After the giant melee came to an end, community group buying ushered in new changes again.
The adjustment of Duoduocai, Meituan Selection and Taocaicai have also entered a new stage. Among them, Meituan Select can be said to occupy the capital and organizational advantages, but at present, cost reduction and efficiency increase have become the main theme.
Starting from the second half of 2021, Meituan has made organizational adjustments and has also withdrawn from many cities. The group buying business behind the selection was what Wang Xing was most concerned about, and even hailed it as a once-in-a-decade opportunity. Today, the profitability of the new business represented by Meituan is also questionable in the industry.
A founder of a local group said bluntly, “At this stage, the staged victory of the Internet platform is directly related to the huge cost investment, but it also causes a lot of unnecessary waste.” The community group buying business has its own effective radius, more like It is a kind of retail in the same city. At present, this retail business is more like eating in the mouth, but it is difficult to swallow, it is difficult to make profits in the short term, and it is an extreme test of patience in the long term.
Meituan is preferred as the current No. 2 in the market. Its daily orders and transaction scale are second only to Duoduomaicai, but such a market position is really embarrassing. After Chen Liang, the former head of Meituan’s new business, turned to organizational and strategic management, all business management rights have been transferred to Guo Wanhuai. And similar adjustments are not over yet.
01 The twists and turns of the fresh retail dream
In July 2017, Meituan opened its first “Palm Fish Fresh”. This carried the fresh retail dream of Meituan at that time.
At that time, Meituan was very ambitious, claiming that it would open 20 stores in 2018 and 50 in 2019, which surprised the industry. However, as of the end of 2018, Meituan’s “Palm Fish Fresh” has opened a total of 7 stores, and the results are not bad.
In fact, this so-called fresh new retail model is not the first of Meituan’s creation, and more teachers come out of Hema Xiansheng. At the same time, Ali, Hema Xiansheng, managed by Hou Yi, landed its first store in Shanghai Jinqiao Store. When Meituan launched its first fresh baby elephant, the Jinqiao store was exactly one year old.
According to public media reports, Meituan’s internal decision to follow this project is considered sufficient preliminary preparation and information collection. At that time, Meituan sent more than a dozen people to visit the Jinqiao store in Shanghai. After the resident staff of Meituan came back from Shanghai, Meituan claimed that the UE model and cost structure of Hema could be completely disassembled.
Therefore, at that time, Meituan started running in small steps and iterating quickly. In May of the following year after launching the first store, that is, in May 2018, Meituan changed its name to Xiaoxiang Fresh on the basis of the original palm fish, and made a new iteration in the store decoration and product category. Beijing Fangzhuang opened a second store.
Since then, Meituan has opened a total of 7 stores in Beijing, Wuxi and Changzhou. However, after a period of operation, Meituan discovered that the operating losses of Xiaoxiang Fresh were very serious and could not be afforded. Therefore, in April 2019, when “Zhangyu Fresh” was renamed “Little Elephant Fresh” for one year, Meituan closed five stores in Wuxi and Changzhou. The stores in Changzhou and Wuxi have both been open for less than a year. Regarding this trial and error, Meituan explained in the analyst conference call after the first quarter earnings report of 2019, “The direct reason for the closure of 5 small elephant fresh food stores in low-tier cities is that the return on investment is lower than expected. “
After that, Little Elephant Fresh Food entered the clearing and retreating one after another. On September 7, 2020, Xiaoxiang Fresh announced that the Fangzhuang store will cease operations from September 9. Little Elephant Fresh Beijing Fangzhuang Store was once the benchmark store of Meituan’s Little Elephant Fresh, and it was also the first store. This store closure announcement actually also announced that Meituan’s offline fresh retailing as a whole has come to an end, leaving only the Wangjing Botai store, but the Botai store has gradually turned to Meituan grocery shopping in the later stage supermarket.
However, Meituan’s exploration in the field of fresh food retail did not stop there. The baby elephant is not dead: “‘Change the way, always accompany me’, this is the content of the announcement when Meituan closed the Fangzhuang store.” This is indeed the case. In April 2019, Meituan’s baby elephant fresh food was completely closed. A month ago, another new track, Meituan’s grocery shopping business, which Meituan entered the game ahead of schedule, also went online, which at that time directly benchmarked Daily Youxian and Dingdong grocery shopping. As a result, Meituan’s dream of fresh food retail has gradually been handed over to Meituan Shopping.
