When will Meituan bottom?

Visual China.

Text |Dong Gui talked about science and technology.

At that time, Meituan had just come out of the "Hundred Group War", and while competing with Dianping, it launched the "beach grabbing action" to enter the takeaway market; Byte's Toutiao, which has been established for two years, is using a recommendation engine to meet the big wave of ** content, competing for traffic and paper media business.

If it had been said five years ago that Meituan and Byte would have a fight, most people would not have believed it.

At that time, Meituan was grabbing Ctrip's hotel business, while taking "eating" as the core, and was anxious with Ali in the field of local life services; Byte surpassed Tencent to become the second largest digital advertiser in China, and the cash cow business promoted the company's boundary expansion, social networking, gaming, education, fearless giants, rampage.

However, in 2023, Byte will have a big impact on Meituan.

In the capital market, it has become the most concerned topic for Meituan investors. In terms of business operation, Meituan has also become a strong competitor in the field of local life: in 2022, the live broadcast related to local life on the Douyin platform increased by 925% compared to the previous year, and the related GMV also soared from 10 billion yuan in 2021 to more than 70 billion yuan. The food delivery business also cooperated with Ele.me to launch an all-out attack on Meituan.

How much influence will Douyin ultimately have on Meituan? There is a similar comparison on the Internet.

In 2018, someone asked Daniel Zhang what he thought of Pinduoduo. Daniel Zhang believes that "some users have been lost in the short term, but a large number of users have flowed to **." You should think that you are helping me develop the rural market and educate users. "Later, as a result, everyone saw that the educated users still chose Pinduoduo, and the growth rate of the two companies was significantly different.

Coincidentally, "Late LatePost" reported that some Meituan people believe that "although Douyin has taken away some of Meituan's market share, Douyin is also helping Meituan to educate the sinking market, and after users gradually mature, Meituan can make up for the lost users from the sinking market and even get more growth." [1]

The structure, results, and tone of this judgment are almost exactly the same as the evaluation of Pinduoduo in 2018. Therefore, it is not surprising that it is used for comparison.

However, in all probability, this judgment is not the idea of Meituan's core executives. Or rather, there is, it's before.

When it is seen that Pinduoduo's revenue and market value have surpassed those of old e-commerce, it is impossible for every Internet company executive not to be touched by "challenge and replace". Especially when Meituan's market capitalization shrinks by 80% from its peak, the negative news will be amplified, and any business challenges will have to be responded.

Therefore, in the New Year's message to employees from Zhang Chuan, president of Meituan's in-store business group, it can be seen that he admitted that Meituan was in a hurry when he arrived at the store and was beaten by opponents to the point of friction; For this business impact, the metaphor of "war" was used to highlight the seriousness; also emphasizes that the opponent is getting stronger, and they are all all-rounders; He pointed out that the combat mode and army building thinking of the Meituan should also be changed. [2]

Zhang Chuan's attention to Douyin can be seen.

Although Meituan and Byte were two seemingly unrelated companies ten or five years ago, a review of the development of the two companies shows that they both share similar "borderless expansion" concepts and business initiatives.

Frontal conflict also seems inevitable. The opportunity to grab food from the tiger's mouth and the interpretation of the two tigers competing are undoubtedly the focus of the Internet spotlight.

The fourth weekend of August 2019 was a joy for Meituan Wang Xing. The second-quarter results disclosed on the 23rd show that the company has achieved overall profitability for the first time, and has been in business for nearly ten years, ushering in a milestone.

On Monday, the exchange opened. Meituan's share price opened higher as scheduled, rising nearly 9%, exceeding its initial offering in 2018 and also "snowing" the "previous shame" of 40% in the three months of listing in 2018.

Meituan's performance and profitability this time are both beautiful and man-made.

The second quarter was the best weather, not too hot and not too cold, with sufficient takeaway capacity, low distribution costs, and strong demand, which drove the core catering takeaway business to turn positive for the first time.

At the operational level, after the acquisition of Mobike in 2018 and the entry into fresh food, Meituan has also begun to reduce costs and increase efficiency, and has been improving operating efficiency and reducing losses in the past few quarters. Bike-sharing has increased the cost of riding, and online car-hailing has launched an aggregation model. Baby Elephant Fresh has also closed several stores.

