From the digital world back to the physical world.
Wen 丨 Marcoshin
Editor 丨 Song Wei
In March 2022, Wang Xing, founder and CEO of Meituan, put forward a hypothesis in an internal meeting to the effect that if Meituan did not have any revenue in the next three years, the company would still have to maintain operations, what would the cash flow situation be?
Thought experiments are conducted through bold hypotheses, which Wang Xing often does. Only this year, the hypothetical conditions have become more extreme.
"He wanted to see what people thought of the worst-case scenario." A Meituan source said. In the second half of last year, Wang Xing said to the inside that the US group should prepare for the future with the expectation that it will not raise new money in three years.
For Meituan, which has been in existence for 12 years and its more than 80,000 employees, 2022 will not be as bright as the company's iconic yellow. The main business has been hit by the epidemic; new businesses continue to lose money and progress slower than expected, including community group buying, online car-hailing, shared travel, instant grocery shopping and other new businesses in 2021 operating loss of 38.4 billion yuan. On March 15, Meituan's stock price fell to HK$103.5, a one-year low.
According to the summary of Meituan's management, ensuring cash flow security, pursuing profitable growth, and systematically reducing costs and increasing efficiency have become the key propositions of the Chinese Internet listed company with a market value of more than 1 trillion Hong Kong dollars and the third largest in 2022.
Passively lower the target
Shanghai was once the most important city in Meituan Taxi's strategic planning this year. In the fourth quarter of 2021, it contributed 20%-30% of the self-operated single volume of Meituan Taxi, which is the city with the highest number of Meituan Taxi orders.
The budget is also tilted toward Shanghai. Since the second quarter of 2022, meituan taxi's subsidy rate in Shanghai has exceeded 20%, compared with only about 12% in other directly operated cities.
A Meituan person analyzed that Meituan Taxi hopes to verify one thing this year, that is, to focus on and do a city with all its might, to see if the business can be done. "The future direction of Meituan Taxi may be 0 and 100 extremes, if it is not done well, it is the next ticket and train ticket business - no longer investing heavily in maintenance, the business has changed from offensive to defensive."
In April, with the static control of Shanghai, the number of meituan taxis in Shanghai was almost zero. According to data from the Ministry of Transport, the number of meituan taxis nationwide in April fell by 13.4% month-on-month. What meituan taxi employees in Shanghai can do at the moment, in addition to operating a small number of public welfare guarantee team projects, is to write materials and "practice basic skills".
The outbreak is unpredictable and difficult to develop a response plan. For cities affected by the epidemic, the answer of Meituan employees is usually "there is no way to save it.". However, some employees also said that after the epidemic, Meituan Taxi's operation strategy in Shanghai may be more radical, after all, the market has been cleared, which is a rare time to transform user habits and minds.
The in-store business is also not optimistic. In March, the turnover of catering merchants in Shanghai decreased by an average of 60%-70%; in April, the GTV (total transaction value) target of in-store related businesses was only about 60%, which was usually successfully or even exceeded in the past; in May, Beijing suspended dine-in, which means that in-store catering is at least 10% less GTV.
A person who arrived at the store said that now they can only increase investment in fifth- and sixth-tier cities. It is equivalent to the original one customer earning 50 yuan, now looking for three customers, each customer earns more than a dozen yuan.
All departments of the US group are lowering their targets. For example, Meituan Flash Sale achieved 60 billion to 70 billion GTV in 2021, which was originally scheduled to reach 110 billion in 2022, but has recently reduced the growth rate from 70% to about 60%.
In some cities, Meituan took the initiative to suspend some of its business. This year, Meituan Preferred has successively closed its services in gansu, Qinghai, Ningxia and northwestern Xinjiang.
The entire community group buying industry has moved from "attack" and "coverage" to "polishing" and "refined operation". "LatePost" previously reported that in 2021, Meituan Preferred GMV (total transaction volume) was about 120 billion yuan, not reaching the target of 150 billion yuan. Meituan's preferred person concluded during the internal review that the difficulty of the business far exceeded expectations, and the profit was very thin, and the state of loss in the next 5-10 years would not change.
Growth is still the key word that Meituan prefers this year, but it is also crucial to have a qualifier before growth, that is, sustained and accumulated growth. Lean management thinking is frequently mentioned within the selection, which stems from the management mechanism of the Japanese automobile company Toyota, the core of which is to reduce waste and create as much value as possible with minimal resource input.