After only one month of low-key operation of the grocery shopping business, Meituan followed the external market and established an optimal business unit in July 2020, which is parallel with the grocery shopping business department. On September 3, after the establishment of the Optimal Division, Meituan announced the “Thousand Cities Plan” in a high-profile manner. It plans to enter 20 provinces in the next three months and achieve “Thousand Cities” coverage within the year. The person in charge of these two businesses is also Chen Liang, and Chen Liang is the key person who led the strategic contraction after taking over Xiaoxiang Fresh.
But now, things are right and people are wrong. After several adjustments, Chen Liang has gradually left the front line of business, and the management rights of new businesses, including selection, grocery shopping, and fast donkey, have all been transferred to Guo Wanhuai.
02 Adjust, Shrink, Survive
In the new business of Meituan, Meituan is preferred to be the biggest cash burner. In 2021 alone, the loss of new businesses including the preferred business has reached 23.1 billion yuan.
In the giant melee that began in 2020, a large number of local groups fell in the last quarter of the year, and even some group-buying companies with financing support gradually lost. Among them, the most typical ones are the “Old Three Groups” Tongcheng Life, Food Enjoyment Club and Shihui Group, but there are also some local group companies that have survived by relying on their own strength, such as the “three banners of local groups”. Knowing Flowers and Fruits, Youjing Youtian and Jiubai Street.
Entering 2022, the market pattern of group buying in the entire community is basically stable. A number of community group buying practitioners confirmed to Leifeng.com that the current market-recognized pattern is Duoduobuicai, Meituan Select, Xingsheng Select, and Ali Taocaicai. And the various giants have actually entered the adjustment stage more or less, optimizing the UE model, shrinking and merging, and making profits, which have been repeatedly mentioned. “‘Survival’ and ‘cost control’ are the most frequently mentioned words in Meituan this year,” said a working Meituan Selected product manager.
In April of this year, the new business “Kuimaiyou” (Kuimai, Maicai, and Select) underwent personnel adjustments, which not only involved the headquarters of Meituan, but also personnel and regional adjustments nationwide. The following May, Meituan withdrew from the four northwestern provinces (Qinghai, Gansu, Ningxia, and Xinjiang), leaving only the province of Shaanxi.
After that, Meituan took advantage of Beijing’s supply guarantee and withdrew from the Beijing market. This surprised the market at the time, and the adjustment was quick and decisive at that time. Meituan’s external explanation is that this is the result of Meituan’s efforts to support materials, and it is only temporarily suspended. Now, the original Meituan preferred warehouses in Beijing have mostly been converted into business warehouses for Meituan grocery shopping.
A practitioner who competes with Meituan in business said to Leifeng.com: “The reason for the adjustment may be that the Beijing market is not doing well, the order volume has not been done, and there is unlikely to be room for improvement in the future.” Objectively In other words, no matter how badly the Meituan Beijing market is doing, it still has a higher market share than Jingdongxi. At a deep level, these are all temporary. The biggest problem of Meituan’s preferred business is that the group efficiency in Beijing is too low, and it is difficult to run through the model.
After that, there were rumors in the market that Meituan’s business in the Fangshan area of Beijing has been restarted, and some groups can place orders and pick up goods. An insider of Meituan Selection analyzed to Leifeng.com: “This is not like a warehouse in Beijing, but more like a warehouse in Shijiazhuang and Baoding. These areas are not far apart, so they may have been delivered incidentally.” Today , the preferred business has withdrawn from the Beijing market. If it is restarted in the future, there will inevitably be great resistance. After all, there are so many merchants in the market, and the market structure is becoming more and more stable. This requires a process of rebuilding trust.
At the same time as the retreat, Meituan’s internal organizational structure around cost reduction and efficiency enhancement is also underway.
In September 2021, Meituan upgraded its strategy from “Food + Platform” to “Retail + Technology” at the group level. The following month, a special group in charge of retail-related business was established. The group included Wang Xing, CEO of Meituan, Wang Puzhong, Senior Vice President and President of Daojia Business Group, Chen Liang, Senior Vice President and General Manager of the Optimization Division, and Kuailu. Guo Wanhuai, general manager of the business unit, Li Shubin, vice president and general manager of the Meituan platform.
In the reporting relationship at that time, Chen Liang was in charge of the three businesses of selecting, Kuailu and grocery shopping, and Guo Wanhuai was only responsible for assisting Chen Liang in management, but the heads of each business turned to Guo Wanhuai to report, and Guo Wanhuai reported to Chen Liang. After that, Gao Yulong was upgraded from the former head of the Kuaimu commodity department to the head of the Kuaimu business department.
