The biggest organizational restructuring adjustment in 6 years, what signal does Meituan send?

A giant company can't expect to go into an "auto-cruise" state.

Author | Dong Jie

Edit | Qiao Qian

At a time when the in-store business was under enemy and the stock price fell below the issue price, Wang Xing announced the most significant organizational restructuring of Meituan in six years.

The most important change in this adjustment is the integration of the two major business groups of Daojia and Daodian, as well as the two middle office departments of Meituan's platform and basic R&D, and jointly report to Wang Puzhong, senior vice president of Meituan. Zhang Chuan, who previously served as the president of the in-store business group, will take over Dianping, SaaS, cycling, power bank and other businesses. Other organizations remain the same.

Regarding this adjustment, many Meituan employees said that it was sudden, especially for Zhang Chuan's adjustment, and there was almost no news before. Some internal employees revealed that Zhang Chuan was planning the two-day closed meeting for dinner operations last weekend. Not long ago, Zhang Chuan also issued a New Year's message to all employees who visited the store, calling on the management to "go to the front line" and change the way of fighting and the idea of army building to deal with the fierce battle of local life with Douyin.

The last time Meituan underwent such drastic structural changes was in 2017. In December of that year, Meituan established the in-store business group, with Zhang Chuan as the person in charge until now. Since then, Meituan has formed a pattern in which two business groups, Daodian and Daojia, go hand in hand: Daodian focuses on the group purchase model according to consumption scenarios, and Daojia takes food delivery and flash sales as its core business.

The organizational structure of major Internet companies is often adjusted to better cope with the fierce competitive environment, and Meituan is no exception.

2023 will be a year in which Meituan has lost ground in an all-round way. Douyin's rapid growth in local life has made the market worry about Meituan's market dominance, and in order to maintain its market share, Meituan has been "lying flat" for many years, and Meituan has once again thrown huge amounts of marketing and subsidies, but this has diluted its profit margins and cash flow. Combined with the huge losses of new businesses such as Meituan Preferred, Meituan's share price has also fallen below the issue price recently, hitting a new low in more than three years.

A sense of frustration began to spread within Meituan in the second half of last year, with many employees worrying about the future of the company and themselves. "It's time for management to make a change," a mid-level Meituan executive lamented.

Wang Puzhong, Meituan's most trusted general

Although Meituan has merged its businesses such as Daodian and Daojia in terms of financial reports, and collectively referred to them as "core local businesses", in terms of organizational structure, the two business groups have previously worked side by side, with Wang Puzhong and Zhang Chuan jointly reporting to Wang Xing.

After this adjustment, Lieutenant General Wang Pu will shoulder the two core businesses of Meituan, which is unprecedented in Meituan's development history. "Group buying and takeaway have a high degree of overlap in terms of supply, and we have been trying to promote the synergy between in-store and home-delivered businesses," a person close to Meituan explained the adjustment. In his opinion, this is Meituan's move to improve organizational efficiency, and it is also a very effective means to deal with the battle for local life.

In 2023, the GTV (transaction value after verification) of Douyin Local Life will exceed 200 billion, approaching 1/3 of Meituan's store visits, which exceeds the expectations of Meituan's management. Since the end of last year, Meituan has been worried that the erosion of the share of the in-store business will likely threaten the progress of the food delivery business, and this fear reached a peak after the market spread that "Douyin will buy Ele.me".

This concern is the same as that of Ele.me. 36Kr learned that after taking UE as the core assessment indicator in 2022, Ele.me will put the "market size" assessment in the first place in 2023 and increase market subsidies again, which will lead to a deterioration in its financial performance in 2023. A Ele.me executive said that this is precisely in the consideration of the rapid growth of competitors' in-store business, which may affect the growth of the in-store business.

A clear comparison is that in the past year, the transaction volume of Ele.me on weekends has increased by about 5%~6% compared with the week, which is significantly lower than about 7% in normal periods (even 10% in some cases), and the frequency of users' orders has also remained at a low level.

The reason why it is Wang Puzhong is related to his outstanding military exploits in the past.

Since joining Meituan in 2015, Wang Puzhong has served as senior product director of takeaway delivery, head of takeaway business unit and delivery business department, and is also the youngest member of Meituan's S-team, the only two post-80s generation.

Wang Xing previously had a set of "difficult theories", that is, the path of human growth - having fought a war, winning a war, fighting a hard battle, winning a hard battle, and Wang Puzhong, who joined Meituan in 2015, undoubtedly perfectly replicated this path. He experienced the "food delivery war" between Meituan and Ele.me, and successfully made food delivery the most pillar of Meituan's business, with a market share of more than 70% and revenue accounting for more than 60% of the group's total revenue.

During his tenure in charge of Meituan Pharmaceutical, he also achieved the first echelon of Meituan's pharmaceutical retail scale in just 10 months. When the community e-commerce business started in 2020, Wang Puzhong judged that Pinduoduo was the most formidable opponent, "This is a protracted battle, and it is difficult for startups and companies without relevant experience to win."

Wang Huiwen, co-founder of Meituan, once commented on him, "Puzhong can communicate with me, not because of strong communication skills, but because of strong ability", which is also the unanimous evaluation of Wang Puzhong by Meituan's internal employees.