Full of warm thoughts**, the faucet wants to make money. At this time, Meituan has a huge merchant partnership, a stable consumer group, a takeaway brother who is difficult to replicate, an efficient local push team, and consumers' mental occupation in terms of life service needs, and the moat is still quite wide. The takeaway market, with a market share of about 75%, is difficult to shake; The in-store business, with a gross profit margin of up to 86%, is also a proof of market position.

In Wang Xing's words, Meituan should adhere to an ROI-oriented investment strategy. In the vernacular, you want to make money.

In 2019, Meituan's overall gross profit margin increased from 138% year-on-year to 187%。Among them, the gross profit margin of the in-store business was 86At a high of 8%, it continued to rise to 888%。In 2020, despite the impact of the epidemic, Meituan's operating profit margin still improved, and the food delivery business increased from 26% to 43%；The operating margin of the in-store business increased from 377% to 385%, with a net profit of 47100 million yuan.

While the operation is improving, Meituan's stock price is also booming. After the epidemic in 2020, the Federal Reserve released water and foreign capital poured into the Hong Kong Stock Exchange, and Meituan also hit a new high along with technology stocks, with its market value starting from the lowest of more than 200 billion yuan in 2018, and successively exceeding 1 trillion and 2 trillion yuan.

In 2019, the Meituan app and other interactive ports were changed to a unified "yellow", and at that time, it was said that Meituan had entered the "** era". Standing at the end of 2020, I will only sigh that "it is really the flower of Meituan".

Prosperous ** routes, often the most attractive to pirates; A prosperous city is also the easiest to attack.

Meituan naturally understands this truth. But looking at the advantages of local life supply and demand, you can also be calm. 36Kr reported that the Douyin team said, "Every time we take a new step, we think that Meituan is going to fight back and follow up immediately, but the result is nothing." ”[2]

It's not that Meituan doesn't fight back, it's just that in the early days, Meituan really "looked down" on Douyin.

High frequency plays low frequency, this is the obvious way of playing on the Internet. So, there is 7Douyin, which has 600 million monthly active users and an average daily usage time of 100 minutes per person, will naturally expand without borders: education, games, finance, e-commerce, and local life. In the user's high-frequency usage habits, it is cost-effective to use the funnel model to screen out a small part.

But the expansion of Douyin did not happen overnight. In 2018, Douyin kicked off with the establishment of a POI team (i.e., any point of non-geographical significance) to strengthen its "local" attributes. In 2019, Douyin was launched, allowing merchants to select the corresponding POI map location when uploading Douyin** to guide users to offline consumption.

Zhang Yiming once mentioned the principle of company expansion: don't do what people do well. Therefore, in the early days of Douyin's entry into local life, the transaction level chose to cooperate with companies such as Meituan and Ctrip. After all, the coverage of merchants and the transaction process of consumers require teams and time.

Using one's own traffic to do other people's business, this spirit of "selflessness" is really rare. Even if WeChat diversion is empowered, it still gives priority to affiliated companies.

Because of making wedding dresses for others, Douyin's income in terms of local life has not improved. According to the report, there is also a controversy within Douyin about "not doing local life and how big the market can be". According to Tencent's "Periscope", the person in charge of Douyin's POI has also changed no less than 5 times.

Perhaps it is precisely because of this cooperation experience that Meituan has further dispelled its vigilance against Douyin's entry into local life. But at this time, Meituan also ignored one of the characteristics of bytes, which is "fast error correction".

When Byte found out that he was making a wedding dress for others, he quickly closed the loop for himself. In August 2020, Douyin launched the "Life Service Scenario Access Solution", replacing Meituan's external links with Douyin merchant mini programs. Subsequently, 10,000 employees were also deployed to set up a dedicated localization development team.

When Byte found that the takeaway business was too heavy and difficult to manage the little brother team, it canceled the "Heartbeat Takeaway" business and switched to cooperating with Ele.me in 2022.

