Meituan’s Community Group Buying Platform Shifts Into Next-Day Supermarket Delivery Service
On October 11, Meituan Select, a community group buying platform under Chinese tech firm Meituan, adjusted its brand positioning to a “supermarket with next-day delivery services,” with a new slogan of “real money-saving,” indicating that it will soon face direct competition with JD Supermarket, Tmall Supermarket and Ele.me’s instant delivery service.
Meituan’s e-commerce business group “Tuanhaohuo” has been reportedly placed under Meituan Select to expand the latter’s stock keeping unit (SKU) or to introduce a new brand.
After this update, Meituan has two “supermarkets” – one with next-day delivery services offered by Meituan Select and Tuanhaohuo, and one with instant delivery services offered by Meituan Flash Shopping and Meituan Maicai.
In fact, Wang Xing, the founder of Meituan, has always intended to develop an e-commerce retail business. In the second-quarter conference call of this year, Wang said that the business model of instant retail will bring about huge changes to the retail industry, and he believes that they can play a greater role in the future.
Since 2020, most of the losses recorded by Meituan have come from the new business sector in which Meituan Select is situated. According to the second-quarter financial report released by Meituan in August, the operating loss of the new business segment reached 6.8 billion yuan ($646 million), and the operating loss rate reached 48%. For the full year of 2021, Meituan‘s new business segement generated losses of 38.4 billion yuan, while Meituan‘s overall operating losses were 23.13 billion yuan.
Since April this year, Meituan has chosen to withdraw from domestic markets such as Xinjiang, Gansu, Qinghai, Ningxia and Beijing, and has accelerated its search for a way to reduce losses and make profits. This time, the positioning change to “supermarket” shows that Meituan has further optimized the retail business.
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According to a report by LatePost, Meituan Select has always strived to be an online supermarket with higher product abundance and better quality than Pinduoduo‘s fresh grocery e-commerce business, which focuses on low costs. Meituan Select has discussed two routes – one is to make more refined products, and the other is to develop “supermarkets” with more SKUs.
Following research, Meituan Select chose the latter, trying to expand the number of SKUs to 3,000, which can cover the daily needs of most users. In the first half of this year, Meituan Select had more than 1,500 SKUs, while Pinduoduo had less than 1,000.
This brand update highlights the money-saying features of Meituan Select. This year, in order to reduce commodity prices, Meituan Select has encouraged more suppliers to uniformly purchase from the origin to reduce procurement costs. Suppliers grade the goods, and supply Meituan with those with better quality, and supply other channels with those with lower quality and cheaper prices.
LatePost also learned that since last year, Meituan Select has provided home delivery services across the country. The coverage of this service is less than 30%, and group buying brokers’ enthusiasm is not strong enough. Despite this, the coverage of home delivery services by Meituan Select is still higher than that of Pinduoduo.
In the past, consumers would point to fresh grocery e-commerce and community e-commerce as the defining features of Meituan Select, but now it is more like a large supermarket that is convenient and economical. The rich product categories allow one-stop shopping, helping users save time and money and increase user stickiness.