Can flash purchases support the second curve of the US group?

It's that time of year again.

Affected by internal and external factors, the financial performance of most internet manufacturers is less than expected, which is directly reflected in the secondary market, and the stock prices of many groups have plunged on the same day and the day after the release of the financial report.

Meituan is one of the few players who has stabilized its stock price. After being pressured on Friday, it rose more than 15% on Monday to close at 11.56% at HK$150.6, and the stock has rebounded more than 40% from its all-time low.

Although meituan's financial report is not beautiful at first glance, the financial report shows that the adjusted net loss of Meituan in 2021 reached 15.571 billion yuan, and this figure was a profit of 3.120 billion yuan last year, but in terms of segmentation, Meituan's core business revenue growth rate or the narrowing of new business venture capital are better than the expectations of major institutions. Therefore, Goldman Sachs, CICC and other institutions still maintain a buy rating on the US group.

In fact, meituan's strategic loss at this time is a major inflection point in its transformation of "retail + technology".

How long will Meituan lose?

For the current Meituan, catering takeaway is a stable basic disk, but the growth has gradually peaked, and the Meituan needs to create more transaction scenarios for the huge traffic of the audience.

Meituan's new business carries the ambition of Meituan's second growth curve. In 2021, the new business revenue increased by 84.4%, and while the rapid growth was at the same time, the new business was also the main factor leading to the loss of Meituan for the whole year. Last year, Meituan burned 10.25 billion yuan in new business.

There are often two situations in which a company loses money, one is that the business itself has a problem with the model, and the other is a strategic upfront investment, and meituan is the latter.

Meituan has continuously strengthened its layout in retail infrastructure in the past two years, because it is confident that it will develop new business to profitability in the next few years.

Meituan's self-confidence comes from the abundance of cash flow on its books, as of December 21, 2021, Meituan's cash and equivalents and short-term financial investment reached a total of 116.8 billion yuan, more than double that of 2020.

On the other hand, the loss of Meituan's new business has begun to narrow. In Q4 2021, Meituan's operating loss ratio narrowed to 69.5% month-on-month. This means that in the next few years, Meituan will no longer have more than 10 billion yuan of losses, according to the current cash flow, Meituan has plenty of time to explore new business.

According to CICC's forecast, Meituan may narrow its adjusted loss to 7.405 billion yuan in 2022 and achieve a adjusted profit of 10.357 billion yuan in 2023.

This means that if the new business exploration is carried out according to plan, Meituan is expected to return to profitability within two years.

Instant retail "pick the beam"

Among the new business of Meituan, the most concerned by the market before was community group buying. But in fact, another new business that will grow rapidly and noteworthily in the past two years is meituan flash sale.

Instant retail is a new outlet in the retail model. According to Accenture's "Focus on China's Post-95 Consumer Groups" report, post-95s pay more attention to delivery speed than millennials, more than 50% of post-95 consumers hope to receive goods on the same day or even half a day, and 7% of consumers hope to receive goods within two hours, while the younger generation of consumers are more willing to pay extra fees for express delivery, and only a few are willing to wait for free delivery.

Changes in consumer demand also correspond to the rapid growth of instant retail. Data from iResearch shows that the size of China's instant retail market is expected to reach nearly 900 billion by 2024.

The Meituan flash sale is exactly the meituan that expands its best ability to match the same city to the trillion market of the whole category. In the planning of Meituan Flash Sale, it will win 400 billion yuan in the instant retail market share in the next five years, which means that instant retail has the hope of recreating a Meituan.

In fact, the business of instant retail has become a popular track for major giants to seize in recent years. In addition to the Meituan flash sale, there are also Jingdong Home, Tmall Supermarket and so on.

Why are the giants betting on instant retail? The reason is that the change from far-field e-commerce to near-field e-commerce is behind the change in user consumption habits.

Today's young people, especially after 95, are the natives of the real near-field e-commerce. They are used to ordering takeout since they were young, and they think that it is a matter of course to buy goods in an hour. Therefore, the imagination of instant retail is not limited to meeting the needs of users to purchase urgently needed supplies, but conforms to the overall evolution of the general direction of consumption.

In the future, when more and more consumers can get competitive prices in one hour, they will no longer be satisfied with next-day delivery, half-day delivery, let alone 3-5 days of arrival.

Another reason why Meituan re-positioned instant retail is that instant retail is a huge growth depression in the e-commerce field. Instant retail penetration is only 1.5% in the entire consumer retail sector. In a blue ocean, whoever gets the first-mover advantage can take the lead in capturing the user's mind.

This is also in line with the orientation of Meituan's exploration of retail tracks in recent years: the imagination space is large, and it is in the early stage of development. From this point of view, it is not difficult to understand why meituan is facing the risk of huge losses and has to exert efforts in the fields of community group buying and instant retail.

Category "reinforcement"

Meituan has a unique advantage in the track of instant retail, that is, the consumption scene. Meituan flash sale is consistent with the use of takeaway, making a broadening of the category, so that consumers will naturally expand their impression of Meituan from the takeaway platform to the whole category.

Previously, the advantage category of Meituan Flash Sale was all high-frequency supplies, including various snacks and water drinks around "eating", as well as daily necessities. Today, Meituan is also reinforcing in categories such as 3C digital.

For example, a week ago, Meituan Flash Sale and Xiaomi officially reached a cooperation, more than 3,000 Millet stores across the country are all connected to Meituan, in addition to mobile phones, tablets, Bluetooth headsets, smart bracelets and other smart wearable devices, fascia guns, electric toothbrushes can enjoy half an hour of service on the Meituan.

Nowadays, the consumption behavior of users on the Meituan group naturally changes from "ordering takeaway" to "ordering everything". For example, when your charger is temporarily broken, there is no spare charger on hand, instead of waiting for the courier to arrive after a few days, more people will choose to use Meituan to get a new charger within an hour.

The instant retail track is not easy to do, because the platform needs to meet the two points of sufficient variety and good experience to promote the change of consumer shopping habits.

In terms of experience, Meituan has more than 5 million riders and a large number of delivery route data, which can be said to have an absolute advantage in terms of transportation capacity. In terms of categories, fresh food, 3C, mother and baby, beauty, and books can all be purchased in one stop on Meituan.

Imagine that when the Meituan flash sale access to more merchants, the front-end warehousing and distribution process is further optimized, and there is a greater advantage in the bargaining power of goods, it will be a dimensionality reduction blow for traditional e-commerce.

According to Chen Shaohui, CFO of Meituan, the current number of active users of Meituan Flash Sale reached 2.3 trillion yuan, and last year's sales of Meituan Flash Sale were equivalent to 12% of the catering takeaway transaction volume. The growth rate of flash purchase business this year is expected to exceed the growth rate of the catering takeaway business.

Chen Shaohui also revealed that the medium-term goal of meituan's flash sale business is to reach 10 million orders per day. At the same time, Meituan will continue to strengthen cooperation with merchants and brands to convert more high-quality takeaway consumers into Meituan flash sale users.

In this financial report, Meituan once again emphasized that the company's strategy was upgraded from "Food + Platform" to "retail + technology". This means that Meituan's retail attributes will become the company's first label. Instant retail is the biggest advantage of Meituan's retail strategy.

Meituan needs to further expand the advantages of Meituan flash sale in real-time retail, but also needs to carry out new innovations in the retail model, the new form of community group buying, self-operated e-commerce, are the imagination space for Meituan to tap its own huge traffic pool.