When Byte found that the transaction link still needed time to build and was not the current advantage, it increased its investment in "content" and started "talent with goods" in June 2020. And "talent" has become an important breakthrough point for Douyin's local life business.

In 2012, the documentary "A Bite of China" was released and received rave reviews immediately. For food, the number of words is written thousands, so it's better to take a look. Talent visiting the store** is not only a good content, so that foodies can watch it with relish, but also an advertisement, which stimulates the desire of consumers and brings orders to merchants. Subsequently, this form also changed from the guidance of byte officials to the trend of spontaneous participation of users.

How popular is the shop? There is a celebrity in Hebei who claims to have 4 million fans, and he doesn't want to pay when he goes to the store to eat and show the number of fans. It is also said that the UP owner who visited the store with two people brought seven or eight people to eat the overlord meal.

Despite some chaos, KOL grass planting is still quite effective, and it has also expanded from catering to other areas of life. For Douyin, traffic, content, and transactions have finally achieved a closed loop; It has also verified the logic of "impulsive consumption" and "goods looking for people".

In 2021, the GTV of Douyin's local life reached 10 billion yuan, and in 2022, it reached 77 billion yuan. Although this volume is still only about 1 3 of Meituan's, the rapid growth has to remind people of the case of fuel vehicles and electric vehicles.

At least, for Meituan, the high profit margins of local life are about to be cut, and the opponents who "look down" are forced to change from lying down to winning.

Meituan and Douyin are very different in the field of local life.

Meituan focuses on efficiency, and Byte focuses on interest; Meituan's advantage is in trading, and Byte's advantage is in content; Users are active instant consumption on Meituan, and impulsive delayed consumption on bytes. These differences will be reflected in the operating data, and they will also shape the boundaries of each other.

For example, judging from the write-off rate, that is, the data that users place orders and actually spend money, Meituan's proportion has reached 90%, while Douyin's is around 60%. There is an opinion that this is the gap, where bytes need to work hard, but in reality, this is just a difference, which comes with different attributes. If the write-off rate of interest recommendations can reach 90%, it is conceivable that the algorithm is terrifying.

Therefore, the expansion of the two sides has both made up for the gap and reduced the difference, but basically starts from "supply" and "demand".

On the supply side, it is necessary to look at both the number of merchants covered and the number of users presented.

Wang Xing and Zhang Yiming are both code farmers, and sales are not their core competencies. Therefore, Wang Xing invited Gan Jiawei during the "Hundred Group War" to create a strong local push team for the company, visiting and placing orders wildly, and now Meituan has 41 categories of local life coverage and 9.3 million active merchants.

The number of active merchants on Douyin just exceeded one million at the end of 2022. Traffic is the biggest advantage of Douyin to attract merchants. However, due to the use of short-term marketing, there is still a threshold for small and medium-sized businesses and long-tail customers, and the efficiency may not be the highest.

Therefore, Douyin's current customers, mainly large customers, including chain restaurants, brand customers, etc., are also easier to create popular products. For example, Haidilao's "breakup**" T97 coffee and so on.

The full coverage of KA merchants is the first boundary of Douyin on the supply side. The expansion of small and medium-sized businesses is where the second boundary lies.

Douyin is improving the "shelf" model, and has adopted a display similar to Meituan in the ** and local columns to reduce the operational difficulty of small and medium-sized customers. In addition, Douyin shared at the conference that 80% of customers are new customers of case customers.

For small and medium-sized merchants, new traffic is important, but old customers who repurchase are more precious and have lower operating costs. How to manage old customers?

Douyin Internet celebrities know that even if they have tens of millions of fans, they can't guarantee the amount of each **. After all, traffic is given by the algorithm, not by the stickiness of fans. This means that it is difficult to accumulate Douyin's private domain traffic. Correspondingly, on Meituan, merchants can continue to operate with users by building fan bases.

