In 2022, Meituan, with millions of riders, has dominated the real-time distribution market for years, shouting "Give it everything away" and frequently launching time wars. Maybe he didn't expect to be able to come up with 14 billion yuan a year to deliver takeaways. In a conference call to interpret the financial report, Meituan CEO Wang Xing said bluntly: "In the fourth quarter, the company's distribution service revenue was 14.3 billion yuan, far less than the related cost of 18.3 billion yuan, which means a loss of 1 yuan per order." ”
Since the establishment of the "comfort zone", we have ushered in another "pivotal moment" in the search for the boundaries of beauty. In the financial report released on March 25, Meituan's annual revenue in 2021 was 179.1 billion yuan, an increase of 56% year-on-year, and the adjusted net loss was 15.571 million yuan. New business has once again become the main reason for Meituan's loss. In 2021, the operating loss of Meituan's new business and other market segments reached 38.4 billion yuan. According to the financial report, the loss was mainly due to investments in supporting retail business development, supply chain and user incentive development.
The "kidnapped" rider
As a "high-risk profession", couriers have attracted the attention of a large number of social groups. The rider's job is to deliver the order to the customer on time, and then the platform gives the corresponding commission. This work seems simple, but there are countless hardships behind it, among which the riders complain the most is that the platform is not inclusive enough. I also remember that on September 8, 2020, an article titled "Takeaway Riders Trapped in the System" went viral on the Internet, pointing out: The platform "algorithm" kidnapped the takeaway rider group, the platform has strict regulations on the delivery time of the rider, but the rider has too much uncertainty in the delivery process, such as the merchant from the single slow, heavy traffic, etc., so in order to avoid bad reviews, for the order late and delivery riders violate traffic rules, and death race. The article caused a stir online and resonated with many food delivery passengers.
It also attracted the attention of the industry's top brass, and the good news is that soon after, the industry issued a statement saying that the platform will further optimize the system, serving the user in the delivery time, the driver can reserve 8 minutes of flexibility, and also improve the rider reward model, while ensuring the safety of the rider while also getting more rewards. In addition, in July last year, the relevant departments as the relevant rights and interests of takeaway members once again spoke out, requiring the takeaway platform to be more humane, not to use the algorithm as the strictest basis for rejecting takeaway judgment, while ensuring that the takeaway staff is not lower than the local minimum wage standard, reasonable distance and the optimal order quantity and delivery punctuality rate, relax the delivery period, reduce accidents, and give the courier safety guarantee.
One loss at a time
Under external pressure, Meituan has also made a lot of changes for riders, which is a good thing and conducive to the long-term healthy development of the food delivery industry. Recently, Meituan also released its latest 2021 financial report, revealing the state of its business. Profit data shows that Meituan's revenue last year was 179.13 billion yuan, an increase of 56% year-on-year. By industry, Meituan Takeaway contributed 96.3 billion yuan in revenue, an increase of 45.3% year-on-year, but after this impressive figure, Meituan Takeaway lost about 15.6 billion yuan.
What's more interesting is that Wang Xing, founder of Meituan.com, said on a conference call: "In the fourth quarter of last year, Meituan.com's takeaway service revenue was 14.3 billion yuan, far less than the related cost of 18.3 billion yuan, which means that each single loss is more than 1 yuan! Wang also stressed that the company will continue to strengthen its distribution network and capabilities, although the distribution service business is not yet profitable. According to Wang Xing's opinion, Meituan not only did not deduct the courier's salary, but also gave them money. Is this true? According to the data, 96.3 billion yuan of takeaways receivable from the industry, rider takeaway costs of 68.2 billion yuan, accounting for 71% of the revenue of catering takeaway, while the annual revenue of catering delivery services is 54.2 billion yuan, that is, subsidies to riders are as high as 14 billion yuan. But what really caused Meituan's loss was not the takeaway business.