An internal employee once told 36Kr, "In addition to having a strong business sense and being good at method output, the biggest difference between Puzhong and Meituan's executives is that it has strong execution and down-to-earthness." He is also one of the few executives in the interior who can not only talk to Wang Xing about strategy, but also drink and eat with front-line delivery workers.

In contrast, when Zhang Chuan joined Meituan in 2017, Meituan already had an absolute dominance in the store, "In addition to the must-eat list and the Black Pearl restaurant, Brother Chuan's biggest contribution in the past years has been to expand the market share and profits of the store," said an employee who has been in Meituan for many years. Compared with Wang Puzhong, Zhang Chuan has not led the team to fight tough battles and has not won many tough battles. And Douyin is the strongest competitor he has faced in the years since he joined Meituan.

After this adjustment, Zhang Chuan will continue to be in charge of Dianping, which is also one of his favorite businesses, in addition to SaaS, cycling, power bank and other businesses will also be taken over by him. An employee who arrived at the store said that it was "unfair" to attribute Zhang Chuan's ineffective response to Meituan's arrival to the store, "not to mention that after a series of rescue measures, Meituan's share of the store has basically stabilized." But coming down from the position of president of the company's only two business groups is a big blow to Zhang Chuan.

In order to allow Wang Puzhong to better mobilize resources and improve organizational efficiency, Wang Xing also assigned the two middle office departments of Meituan platform and basic R&D to him, and the previous heads of these two platforms, S-team members, Li Shubin, senior vice president of Meituan, and Han Jian, vice president of Meituan, will report to Wang Puzhong.

Improving efficiency is something that Meituan urgently needs to improve now. A Meituan Daojia employee once complained to 36Kr that when Meituan first started to explore live broadcasts, it wanted strategy to take the lead, "but the strategy is not as experienced as someone who understands the business, so they organize discussions, and business sharing, user growth, and agents come up with their own strategies." But after 3 months, Meituan's management decided to do low-priced, live broadcast (but it continued to use the live broadcast idea that was stopped in 22 years), wasting a lot of time. This is also a reflection of Meituan's sluggish response to Douyin's competition.

Regarding this adjustment, a number of internal employees commented, "I can see Brother Xing's courage and worry about the deterioration of the current competitive environment", and a Meituan middle-level also said, "If you can find someone to help Meituan turn the situation around, only Wang Puzhong."

Wang 兴重回台前?

In addition to Wang Puzhong's overall management of the in-store and home-to-home business groups, another key point of this adjustment is that drones and overseas business will be reported to Wang Xing. At this point, Meituan's exploratory business in both internationalization and technology will report directly to Wang Xing.

It should be noted that the drone business has been classified as a home business group, and its person in charge, Mao Yinian, reported directly to Wang Puzhong. According to insiders, although there is some synergy in the business, Wang Puzhong has always advocated the exclusion of the drone business to the home business group, "first, this business is still losing money, affecting the financial performance of the entire business group, and it will also dilute the overall budget;

After the completion of this adjustment, the core of Meituan has gradually become clear - "local + retail" is in charge of Wang Puzhong, and "technology + internationalization" is directly led by Wang Xing. An insider joked, "One is responsible for "entering the ground" and stabilizing the core business, and the other is responsible for "Feitian" and is responsible for Meituan's imagination in the future".

At a time when the local and retail businesses are facing challenges, this time Wang Xing once again stepped forward to take on the responsibility of Meituan's search for new growth poles.

Previously, 36Kr reported that in May last year, Zhu Wenqian, the overseas head of Meituan Venture Capital, together with Wang Xing and Wang Puzhong, visited the Middle East to explore the possibility of landing a takeaway business there, but then it was not done. The reason is that "there are internal concerns about whether the volume and growth rate of takeaway orders in the Middle East market are worth doing, and whether they can be profitable in the short term." In particular, consider that takeaway is an offline-oriented, performance-oriented and execution-oriented business."

But the advent of the Age of Discovery, this is an effort that Meituan does not do. Wang Xing has also said on many occasions that "the company will maintain a cautious attitude in terms of overseas business development", but he also believes that "globalization is an absolute necessity and a huge opportunity", in the third quarter of the call, Wang Xing once again revealed that the company does not rule out the possibility of seeking overseas growth.

As the first stop to go to sea, Hong Kong also had good news not long ago. According to market research, Meituan Hong Kong KeeTa has a market share of about 31% in Hong Kong less than half a year after its opening, and its share of orders has surpassed Deliveroo, and later became the second largest in Hong Kong.

However, compared to e-commerce, the business model of food delivery naturally lacks economies of scale, which means that Meituan needs extremely high operational efficiency to ensure profitability, which is full of challenges for Meituan, which currently has insufficient cash flow.

Compared with going overseas, the business represented by autonomous delivery vehicles and drones has been explored for a long time, but it is still losing money, and the possibility of large-scale commercialization in the short term is limited.

According to a person familiar with the matter, Wang Xing has previously criticized the high cost of the automatic delivery vehicle project, "The core consideration of the internal is to reduce losses and try to give cash flow to the core business."

At present, Meituan is facing the biggest challenge since its listing. Business has been hit, stock prices have been declining, and frustration has been rife both internally and externally, but this adjustment has somewhat made a difference.

Wang Xing once said that "one of the basic characteristics of startups is that they cannot expect to enter the state of 'automatic cruise'", which has been the norm for Meituan in the past few years, but in the next few years, it may have to return to the state of entrepreneurship.