Another powerful tool to attract merchants is "low cost". To this end, in the early stage of Douyin's expansion, it will provide commission reductions and subsidies for settled merchants. However, according to the research report of Guoxin**, with the weakening of Douyin's preferential efforts, the comprehensive cost of merchants on Douyin is gradually rising, and even after taking into account the traffic advantage, the comprehensive cost is almost the same as Meituan, or even higher. [3]

The starting point of Douyin is naturally for profit. After all, in the current environment, wild growth is a thing of the past. However, considering the immediate effectiveness of the war on market share gain, Meituan may also use it as a counterattack. It is still too early to assert that competition is slowing down.

While increasing the number of coverage, Douyin also needs to break through the "display ceiling". According to the operation of Douyin, the traffic ratio of 8% is basically the ceiling for users to accept commercial information. [4] Therefore, another important topic is how to guide consumers to open the business information in Douyin when they are not swiping **.

This is the other element of the border between the two sides, the consumer side. Meituan is believed to firmly occupy the minds of users in the "instant and active consumption" scenario. But consumer demand has changed in recent years: low prices are more popular. This leaves it to the possibility of TikTok.

Meituan has been "forced" to change.

For example, the increase in *** has increased the live broadcast, and the ** column has also been added on the homepage. The content is also high-traffic jokes such as "beautiful women with long legs, KTV points to school flowers". Maybe it's because I'm a new user, and I'm pushing the system's default new user preferences. This is very similar to Douyin, it seems that male users default to start with these contents.

But Meituan's response is still very indescribable. Let me think of Li Xiang's words for the first time, we have never met such a strong opponent, and we have no power to fight back for a long time.

However, just as those who learn from Meituan, they must not be able to defeat Meituan; Those who learn Douyin will definitely not be able to defeat Douyin. Meituan still needs to build on its strengths and avoid its weaknesses.

I once gave Wang Xing the nickname "Voldemort".

VoltIt refers to envisioning the future in a high-profile manner, operating in a low-profile manner, and learning to wait patiently for the best opportunity. landIt refers to Meituan's two major weapons of "local push and local delivery" to get the merchants and fulfillment. Magic,It means that he will choose those fields with false moats, and when the competition in the industry is weakened and there is no big money willing to re-enter, he will quickly gain market share from the existing leaders through tactics such as playing seven inches.

This feature has made Meituan win in the fields of food delivery, hotels, and even power banks. It's just that at this moment, Meituan has become a leader and defender in the field of "false moat" of local life.

More importantly, as Meituan Zhang Chuan said, the current opponent is an all-rounder, with funds, momentum, playing style, strong error correction, and good learning. Defense, too, is not easy. Therefore, just as some Meituan employees are confused, Meituan's investors in the capital market are also confused

Competitive landscape, when will it improve? When is Meituan's stock price bottoming?

Unfortunately, the answer to this question,First of all, it doesn't depend on Meituan, but bytes: Does Douyin's local life want to achieve 30% or 70% of Meituan's revenue?

Secondly, it is Meituan's response. How much effort can be used to make the two sides realize their respective boundaries and reach a tacit understanding of business such as takeaway.

Thirdly, it is Xiaohongshu, Kuaishou, Pinduoduo, etc., whether they are still willing to play after seeing the fierce competition in local life.

However, unlike previous years, the current competitors, no one can afford a subsidy war regardless of the cost, and the competition between the two sides needs to show more micro-manipulation and patience.

Sharks are the kings of the ocean, but sharks don't have an easy time. Since sharks do not have swim bladders, they can only keep swimming forward to ensure that they do not sink; Because there is no gill cover, you have to swim constantly to allow the water to get oxygen through the gills and avoid suffocation.

The use of sharks to describe Internet companies could not be more vivid. If you don't move forward, you sink; If you don't improve efficiency, you will fall behind. Hoping that the moat will lie down to win, it will lie down in the long river of history.

References:

1] Late Exclusive丨Meituan, Douyin's new opponents: Duoduo Grocery Focuses on Local Life, Now Suspended[2] 36Kr Exclusive Zhang Chuan, President of Meituan's Store Business Group: This is not a short-term war, nor a long-term war, but a brutal trench war[3] Local Life Series III: Meituan vs Douyin: Meituan actively responds, and the competitive situation is slowing down at the margin[4] Late Exclusive丨The ceiling of live broadcast e-commerce is approaching, and Douyin has found a new way out.