The new business lost 38.4 billion yuan
The Group's retail, hospitality and tourism businesses achieved steady growth. In 2021, Meituan's operating income from stores, hotels and tourism was 32.5 billion yuan, an increase of 53.1% year-on-year; operating profit increased from 8.181 billion yuan in 2020 to 14.193 million yuan in 2021, and the operating profit margin increased from 38.5% to 43.3%. In terms of hospitality and tourism, the number of Chinese hotel nights increased by 34.5% in 2021. In addition, Meituan has also consolidated its competitive advantage in the field of low-star hotels, guiding offline users to online platforms and helping more hotel merchants to operate digitally. In the field of high-star hotels, the number of nights in star hotels in 2021 accounted for more than 16.5%. In 2021, Meituan continued to expand its investment in new businesses, especially in the retail business of bulk commodities. New business and other aspects mainly include Meituan Preferred, Meituan Flash Sale and Meituan Buy.
As can be seen from the financial report, the peak single-day orders of Meituan Flash Sale in December 2021 exceeded 6.3 million, and the number of annual on-site buyers reached 230 million; categories such as flowers, supermarkets and convenience stores continued to maintain a high growth momentum; and the launch of 24-hour drug delivery services hit a record high number of 24-hour pharmacies in the fourth quarter. On average, both the daily nightly medical order and the night prescription drug doctor order achieved a three-digit year-on-year increase. New business revenue grew strongly, but continued to burn money. According to the financial report, in 2021, the revenue of new business purchased by social groups dominated by social groups increased by 84.4% year-on-year to 50.3 billion yuan, and the operating loss expanded from 2020 yuan to 38.4 billion yuan, an increase of 252% year-on-year. Among them, in the fourth quarter of 2021, the revenue of new business and other market segments increased by 58.7% year-on-year to 14.7 billion yuan, and the operating loss expanded to 10.2 billion yuan year-on-year.
Despite the rising losses, executives expressed confidence in the company on a conference call after the earnings report was announced. Meituan said that the new regulatory environment facing community e-commerce is conducive to the stable and healthy development of enterprises. At the same time, community e-commerce business is gradually returning to rationality in the current environment. "Meituan's optimization shows strong vitality and potential, which will add more vitality to the retail industry." Executives said that this year we will continue to focus on improving the allocation of resources and the quality of growth, pursuing long-term economic benefits rather than short-term benefits; further improving operational capabilities and efficiencies, optimizing logistics and distribution capabilities, and hoping to build a healthy ecology through various efforts.
Short-term stall
As the book The Age of E-Commerce puts it: "People's expectations, hopes, and desires are broken down by routers into costly amounts of data in network cables." A large number of customers is like gold waiting to be mined. Competition in the business world is pure and crazy. "In the takeaway market, playing with traffic and competing for low prices is also the most common way. The takeaway market was still in a period of barbaric development many years ago. All the players are aggressive and make a lot of money, but very few will survive in the end.
Therefore, with the rise of online food delivery models, this kind of business should increase sales for merchants, provide consumers with multiple options, and save efficiency. At the beginning, people's impression is that the red envelopes are continuous, the cost performance is high, and there is no money for eating. But behind the "25 minus 24" that has poured into the market, businesses still want to make money, and consumers still want to eat. Behind this demand, the real burden of "low price" is the distribution platform that provides huge subsidies in order to seize the market and compete for traffic.
The market will eventually mature. The traffic wars in the industry will continue for some time, but not for a lifetime. When the winner is firm in the market, how to make a profit becomes a more urgent proposition. Therefore, the huge subsidies of the past no longer exist, but at this time, the consumption habits of platform users who have been raised by countless red envelopes are difficult to change. A netizen lamented when describing the magical situation of the takeaway industry: "Now consumers spend more money, the merchants who sell rice say that they do not make money, the passengers who send rice say that their income is low, and the takeaway platform also says that they have lost money, so who makes money?" ”
The answer is to bypass the nature of every Internet export rise. You should take a bite of your meal and walk step by step, otherwise you will choke if you eat too fast, and you will fall down if you walk too fast. From the fact that food delivery platforms are penalized for forcing merchants to choose one of the other, to the growing calls from the outside world for improving the protection and welfare of food delivery delivery workers amid algorithmic controversies. It is not difficult to see that the takeaway market that has entered the 100 billion mark has gradually matured, and players who win the low-price war of early traffic must also pay a price and take responsibility.