1. Continued Investment in Community Group Buying: Meituan Select Leads the Charge
Meituan is doubling down on its efforts in the community group buying sector!
Recently, Meituan Select launched a new “Tuan Maimai” mini-program on WeChat. This is an official Meituan tool for managing private domain transaction communities, allowing users to easily find a wide range of products, including food, fresh produce, and daily necessities.
The launch of “Tuan Maimai” marks the latest move by Meituan Select in the community group buying space.
However, if we look back, it’s clear that Meituan Select has been making continuous efforts in community group buying throughout this year.
In the first half of this year, just as the community group buying race seemed to be cooling down with fewer participants, Meituan Select defied expectations and increased its investment in the sector through a series of strategic adjustments.
Here are some key milestones we’ve identified:
In May this year, Meituan Select abolished its original regional system and switched to a province-based system, where each province is responsible for its own profit and loss. This move effectively removed the constraints on the development of the Select business at the group level, pushing it into the wild for survival while also encouraging the business to leverage its own initiatives.
A month later, Meituan Select’s leadership gathered for a significant meeting, known as the “Summer Conference,” where the “Summer Campaign” was officially launched.
In retrospect, this far-reaching “Summer Campaign” has extended from summer to fall and is now poised to continue into winter. The duration, scale of investment, and number of participating brands are unprecedented. From a data perspective, the results so far have been remarkable: many partner brands have achieved breakthrough growth, with some brands and products experiencing growth rates exceeding 500% or even 1,000%!
On August 30th, Meituan Select officially announced the launch of a “Morning Delivery” service, causing another stir in the industry. The essence of this service can be summed up in one sentence: what used to be available for pick-up at 4 PM can now be picked up by 11 AM, effectively speeding up the process by half a day.
For the fresh produce industry, this half-day acceleration by Meituan Select is a small step but a significant leap for the entire industry!
Previously, in the fresh produce and e-commerce sectors, only JD Logistics could promise next-morning delivery for orders placed the previous evening, and even then, only for JD’s own products. Now, Meituan Select has announced that it can match JD Logistics’ performance, highlighting the substantial improvements Meituan Select has made in fulfillment and logistics capabilities this year!
More importantly, the continuous rollout of these initiatives suggests that Meituan Select’s position within the Meituan Group has significantly improved—clearly, as Meituan’s new direction for business expansion, Select has become the group’s pioneering force.
2. Another Big Bet by Wang Xing!
Analyzing Meituan Select’s continuous actions this year, the reason is simple: although Meituan’s entire new business division, including Meituan Select, is still operating at a loss, the growth momentum of the Select business has been very strong—a trend that everyone is well aware of.
According to Meituan’s second-quarter financial report, Meituan’s new businesses, including Meituan Select, reported a net loss of 5.2 billion yuan. Meituan was upfront about this in its financial report, openly acknowledging that “community group buying is currently facing short-term challenges in optimizing the business model.”
However, despite the existing challenges, the rapid growth of Meituan Select has given Wang Xing hope that one day, Meituan Select could fully recover the lost ground.
At a recent Meituan Partner Conference, the head of Meituan Select told the attending partners that the growth of the Select business is so fast that, while he didn’t want to disclose the exact figures, he could say it far exceeds 50%.
So, even though it’s still in the red, Meituan Select has the confidence to sustain these losses!
To be more precise, in the eyes of Wang Xing and Meituan Select’s top management, the current losses in the Select business are not true losses but rather necessary investments in expanding its market presence.
Meituan’s financial report provides a clear explanation: the current losses in Meituan Select are due to “the expansion of business scale, increased subsidies to drive growth, investments in cold chain and logistics to prepare for the hot weather, and seasonal product mix changes.”
Indeed, this is the case. From a category perspective, the range of products available on Meituan Select has been continuously expanding. By mid-year, the number of fresh and daily goods available on the platform exceeded 900, with a year-on-year increase of over 40%. Even rare local specialty dishes can now be found on Meituan Select.
Calling Meituan Select a “community group buying version of Tmall” is not an exaggeration.
To ensure the quality of fresh food, Meituan Select has also significantly ramped up its investment in cold chain logistics, connecting agricultural production areas through trunk lines and intracity logistics networks—a move that has surprised many. Looking across the industry, few platforms are willing to invest in logistics infrastructure with real money and resources, especially given the current environment of shrinking profits across internet platforms, where even JD Logistics hesitates to make such investments!
Perhaps Wang Xing believes that once the community group buying layout is complete, it will be time to reel in the net. Therefore, the transition of Meituan Select from a huge loss to becoming a major profit contributor to the group is just a matter of course.
This has been validated by another recent move by Meituan.
Not long ago, Meituan Select quietly took the top spot on the Meituan app’s bottom navigation bar. This suggests that after a series of adjustments, Meituan Select has successfully completed its layout phase; in the next phase, Meituan Select will shift from a broad-spectrum approach to focusing on capturing the “quality-savvy” consumer group. It’s expected that in no time, it will achieve profitability.
It seems that Wang Xing has always had a clear understanding of the gamble he’s taking in the community group buying sector and where things are headed.
3. With 470 Million Grocery Shoppers at Stake, No Giant Wants to Give Up
Today, the community group buying market may seem calm, but beneath the surface, there are powerful undercurrents.
In July of this year, Jingxi Pinpin rebranded as JD Pinpin, a move that clearly indicates JD.com’s strong commitment to the community group buying sector. This action is bound to have a significant impact on the industry: JD Pinpin, backed by JD’s products and logistics experience, has re-entered the community group buying arena as a formidable competitor that no one can ignore.
JD and Meituan’s renewed focus on community group buying at this time is partly due to the looming presence of Pinduoduo’s Duoduo Maicai.
Pinduoduo’s second-quarter financial report shows that the platform’s transaction service revenue reached 14.3 billion yuan, a year-on-year increase of 131%, with the performance of Duoduo Maicai being a major driver of this growth.
If Duoduo Maicai can achieve this, there’s no reason JD and Meituan can’t do the same!
For JD Pinpin and Meituan Select to surpass Duoduo Maicai, the biggest breakthrough seems to be in logistics and delivery. After all, both JD and Meituan have their own comprehensive logistics systems, which theoretically gives them greater control over improving efficiency across the entire chain, from product selection to delivery.
Therefore, Meituan Select’s announcement of accelerated delivery is not just a simple tactical adjustment—it’s a strategic move to reignite the flames of competition in the next round of the community group buying war!
After all, Meituan Select’s platform already has 470 million active users. These 470 million people are the backbone of community group buying and represent what Wang Xing sees as a “once-in-a-decade opportunity” that Meituan is not willing to relinquish.
Now, as the community group buying market enters its second half, all players are faced with the critical challenges of upgrading business models and optimizing supply chains. Whichever player finds the optimal solution will not only dominate community group buying but could also redefine the hierarchy of the entire internet industry!
Post time: Aug-13-2024