Meituan's biggest adjustment since its listing: integration into home-to-store, focusing on defending against enemies
Image source: Visual China
Meituan entered a wartime state.
Text丨Shen Fangwei Guan Yiwen
Editor丨Guan Yiwen
On February 2, 2024, Wang Xing, Chairman and CEO of Meituan, announced the organizational adjustment decision of S-team, the company's highest decision-making body, as follows:
Meituan's platform, in-store, home-to-home, and basic R&D are in charge of Wang Puzhong, senior vice president, who was previously the head of the Daojia business group;
Dianping, SaaS (Food and Beverage Management System), cycling, power bank, etc. are in charge of Senior Vice President Zhang Chuan, who was previously the head of the in-store business group;
UAVs and overseas business are directly reported to Wang Xing;
Other organizations remain the same.
This is the biggest adjustment since Meituan's listing, and the most important change is the integration of two originally independent business groups (home and store) and two platforms (Meituan platform and basic R&D platform), and the packaging is handed over to Wang Puzhong, senior vice president of Meituan, who is in charge of Meituan's core local business segment, which accounts for more than 70% of Meituan's total revenue.
A long-time follower of Meituan's secondary market believes that this adjustment is a "big positive", and in his opinion, Wang Puzhong has strong ability, "After the concentration of power, there is better coordination between various businesses." A Meituan employee believes that Wang Puzhong's pressure will not be small, "The next thing is to see how he coordinates the focus of takeaway and store delivery." ”
On the day the adjustment was announced, a Meituan employee posted on the internal forum "Meituan Family Affairs" that "as long as the management wants to change, there is hope", to which Wang Puzhong replied to the post, "I have been in Meituan for almost 9 years, 31 to 40 years old, and I hope we can rely on our own efforts to make youth continue to be proud." ”
LatePost understands that this adjustment is not a temporary decision, but is based on discussions and decisions made over the past six months.
In this adjustment, drones and overseas business are directly reported to Wang Xing, plus the unmanned vehicle business directly managed by Wang Xing, all three belong to Meituan's exploratory business - all facing complex challenges, unknown prospects and distant profit expectations.
Because of this, it is more appropriate for the founder to lead these exploratory businesses directly, allowing more room for trial and error, and can also face failure more rationally. Wang Xing is one of the few founders of the current leading Internet companies who are still leading specific businesses on the front line. Wang Xing doesn't want to retire yet. A person close to Meituan commented.
On the day the adjustment was announced, Meituan's share price closed down at HK$63.25, which was already below the panic level caused by the pandemic in early 2020, and the total market capitalization also fell below HK$400 billion.
In the past year, Meituan has faced the biggest top-down challenge since its listing in 2018 - in terms of business, the acceleration of food delivery has reached its peak, the arrival of stores has been positively impacted by Douyin, and the growth rate of the preferred business has been slower than that of Duoduo Food; culturally, the feeling of many employees is that the overall fighting atmosphere is much lower than two years ago, and the company lacks strong counterattack actions in some business competitions.
With the implementation of anti-monopoly penalties in 2020 and the management's clear investment in community group buying, the market's expectations for Meituan reached a high point, which not only pushed its market capitalization to a peak of HK$2.5 trillion in February 2021, but also enabled it to successfully obtain a record Hong Kong stock financing of nearly US$10 billion in April of that year.
Wang Xing once said in the third quarter of 2021 conference call that "the transaction volume of the (short video) platform is not the same concept as ours, and the users and merchants are not the same. "In the first half of 2022, after Meituan investigated Douyin's local life, it believed that the threat posed by this new rival was manageable.
It is understood that in the second half of 2022, Meituan has regarded Douyin as a core rival. Since then, a series of business strategies have been adopted, including adjusting merchant rates and relaxing thresholds in various links, and issuing more subsidies to users, sacrificing some of the profit margins of the in-store business to stabilize its market share. But the organizational realignment came a little too late.
Meituan's food delivery business, which is at its core, has also weakened. At the third quarter report call at the end of November last year, Meituan CFO Chen Shaohui said that "we believe that the year-on-year growth of takeaway revenue in the fourth quarter will be slightly lower than that in the third quarter", and that the operating profit of the in-store and hospitality business in the third quarter fell year-on-year, offsetting the "steady growth" of the profit of the catering takeaway business.
Meituan in the past embraced failure. For a long time, Meituan had no real competitors to threaten it, which gave Meituan plenty of room to explore various business opportunities, such as taxi-hailing, offline supermarkets, breakfast delivery, and swan-like life services.