According to late reports, Gao Yulong’s career is mostly related to financial work. He joined Meituan in August 2016 and is in charge of the group’s financial work. Earlier, he had 6 years of financial work experience in Intel and Baidu. Gao Yulong changed from group finance, to business finance, business commodity department to the general manager of the business.
A further adjustment is that Chen Liang retired completely and turned to organizational and strategic management. Chen Liang completed the transition to assist Guo Wanhuai to take over the business. This adjustment has always been relatively calm within Meituan, without waves or discussions. Chen Liang’s old subordinates are also in this adjustment, Liu Wei transferred to the store business department, but according to the rumors circulating within Meituan, Liu Wei’s internal living water transfer is more of his subjective request. Liu Wei was an old man of Meituan before and has been in charge of market expansion. The in-store division is a relatively stable division with little adjustment or change, and it is also a highly profitable division of Meituan.
Regarding this adjustment, an on-the-job product manager of Meituan commented: “This adjustment has been circulated as early as the end of 2021, but it was not until April this year that the boots finally landed. There have always been many adjustments within Meituan. In this way, the information separation is very obvious, which makes the communication of information very delayed, and when employees know it, it is often already in the stage of rapid execution.” The product manager was quite critical of this.
At the same time as Guo Wanhuai’s management rights have been expanded, he has also begun to seek talents in the direction of logistics and supply chain from the market with the goal of reducing costs and improving efficiency. The aforementioned in-service Meituan preferred product manager said, “At the same time when Chen Liang and Liu Wei were mobilized, Meituan also introduced two managers from outside, one was Gao P from Cainiao who had been exposed by the media, and the other was the same. They are from the Ali Department. But due to the existence of a competition agreement, the two have always been fake names in the internal system of Meituan.” According to rumors, the two high-level Ps will cooperate with each other and jointly assist Guo Wanhuai to take charge of new businesses such as Kuaibuyou.
Guo Wanhuai is from a financial background and is very good at financial work. This is one of the main reasons why Meituan is currently doing cost reduction and efficiency improvement. The same is true for the layoffs in the first half of this year, which involve executive positions in Meituan headquarters and third- and fourth-tier cities. Despite serious layoffs, in fact, the problem of redundancy in new businesses such as Meituan is still very serious, and many people lack practical experience. Most of the internal product managers in the selection are relatively inexperienced, and most of them are from the Internet industry. There is a shortage of logistics personnel in the Meituan selection business line for more than three years.
Inside Meituan, we have always felt that Kuaimaiyou has parts that can be integrated, but it is actually very difficult. This is reflected in the fact that the reuse of resources is not very good. There are several internal reasons for Meituan’s adjustment. One is that the aggressive losses exceeded investors’ expectations, so it had to adjust the scale and control costs; the other is that after the development of the past two years, players in the entire market The only ones left are DuoduoCai, TaoCaiCai, and Meituan Optimal, as well as the prosperous Optimum that was supported by capital after being born in a local group. “
In fact, far more important than this is that the order volume and sales of Meituan and the community group buying industry have entered a bottleneck period and are showing a downward trend. ” emphasized a working Meituan-selected product manager.
03The third-stage business rocket to be verified
Preferred is the most important segment of Meituan’s new business, and it is also the business that Meituan has invested in the most. Wang Xing, the founder of Meituan Dianping, once said in the financial report meeting that Meituan Optimal is an important opportunity that only comes once in ten years, and this is a war that must be won.
It has never and will not give up new businesses such as optimization, which is the main reason for the continuous loss of Meituan’s new business. At the same time, under the target of cost reduction and efficiency increase starting this year, the loss has been reduced but still exists. According to the performance data of Meituan Dianping in 2022, the overall revenue in the first half of 2022 will be 97.21 billion yuan, and the net loss in the first half of the year will be 6.82 billion yuan. In the second quarter of this year, the operating loss of Meituan’s new business segment narrowed to RMB 6.8 billion both year-on-year and quarter-on-quarter.
Operating losses are not without benefits for Meituan. Objectively speaking, the new business represented by Meituan Select has brought new users. Wang Xing has repeatedly emphasized at the financial report meeting that the new business that is based on optimization has brought a huge number of new users. In fact, it is indeed true.
A founder of a local group said, “If you consider it from the perspective of changing the market from losses, the acquisition cost of a single user must be cheaper than the period of group buying and e-commerce melee, especially now that vertical e-commerce is dying one after another. For Meituan, it’s almost a great thing. There is no doubt that Meituan is the biggest winner.”