Fast Donkey and Meituan also slowed down their pace. LatePost previously reported that in January, Fast Donkey shut down services in six cities, including Dalian, Taiyuan, Shijiazhuang, Xuzhou, Shenyang and Yangzhou, while buying vegetables suspended Suzhou's kaicheng plan.
Various conferences and projects within Fast Donkey have begun to emphasize UE (Unit Economic Model), emphasizing the improvement of the gross profit indicators of self-operated goods, calculating the gross profit of goods will look at the actual gross profit after deducting the cost of performance, "the analysis is also based on this", at the same time, Fast Donkey has improved the commodity commission of the platform model.
Compared with other businesses of Meituan, Meituan's purchase of vegetables has been less negatively affected by the epidemic. But it is also shrinking its subsidy budget and lowering its growth targets for new stores.
Grow in mature markets
The takeaway business, which accounts for more than half of Meituan's revenue, is in a calmer and more brutal market. And this cruelty does not come from market competition.
Standing today, Meituan takeaway needs to achieve greater commercial value in a low-profit market, while also taking into account more social value.
In 2021, the year-on-year growth rate of Meituan's takeaway revenue and transactions slowed down quarter by quarter, and in the fourth quarter, the year-on-year growth rate of revenue was 21.3%, and the year-on-year growth rate of transactions was 17.4%. Wang Xing explained on the earnings call that the growth of orders was affected by factors such as inconvenient food delivery services and a weak macro environment during the epidemic prevention and control period.
Meituan is still optimistic about the outside world, its CFO Chen Shaohui said that there is still a lot of room for growth in takeaway, and Meituan will continue to move towards the goal of 100 million orders a day.
Meituan's 2022 single volume target is to reach an average of 60 million orders per day by the end of the year. In the fourth quarter of 2021, the average daily order volume of Meituan takeaway was 42.5 million. This means that Meituan needs to achieve more than 40% growth in this year.
A lot of room for growth does not mean a very fast growth rate, even excluding the impact of the epidemic and the macro economy, the takeaway has generally passed the period of rapid growth.
Some insiders have observed that in recent years, the marketing means and tools at the bottom of takeaway have hardly changed, and they still use members, red envelopes, and card coupons to increase the frequency of consumption and increase user stickiness. Repeat similar movements every day. Penetration of low-tier market populations has been slow.
Some ideas were repeatedly discussed but not pursued. Meituan has been studying whether it can establish a large membership system to allow different businesses to divert each other. But it never really set up a project. One of the difficulties is that the economic model, caliber and calculation method of meituan's different businesses are different, and the accounting is not clear.
Meituan takeaway also did some projects that were abandoned in the early years, such as breakfast. In the past exploration, in the breakfast scene, the unit price of customers is low, the user's requirements for timeliness are high, and the cost of performance is high, which is an economic model that cannot run.
Restarting the breakfast project, whether successful or not, means that Meituan Takeaway is trying to repeatedly tap the segmentation scene in a mature market, eager for new growth.
Meituan takeaway has not given up exploring new models, typically spelling good meals and corporate group meals.
Meituan will try to "spell a good meal" in 2020. Users can invite users in the same district or office building to participate in the spelling, and after the single volume is concentrated, the delivery cost can be reduced and the quality supply can be increased. Spelling out the rice allows users to eat a meal or drink a cup of milk tea at a price of about 10 yuan.
Initially, the good meal was incubated in the strategic department of Meituan Takeaway, and then the business sub-team did industry research, strategy formulation and business planning, and has now been split off into an independent department. At the beginning, it only existed in the WeChat Mini Program to spell good rice, and now it can be found in the service section of the home page of the Meituan APP.
Spelling out good food is moving from third- and fourth-tier cities to first- and second-tier cities. On March 16, The Fight Meal was launched in Beijing and played the slogan of "9.9 yuan to eat well, 0 delivery fee".
It is understood that the performance cost of fighting a good meal has "dropped considerably", but its business model has not been fully proven. An industry insider believes that platforms, merchants and agents are all losing money, "at this stage, fighting good food is just using low-cost takeaway to obtain traffic."
However, in first-tier cities, the takeaway market for a few dollars is not so large, and in the sinking cities, supply has become a problem.
According to "Late Post", Ele.me is also exploring the takeaway spelling model, but there is no product that has been formed so far. In the second half of 2021, Hu Qiugen, general manager of the national operation and management of Hema Fresh, was transferred to Alibaba Local Life as the head of the business operation department of the home business center. He is responsible for the secret project "Group" to compete with the standard American group.
