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Text |Bohu Finance, Author |Stroll through Hengtian.Local life has always been a chaotic battleground. The first big war after the arrival of the mobile Internet - the battle of thousands of regiments in the field of * started here, and then experienced the fierce competition between takeaway and community**, and Meituan defeated all the enemies and ascended to the throne of giants.
Until Douyin's shot.
Meituan's anxiety is quite reflected in the third-quarter earnings report. For example, the commission income of the core local business segment was 21 billion, a year-on-year increase of nearly 30%, higher than market expectations, but at the same time, Meituan's sales expenses in the quarter also increased by 16%. This shows that in order to resist the erosion of Douyin, Meituan has to fight back by increasing investment and subsidies.
The erosion of the core business by Douyin, coupled with the fact that the new business has not yet seen progress, made even Meituan's overall performance in the third quarter slightly exceed expectations: total revenue of 7646.7 billion yuan, a year-on-year increase of 221%；Adjusted net profit of 572.7 billion yuan, a year-on-year increase of 624%, still not favored by the market: four working days after the announcement of the earnings report, its share price fell by more than 18%, and its market value evaporated by more than 100 billion Hong Kong dollars.
However, Meituan, as a giant that has fought its way out of the encirclement in full market competition, has always lacked fighting spirit. It is foreseeable that Meituan's counterattacks and moves will be more frequent.
Meituan's business can be divided into two parts: core local business and new business. The core local business includes food and beverage takeaway, flash sales, in-store, hotel and tourism, etcThe new businesses include Meituan Preferred, Meituan Grocery and so on.
Let's take a look at the core business first, there is no doubt that after more than ten years of market operation of Meituan, the "moat" of the local commercial business with takeaway as the core has been continuously expanded, and the basic market is also very stable.
According to the data of the third quarter, Meituan's core local business revenue increased by 24% year-on-year in the quarter5% to RMB5769.1 billion yuan;Operating profit increased by 8% year-on-year3% to RMB1009.6 billion yuan. In particular, in the food delivery business, Meituan still maintained a strong growth momentum, with a peak of 78 million orders in a single day, a record high and double from three years ago.
However, at the results conference, Meituan CFO Chen Shaohui said when looking forward to the fourth quarter, "It is expected that the year-on-year growth rate of food delivery business revenue will be lower than that in the third quarter, and the year-on-year growth rate of flash sale business revenue (compared with the third quarter) will be flat, but the unit price of both businesses will decline."
We can also speculate that Meituan's lack of confidence in the expected growth of its core business in the fourth quarter may stem from two points: on the one hand, the macroeconomic growth has slowed down and consumer demand has been suppressed to a certain extentBut on the other hand, it is more that Meituan's local life track is being besieged by big factories, and its core hinterland is constantly being attacked by Douyin.
The local life service field, where Meituan is located, is a trillion-dollar cake, which naturally attracts an influx of new and old players. For example, Pinduoduo has launched a local life portal, and the products sold are mainly coupons of chain brandsXiaohongshu, Kuaishou, and WeChat ** accounts have also followed the trend and created local life modules.
Among the many competitors, Meituan's biggest "headache" is Douyin's strong force.
As early as 2019, Douyin began to work the local life business sector, and launched three or four thousand hotels on the site, taking this opportunity to tear up the small hole in the market. In 2021, Douyin officially established a local life commercialization team, attracting many merchants to settle in with the "0 commission" and low commission model, and then continuously launching *** coupons to attract a large number of consumers and seize market share.
At the 2023 Douyin Life Service Ecological Partner Conference held in April this year, official data showed that in 2022, Douyin Life Service GMV increased by 7 times year-on-year, and Douyin's life service business has covered more than 370 cities with more than 2 million cooperative stores. According to the research report data released by Guosheng**, the total transaction volume of Douyin stores is expected to reach 300 billion yuan in 2025, about half of Meituan.
Not only that, in the past 10 months, Douyin also announced that it would invest 500 million yuan in the next year to encourage and support influencers to visit stores, and match business orders between merchants and talents, which shows that this will be another major strategic plan of Douyin in the field of local life services, and the siege of Meituan will become more and more intense.
