The competition in the local life track is intensifying, and Meituan is under siege.
Will it affect the geometry? Perhaps the attitude of the outside world can be seen from the fluctuation of stock prices. On January 31, Meituan's Hong Kong stock closed at 6190 yuan, a four-year low. In addition, this ** also fell below the ** of HK$69 when Meituan went public in 2018.
*According to online industry analysts, Meituan's share price is not only due to the general downturn in Hong Kong stocks, but also due to the strong performance of players on the track - old players like Ele.me are showing their strengths, while new players like Douyin are playing to their strengths. Recently, it has also ushered in many participants such as express delivery and e-commerce.
So, in the face of increasingly fierce competition for local life, can veteran player Meituan keep its moat?
When it comes to local life, Meituan is the undisputed king. More than ten years ago, the remaining strength of his victory in the Battle of the Thousand Regiments is still there today. You know, among Meituan's competitors at the time, Pull Hands raised 1$600 million, Dianping raised $1$2.7 billion. At that time, Meituan's Series A financing was only $12 million. It wasn't until July 2011 that another $50 million was raised.
But the ultimate winner is Meituan, and why?
If we look at the company's strategy, the core of Meituan's success lies in Wang Xing's "three highs and three lows" strategy. High quality, high efficiency, high technology is easy to understand. But why emphasize low cost, low **, low gross margin? This is because on the track of local life services, Wang Xing wants to dig a moat called scale effect.
For example, Meituan's operating profit in the third quarter of 2023 was 335.9 billion yuan, with an operating profit margin of 44%。Operating profit in the same period last year was 98.8 billion yuan, with an operating profit margin of 16%。It is also a large Internet company, with an operating profit of 7.6 billion yuan in the third quarter of 2023 and an operating profit margin of 22%, which shows that Meituan's gross profit is low.
In the face of the huge number of local life services, Meituan's strategy has not scared off its opponents: new and old players from all walks of life have also begun to increase their layout.
For example, e-commerce platforms such as JD Daojia and Alibaba have long joined the fray. Platforms such as Xiaohongshu, Kuaishou and **hao have also started to create local life sections, as well as Ctrip, Fliggy, Ele.me and AutoNavi. And Meituan's biggest competitor, Douyin, is gradually eroding Meituan's market share through partnerships with platforms such as Ele.me and SF Express.
*As one of Meituan's biggest competitors, Douyin began to focus on the local lifestyle business as early as 2019, and took this opportunity to launch three to four thousand hotels in the local area. By 2021, Douyin has officially established a local life commercialization team. After attracting many merchants to settle in with the "0 commission" and low commission model, the next step will be to attract a large number of consumers with special ** coupons and seize market share.
At the Douyin Life Service Ecological Partner Conference held in April 2023, officially disclosed data showed that the GMV of Douyin Life Service in 2022 increased by 7 times year-on-year. Douyin's life service business covers more than 370 cities across the country, with more than 2 million cooperative stores. In addition, consumers have gradually developed the habit of searching for tickets and visiting stores on Douyin.
Douyin, on the other hand, has an innate marketing advantage. For merchants who don't have time or are not good at operating content, Douyin has built a complete product system, such as a star map platform for merchant orders that matches talents, and a "local push" tool for life services that is more accurate than DOU+. There are also a large number of service providers on the Douyin platform.
Douyin has the advantages of low price and strong daily activity, and its attractiveness to merchants and consumers is naturally far greater than that of Meituan. On top of that, Douyin has huge potential for lane changes and overtaking.
How will Meituan fight back?
The first is the user mentality of "low price + fast" and "comprehensive + high quality". Zhang Chuan believes that in the past, Meituan's in-store system was a shelf system, which was characterized by "more and better", but it did not fully capture users who were looking for low prices. Meituan has found new users through new businesses such as special ** and live broadcasts, "This is an opportunity for the store to take off again." ”
*The second moat stems from the network is "business and coverage over time". In the past, Meituan's ** and ** could remain unchanged for a year, but with the existence of low prices every day, the ** combination plan had to change with time and people.
The third moat is absolutely low-cost. Zhang Chuan believes that life service merchants are characterized by small scale and low net profits, "Meituan's total commission is low, there are fewer participants, the tools are complete, and the understanding of the business is simple and straightforward." ”
On the other hand, Meituan has also put a lot of effort into short ** and live broadcasting. For example, it first cooperated with Kuaishou to launch the Meituan Mini Program, and then launched the "Meituan Live Assistant" app to start the first live sales of coupons for takeaway products. The Meituan app is even testing the short** feature internally, and has also launched the "Meituan Pipi Shrimp" tool to help creators with image and text editing as well as **editing. In July last year, Meituan Live became a fixed entry to Meituan's homepage.
A Meituan insider revealed that in previous years, Zhang's New Year's message was mainly about cheering and encouragement, and rarely involved actual commercial content, but this year he rarely talked about more business ideas. To a certain extent, this reflects the serious challenges facing Meituan's in-store business.