But just a few months later, Ele.me's group business was at a standstill. A hungry person said that the final decision to spell a good meal is whether the US group can complete the design from drainage to retention, "Hungry did not follow up quickly, mainly considering that the retention effect is not good."
Meituan is also trying corporate group meals. The project began incubation in the second half of 2019, was suspended for a while, and after restarting market research, Meituan established a group meal incubation center in May of the following year. According to meituan's internal calculations, if the country is rolled out, corporate group meals can bring tens of millions of growth to the daily order volume of takeaway.
Corporate group meals are in the early stages of competing for good meals. A Meituan source said that the enterprise group meal requires large investment from the supply chain to the fulfillment and delivery, and now it is basically completed to complete the basic construction of the product.
Chen Shaohui said on the fourth quarter of 2021 earnings call that the proportion of subsidies for takeaway in 2022 is expected to be lower than in the past few years. According to "LatePost", in 2022, Meituan plans to shrink the takeaway subsidy expenditure by 0.3% from the transaction amount. This means that at least in terms of subsidies, Meituan has saved more than 2 billion yuan this year.
Systematic cost reduction
Reducing costs and increasing efficiency, "ben" is not only people, but also includes long-term and short-term investments that can be done or not, and all the places where money is spent are "ben".
In the first half of this year, Meituan updated its travel management regulations. Travel approval has become more stringent, most job sequences require L9 or above approval, before only the approval of the head of the department; the air ticket standard is lowered, you can only choose less than 30% off, depart at a time other than 11:00-16:00, and is the lowest price ticket for 1 hour before and after departure, more than 30% off requires additional approval; weekends and holidays are no longer provided with travel subsidies.
In March, Meituan set a goal of shrinking personnel. Some departments have redundant personnel, then lay off employees, and some departments are short of personnel, so they temporarily lock HC (headcount, the number of departments).
The first to take action is the Store Business Group. In late March, the store business group announced that all HCs would be frozen, and all offers would be issued to Zhou Xiaoming, the head of HR of the business group, for approval. After the Qingming Festival, some Meituan employees found themselves unable to check the clock-in time for commuting. "Not only myself, but also my superiors and HR can't see it." A Meituan source said. Attendance records can prove the length of overtime work of employees and can be used for labor arbitration.
Xiao Ping (pseudonym), like most people, experienced "same day notice, same day departure". From negotiating with HR to handing in the computer, he only had three hours. During this time, he quickly wrote a handover document, and at the same time, at a nearby workstation, a colleague was sobbing, and several colleagues next to him whispered comfort.
Meituan's current round of personnel adjustment is mainly concentrated in L8 (benchmark Ali P7) and below employees, and some departments L9 and L10 are also involved. The number of people optimized in the store business group, taxi, preferential selection, grocery shopping and fast donkey business department, the overall optimization number is 10%-20%; the number of people optimized by the Meituan platform is about 7%, and the cycling and unmanned vehicle business department is slightly higher than the natural loss rate in previous years, which is less affected; the same is less affected by the home business group, and the personnel optimization is mainly concentrated in the group good goods business department.
Meituan's current round of optimization does not involve employees in the third phase (pregnancy, childbirth, lactation), employees in Shanghai and fresh graduates.
Meituan employees often use "boiling water group" to call their company, which means that employee welfare is poor, and the only benefit is boiling water. Self-deprecating to self-deprecating, what employees really care about is the growth and salary brought about by work. "Benefits are just an after-dinner dessert, and the important thing is that the company can feed you." A Meituan source said.
"Climbing the ladder" in large companies has become more difficult, which is related to the smaller business growth space, slower growth rate, less opportunities for "fighting", and also related to the company's institutional design.
A former employee of the Meituan group who voluntarily left this year said that after the adjustment of the promotion system last year, although the salary increase was changed to twice a year, the special salary increase in the autumn was only for a small number of employees, and if you want to rise more, you still have to rely on promotion. Promotions have become once a year, and the pass rate is low, "L7 L8 is said to have a pass rate of only 15%."
Learn Amazon
In Meituan, grassroots employees hardly work overtime on weekends, while the "bosses" and S-team of the business unit often meet on Saturdays and Sundays.
In the past two years, "Learning Amazon" has begun to penetrate the company's capillaries from a slogan. Byte, Ali, Tencent, Baidu and other companies, advertising business is very profitable, so there is no need for any innovation through a lot of mechanisms to find opportunities, and Meituan and Amazon are similar, their main business is low gross profit.