In the growth structure, Meituan’s business is divided into three-level rocket, first-level takeaway, second-level wine travel, third-level Kuaibuyou and other new businesses. However, such business adjustments have continued to this day, and Meituan is still losing money. To some extent, this has also led to the biggest change within Meituan this year is the repeated mention of the words survival and cost control. A relatively typical factual detail is that in July this year, the preferred office location of Meituan was directly transferred from Wangjing to Fangzhuang.
In Meituan’s new business, grocery shopping is against Dingdong Shopping, Pupu Supermarket, and Kuailu is against Meicai.com, while Best’s main competitors are Duoduo’s and Xingsheng Best. Kuaimayou constitutes the backbone of new businesses, and without exception, they are more or less related to the fresh food retail industry. However, the difficulties and sufferings of fresh food entrepreneurship are only known to front-line practitioners.
Taking Kuailu’s competitor Meicai as an example, this is enough to illustrate the difficulty and pain of fresh food.
Fresh food has a characteristic that it is not economical in scale. When Meicai entered the market, two stories were told in the capital market. The first story is that our transaction scale reached 50 billion yuan, and the procurement cost may drop by 20%, but is this really the case? In fact, such a story doesn’t make sense at all. It is also the same as purchasing Chinese cabbage, buying 10,000 catties and buying 100 catties of Chinese cabbage. The final result may be that the actual cost of buying 100 catties of Chinese cabbage will be lower.
The reason is very simple. Meicai goes to buy goods, 10,000 catties of Chinese cabbage, first go to a market distribution center, and then find a wholesaler to buy it, but Meicai has specific requirements for specifications. After a hand or two. The reason for the survival of some local groups is that the local groups directly find farmers and places of origin to get the goods. Therefore, it is difficult to run through this model of direct large-scale procurement of goods of a specific size from the origin.
Meituan preferred, is also facing similar problems. Taking the procurement of Xinjiang Aksu apples as an example, Meituan’s cargo circulation logic is that the goods first arrive at a wholesale stall in Xinfadi, and then a joint supply chain company is established, and then procurement, and there must be a service provider in the middle. Meituan has its own standards for what it wants. For example, it only needs a small size and sells two or three Aksu apples in a group. As a result, the supply chain is from the place of origin to the stall in Xinfadi to the service provider. The service provider delivers the goods to Xinfadi. There is no 15% cost in this circulation process, and it is almost impossible for the goods to circulate from the market.
In addition, the cost of Xinfadi, the handling cost of goods, and this series of operating expenses will be added by 15%.
So far, this batch of goods has been increased by 30% to the Okura of Meituan. In some cases, this is not even the optimal and shortest circulation path. Not to mention the delivery cost. Each order of Meituan is calculated on an order-by-order basis. The delivery cost of each order is divided into two levels from the total warehouse of Meituan to the consumer, from the total warehouse to the grid warehouse, and from the network warehouse. Grid warehouse to consumers. The delivery fee for these two levels is about 1 yuan, 9 cents in some places, and 1 yuan in some places. In addition, Meituan also has warehouse rent, personnel costs, etc., which are almost impossible to calculate. So far, Meituan has lost 10 billion yuan in a single year, which is quite normal. But this has also brought some benefits. It is the existence of these procurement standards and profits that Meituan prefers to have the best quality products among several existing community-based group buying companies.
“The logistics and back-end supply chains that Meituan and Ali are doing, I think it is unlikely to be reused, and it may not be able to see results. The group buying business between Meituan and Ali will not necessarily be in the next 3-5 years. It can’t run.” The founder of the local group analyzed and judged: “The overall loss of Meituan’s preferred business is at least 40-50%.”
Since entering 2022, the entire group buying market has become much more rational. However, judging from the deep sinking of Meituan Select, DuoduoCaiCai and TaoCaiCai, this track is still surging. According to a late report, since the beginning of this year, Meituan founder Wang Xing has stopped participating in the regular meeting every two weeks, and the flash sales business unit, which has started to improve its strategy this year, is also expanding and gradually entering the deep water area. . However, the business model behind the Meituan Kuaibuyou service, represented by the preferred representative, is still in the verification stage, and the fierce competition continues.
After the second year from profit to loss, Meituan needs to quickly find the third business curve. Since the fourth quarter of 2020, Meituan has been losing money for six consecutive quarters, and Meituan needs to strike a better balance between the trial-and-error growth of new businesses and the health of its financial position.
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