery networks, and the profit paths are similar. The convenience of supermarkets, high-quality department stores and buying medicines in the sticky-top business all belong to the business scope of flash sales.
The domestic e-commerce market is divided by the three giants Taobao, JD.com, and Pinduoduo, but Meituan has the advantage of connecting products and demand in the shortest time. With more than 5 million riders, can it take a slice of the huge e-commerce pie?
Meituan’s Big Retail “Three Brothers”
With a big retail dream, Meituan has explored more than one path in the past few years, mainly including flash sales, community group purchases and traditional e-commerce.
The first path is a flash sale.
In 2018, Meituan spun out the quick-to-go, which originally belonged to the food delivery business, and launched the independent brand Meituan Flash Shopping. In July of that year, the flash sales division was established. Meituan Flash Sale is positioned to realize LBS instant retailing of everything to home within 30 minutes, and the traffic entrance is Meituan and Meituan Takeaway App.
At that time, Meituan had about 2.7 million riders, and the average daily number of takeaway transactions was 17 million. There are very obvious peaks and troughs in the demand for takeaway delivery within a day. The emergence of flash sales allows riders to get busy during non-dining peak periods.
The early Meituan flash sale mainly connected small offline stores, and then successively connected to supermarket stores, fresh fruit stores, convenience stores, and offline brand stores. And from 2019 to 2021, it has hatched the real-time delivery business of shopping for vegetables, medicine, flowers, and drinks.
Instant delivery is an advantage of Meituan, but the SKUs of deliverable items are limited, which means that the ceiling for flash sale business is not high enough. Meituan’s ambition is to further expand its categories, from a small pond of near-field e-commerce to a vast ocean of far-field e-commerce.
In 2020, Meituan embarked on the second path, focusing on community group buying, which was still a blue ocean at the time.
In July 2020, Meituan established the Meituan Optimal Division and officially entered the community group buying. In September of that year, Meituan Selected announced the launch of the “Thousand Cities Plan” to achieve nationwide coverage by the end of the year. According to 36Kr report, Meituan’s GMV target for 2021 is 200 billion yuan, which is 2.5 times the GMV of Meituan’s flash sale that year.
At the end of the same year, Meituan also launched Tuanhaohuo, which was split from the flash sales division.
Tuanhaohuo is the predecessor of Meituan e-commerce. It mainly adopts the operation model of direct delivery from the origin and group purchase. The products cover all categories, and the SKU richness is higher than that of Meituan Flash. Business. In November 2021, Tuanhaohuo changed its name to Meituan E-commerce, and in January this year, it became the first-level entrance of Meituan App.
This is also the third path for Meituan to test the waters of large retail.
According to the time limit of performance, online retail can be divided into near-field e-commerce and far-field e-commerce. From the near field to the far field, Meituan, which is unwilling to put its eggs in the same basket, has tasted a little sweetness of the category expansion, but the far field e-commerce has not gone smoothly.
After spending a lot of money on community group purchases, which Wang Xing called a “once in five years, or even a once in ten year opportunity”, the money that Meituan selected did not bring about growth. Analysys Qianfan data shows that the number of monthly active users of the Meituan Preferred App has been declining since reaching a high of 9.63 million in July 2021. According to a LatePost report, Meituan prefers to achieve GMV of 120 billion yuan in 2021, which is only about half of the original target.
Since April this year, Meituan has successively shut down preferred services in Gansu, Qinghai, Ningxia, and Xinjiang, gradually shrinking the front line. On April 26, Meituan selected an announcement in the app saying that it would shut down the self-pick-up service in Beijing.
Meituan e-commerce, which occupies the first-level traffic entrance, also showed a mediocre response. At present, the average daily order volume of Meituan e-commerce is about 200,000 orders. On the other hand, Tuanhaohuo reached a peak of 160,000 orders in a single day two years ago.
Compared with the other “two brothers” whose performance was lower than expected, Meituan’s flash sale, which takes 30 minutes as its main selling point, performed well. By the end of 2021, Meituan Flash Sale has covered more than 100,000 merchants, with a GMV of 81.4 billion yuan, a year-on-year growth rate of 66%. Zheshang Securities estimated in a research report that the GMV of Meituan’s flash sales will exceed 100 billion yuan by the end of 2022.
Part of the reason why community group buying and e-commerce businesses are in the current awkward situation is that cross-regional logistics has greatly extended the average delivery time. The delivery time of community group purchases has been extended to the next day, and the fulfillment time of Meituan e-commerce is usually 2 to 3 days. Meituan, which uses fast delivery as its moat, is losing its core competitiveness step by step.
Therefore, it is not a difficult choice for Meituan to concentrate its forces and choose instant retail as a breakthrough to realize the dream of “all things at home”.
Go back to the home court, take defense as attack
The focus of returning to instant retail from far-field e-commerce does not mean that Meituan has given up on a larger market. The instant retail market with huge potential is a fertile land with lush vegetation, and Meituan has the thickest city wall and widest moat on this land.
Data from iResearch shows that the compound annual growth rate of the instant retail market from 2019 to 2023 is expected to reach 69.5%, and the market size will reach 900 billion yuan in 2024, 4.5 times that of 2020. According to the National Bureau of Statistics, the growth rate of online retail sales in 2021 is only 14.1%.
China Merchants Securities estimated in a research report that from 2020 to 2025, the annualized growth rate of near-field retail sales will be about 40%, that of far-field retail sales will be about 10%, and the growth rate of on-site offline transactions will be -2%. .
In this era of stock competition, higher growth rates represent more opportunities.
Wang Puzhong, president of Meituan Daojia Business Group, said in 2021 that in the next five years, Meituan will win 400 billion yuan in the trillion-dollar instant retail market.
Similar to many emerging industries spawned by the Internet, instant retail has two modes: self-operated and platform. Meituan is involved in both models, with supermarket convenience and quality department stores as platform models.
The self-operated model is still struggling with losses due to its heavy operating assets. Zheshang Securities Research Report shows that the platform model is better than the self-operated model in the instant retail market. It is estimated that by 2025, the market share of platform type and self-operated type will change from 64% and 36% in 2021 to 80% and 20% respectively.
In the platform model of the instant retail market, Meituan has a larger lead. In 2021, the market shares of Meituan, Ali and JD will be 40%, 32% and 16% respectively.
The category can’t be more than Taobao, the price can’t be competitive with Duoduo, and there is no JD.com’s self-operated logistics system. However, Meituan, which returned to the real-time retail battlefield and clarified its offensive line, has become a sharp knife to stab the e-commerce giant.
In mid-June this year, shortly after Meituan announced that it would upgrade its strategy from “Food+Platform” to “Retail+Technology”, JD.com Retail CEO Xin Lijun said in an interview that JD.com has considered and studied the launch of an on-demand takeout service to kill the United States. group hinterland.
The move is more for defense. When an iPhone 14 can be delivered to users within half an hour, JD.com’s fundamentals are beginning to be threatened.
Ali is also taking on Meituan in the instant retail market. On August 19, Ele.me announced a partnership with Douyin. Ele.me will be based on the Douyin open platform, using mini programs as a carrier, and together with Douyin, will provide users with local life services ranging from content planting, online ordering to instant delivery.
In the face of the menacing counterattack, Meituan, which retreated to the advantageous battlefield and used defense as its offensive, provoked a new local war, but how much territory it can conquer remains to be tested by time.
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