Wang Xing once said that meituan learned from Amazon, not only learning strategy at the company level, but also the management mechanism.
At this stage, Meituan Learning Amazon mainly involves two core mechanisms of Amazon, OP (Operating Plan, Operational Plan) and S-team goal.
OP can be simply understood as an annual plan. It is a process for the allocation and planning of Amazon's core resources, including the planning and financial budgeting of business strategies. It goes down into the operational details, makes specific plans on business goals, drive times, milestones, and then proposes resource matching based on that.
OP is divided into two phases, OP1 and OP2, and Amazon's OP1 process runs through the fall. Specific to the various departments of the US group, the practice of the OP is different. Some departments set op1 in less than half a month, employees feel that "lack of rigorous arguments", and some departments have gone through a long process like Amazon, changing more than 30 versions.
In 2021, Meituan has more than twenty business meetings, and the entire S-team spent a week and a half, about 60 hours to collectively evaluate all the important OP of Meituan. Each business then adjusts OP1 based on S-team feedback and fourth-quarter results, produces OP2, and finalizes budget and team goals.
S-team goal is a mechanism that complements op. The important items in the OP are screened out and tracked at the S-team level throughout the year.
We can't get a full picture of meituan's S-team goal, but we can infer its style through Amazon. Amazon's S-team has a large number of goals, five or six hundred, with a high level of detail and strong aggressiveness. People who work at Amazon have concluded that S-team goals are so radical that Amazon expects only three-quarters of them to be fully realized within this year.
The development of the MEITUAN OP2 is underway. As mentioned earlier, many sectors are lowering their growth forecasts. A Meituan source said that the new round of calculations should not only think about how many figures need to be done this year from the perspective of investors and the stock market, but also consider the actual operating curves of each business.
Developing OP and S-team goals, detailing the year's business from goals to resources, and finally landing on key "controllable input indicators" – this is an important part of Meituan's learning from Amazon.
Controllable input indicators follow the idea that output (such as business gtv) is not completely controllable, market, competition and weather factors are uncontrollable, then you should firmly grasp the controllable part.
In March 2021, Meituan S-team began to discuss Amazon's controllable input indicator system and selected several businesses for early pilots. In May, the controllable input indicators began to be implemented in the United States with a large and relatively stable business volume, and the first implementation was takeaway, meal and accommodation.
It is understood that in an internal exchange, a takeaway person mentioned that they have recently dismantled a lot of new indicators. An employee in another department asked, "Why are you so stable in your business form, why are there so many new metrics?" The other person replied: "This is a secret project." ”
Now the controllable input indicator is no longer a mysterious word for meituan people, "the weekly meeting and the month will become very scary, and countless data will be asked."
Wang Xing said internally: "We can't just talk about the results, we should look at the controllable input." 'Bodhisattvas fear causes, ordinary people fear effects', we should look at causes more. ”
Wang Puzhong, president of meituan's home business group, also stressed to employees at the meeting that do not indulge in the digital world, but return to the physical world, to know what is happening in the real world behind a 5% increase in an indicator in a certain period of time.
Meituan's learning of Amazon is from the surface and inside, just like Huawei learned IBM in the past, the path is first rigid, then optimized, and then solidified.
In the words of some employees, it is "pixel-level copying". An example that can be testified to is that Meituan changed the name of the weekly/monthly/quarterly meeting to the same WBR/MBR/QBR (Weekly/Monthly/Quarterly Business Review) as Amazon, and not only that, but also the process and principles of Amazon's meetings must be learned.
Wang Xing has many expectations for the US group in 3 years. Not only the management of organizational capabilities to reach a new height, in his vision, in 2025, Meituan takeaway can achieve 100 million orders a day, and flash sale in 2026 can occupy 400 billion shares in the trillion retail market. In the longer term, in-store catering can achieve 100 million people using Meituan to buy a meal in the store every day; technology must be able to serve, promote, and even lead the business.
A former executive of Meituan once said that Meituan often says a phrase called "long-term patience", but people often ignore the previous sentence, called "confidence in the future, patience with the present." The reason why a person and a company are very patient now is because the future must be right.
At the strategy meeting in March, Wang Xing once again stressed to employees that we must believe in the basic disk of Meituan's business and believe in the value of Meituan to society and customers.
He also specifically mentioned that he will not retire for the time being, and will advance and retreat with everyone.