China's Internet company, once the third largest by market capitalization, has now lost 208 trillion yuan, this is the darkest moment that Meituan has experienced in the past year. The king of local life is facing fierce challenges from Douyin and the test of its own business model.
The fundamental reason for Meituan's stock price is not because Douyin has entered the food delivery market, but because there are hidden concerns about its business model. On the one hand, the moat built by Meituan with millions of riders is being breached by its opponents, and the profit margin of local life is declining. On the other hand, new business continued to burn money and lose money, and the total loss of new business has exceeded 70 billion yuan in the past three years. After the Internet industry as a whole entered the stage of reducing costs and increasing efficiency, such losses can no longer be afforded. Investors are no longer willing to pay for burning money and hope, but want to get ready-made profits and fruits.
Meituan's profit model in the past was to rely on the food delivery services provided by many riders, forming a huge traffic entrance. Although the food delivery business itself is loss-making, it has brought a lot of traffic to Meituan's other ** businesses, among which the higher gross profit margin of the in-store, hotel and travel business has created huge profits for Meituan. However, with a user base of 700 million daily active users, Douyin has achieved scale expansion through low prices** and rapidly expanded its in-store business, which has made Meituan feel huge competitive pressure.
Meituan and Wang Xing have once again come to a crossroads. Whether to continue to diversify, or shrink and return to takeaway and in-store business, focusing on profits, Meituan must choose a clearer and more thorough route. In the eyes of the industry, as long as Meituan stubbornly sticks to its cost advantage, it can curb the expansion of competitors. At the same time, Meituan is also trying to explore new incremental markets, such as launching a new food delivery brand Keeta in Hong Kong, posing a serious threat to European food delivery platforms Delivery Hero and Deliveroo.
2024 Travel Guide Meituan was once the king of local life, building a moat with millions of riders, and growing into China's third-largest internet company in the midst of brutal market competition. But now, it must forge a new path of growth and return to its former glory.