At an internal ecological meeting in mid-April this year, Meituan set the tone for the competition to reconcile with Douyin's takeaways
Douyin has it, and Meituan must have it. ”
On the one hand, Meituan has increased measures such as reducing annual fees and renegotiating commission rates with merchants in exchange for merchant losses, and has also increased real money** investment in online marketing. According to the financial report data, Meituan's sales and marketing expenses in the third quarter of this year increased from 108 in the same period last year8.6 billion yuan, an increase of 553% to 1690.5 billion yuan, accounting for 174% to 221%。
On the other hand, since the beginning of this year, Meituan has made a lot of efforts in short ** and live broadcast. For example, it first cooperated with Kuaishou to launch the Meituan Mini Program, and then launched the "Meituan Live Assistant" APP to start the live broadcast debut to sell takeaway vouchers. Even in the Meituan app, the short** function was tested, and the tool "Meituan Pipi Shrimp" was launched to help creators edit and edit. In July this year, Meituan Live became a fixed entrance to the homepage of the Meituan app.
Meituan's counterattack has yielded good results. Douyin's advantages for Meituan are mainly in two aspects, one is the content advantage brought by short** and live broadcast, which can stick to users more. As for Meituan, which has been positioned as a tool for a long time, users will not stay too much after placing an order on the app.
At present, Meituan Live has made good progress. According to relevant reports, Meituan Live's monthly GMV exceeded 2 billion yuan in October, and commercialization will become one of the key goals next year.
However, Meituan Live quickly responded that the goal next year is still to improve the basic capabilities and quality of live broadcasting, focusing on exploring live broadcast forms suitable for local businesses, and helping more businesses explore live broadcast business.
The second is in the intensity of subsidies. In the early days, Douyin recruited merchants to attract the biggest ** is the subsidy, which is reflected in the low commission ratio: according to Douyin's official data, the commission ratio charged by Douyin to merchants is between 2% and 10%, of which the commission ratio of food (catering) is 25%, which is also reflected in the *** grid beyond other platforms.
However, with the increase in Meituan's investment in the third quarter, it has been able to achieve "Douyin has it, Meituan also has it" in the low-price supply. One example is that in the third quarter, Meituan's core local commercial advertising revenue grew faster than commission growth, and merchants focused more on Meituan.
Moreover, the management further pointed out that given the competitive landscape, Meituan will introduce a series of measures to capture the growing market, which may continue to affect short-term monetization rates and profit margins.
With the core business in place, another question for Meituan to face is when the innovative business will grow into a new growth curve.
Even though Meituan's market share is high and its revenue scale is increasing, its new business is just not profitable and has been dragging its feet. From 2020 to 2022, the new business lost 1085.5 billion yuan, 3839.4 billion yuan and 28.4 billion yuan, the revenue of the business in the third quarter of this year was 18.8 billion yuan, an increase of only 153%, continuing to achieve a loss, amounting to -51100 million yuan.
Meituan's innovative business focuses more on high-frequency business, hoping to use the traffic of high-frequency business to drive overall revenue, whether it is a taxi or a power bank, it follows this logic.
At present, Meituan is putting its treasure on instant retail. On December 1, 2023, Meituan's self-operated retail brand "Meituan Maicai" was officially upgraded to a new brand, Little Elephant Supermarket. The name change means that the business will expand its coverage from fresh food to more supermarket categories, and it also means that Meituan will increase its investment in this part of the market: on the Meituan app, the entrance of Xiaoxiang Supermarket is placed in second place, second only to the core food delivery business.
However, despite upgrading the name to "supermarket", Meituan has not learned Xi from JD.com and Alibaba to establish an "offline + online" model (Hema and Seven Fresh), and is still expanding its instant retail business in the form of front-end warehouses.
Bohu Finance believes that this choice is more in line with Meituan's current situation.
With the core business threat still unresolved, Meituan still needs to spend a lot of energy and investment to deal with the erosion of Douyin, and it is difficult to spend a lot of money to build a consumer mentality through the construction of offline supermarkets.
According to relevant data, in the first three quarters of 2023, the national online retail sales reached 108 trillion yuan, a year-on-year increase of 116%, higher than the growth rate of total retail sales of consumer goods by 48 percentage points, the proportion of instant retail in the online retail market continues to expand. According to the "2023 China Instant Retail Industry Insight Report" released by 36Kr Research Institute**, the market size will reach 1,193.6 billion by 2025, which will double compared with 2023.
Therefore, it is obviously a better way to rely on the achievements of Meituan in fresh retail, drive the consumption of other categories with high-frequency fresh consumption, give full play to its own distribution advantages, and then use the scale advantage to flatten logistics costs.
However, whether it is against Douyin, holding the basic market of takeaway and in-store, or winning as much share as possible in instant retail, it is not an easy task, even if it is Meituan.