But now, competition and the macro environment are compressing the space for Meituan to explore, and the company must focus more on consolidating its main business (in-store + takeaway), enter a wartime state, and concentrate its business to defend against the enemy.
Wang Puzhong became the number one business leader in Meituan
Since the establishment of the in-store business group at the end of 2017, Meituan's organization has gradually and steadily developed into a "2+3+N" structure: two business groups (Daojia and Daodian), three platforms (Meituan platform, smart transportation platform, and basic R&D platform), and several business divisions (Youxuan, Kuaidon, Grocery Shopping, Dianping, etc.).
After this adjustment, Wang Puzhong is responsible for the core local business segment of Meituan, which oversees the two major business groups, as well as the two core of the three platforms.
Wang Puzhong has been with Meituan for nine years, and he joined Meituan in April 2015 as a senior director, and has managed the food delivery business for a long time since then. With his outstanding performance in the food delivery business, Wang was promoted to vice president in 2016 and became senior vice president in January 2018, and joined S-team at the same time, making him the youngest core executive. In October 2018, Meituan's organizational structure was adjusted and the Daojia Business Group was established, and Wang Puzhong was appointed as the President of Meituan Daojia Business Group. He is also the Chairman of Meituan's Business Analysis Committee.
In the eyes of some Meituan employees, Wang Puzhong is a key figure in the rise of Meituan Takeaway, and after Wang Huiwen, another management who dares to fight and make new attempts. A Meituan person commented that Wang Puzhong is smart, pragmatic, down-to-earth in management, and has an overall view of the rhythm of business development, "For example, in the takeaway war, when to engage in supply, when to make delivery, the timing and rhythm are very well mastered, rather than what the opponent does, just follow what, or what everyone thinks should be done." ”
A person close to Wang Puzhong commented on him, "He has always been in the entrepreneurial period, he will take the initiative to increase his workload, and he is the kind of person who wants to answer 120 points out of 100 points." ”
According to the above-mentioned people, Wang Puzhong not only has a strong business insight ability, but also can accurately disassemble and promote the implementation of big goals, and the business he manages is always trying various new businesses. Meituan's flash sale business is the most successful product of his series of attempts, which started in 2018 and now has a turnover of more than 150 billion yuan a year, ranking first in the retail sector in the same city.
To this day, Wang Puzhong still devotes a lot of time to the front line of business. At the beginning of 2023, Douyin piloted takeaway in a small number of cities, and Wang Puzhong personally led a team to Chengdu to investigate its business situation. In mid-2023, Meituan Takeaway launched an overseas version of "Keeta", choosing Hong Kong to start its first stop in internationalization. Some employees met Wang Puzhong in Hong Kong, and he and some members of the management came to Hong Kong to learn about the life of a delivery person.
After Wang Puzhong took over the Meituan platform, Li Shubin, the head of the latter, also reported to him, and the two belonged to Meituan's highest decision-making body, the S-team.
There are currently 7 members of Meituan S-team, namely Wang Xing, Chairman and CEO, Mu Rongjun, Senior Vice President, Wang Puzhong, Senior Vice President and President of Daojia Business Group, Zhang Chuan, Senior Vice President and President of Daodian Business Group, Guo Wanhuai, Senior Vice President, Head of Preferred, Kuaidun and Xiaoxiang Supermarket Business Division, Chen Shaohui, Senior Vice President, Group CFO and Head of Strategic Investment Department, and Li Shubin, Senior Vice President and General Manager of Meituan Platform.
Prior to this adjustment, Meituan promoted six managers to vice presidents in September 2023, the largest promotion in the past few years, including Mao Yinian, head of the drone business department, Sun Zhizhao, head of the Daojia R&D platform, Xiao Fei, head of the catering SaaS business department, Xiao Kun, head of the flash sale business department, and Zhang Jing, head of the grocery business department. All six of them are leaders of Meituan's various business lines with outstanding achievements in the past few years.
Soon after, Li Shubin, the head of Meituan's platform and vice president, was promoted to senior vice president, and he joined Meituan in 2019 and joined the S-team less than two years later. Li Shubin was initially responsible for the construction of technology platforms, supporting home delivery, flash sales, pharmaceuticals and a number of overseas businesses. In 2023, Li Shubin led the team to build a Meituan live streaming middle platform system in a short period of time to meet the challenges of Douyin, and its products serve both in-store and home-delivered businesses.
Another key figure in this adjustment, Zhang Chuan, handed over to him the business of Dianping, SaaS, cycling and power bank, which were previously under his management, and the latter three belong to the new business segment in Meituan's financial report, along with Youxuan, Xiaoxiang Supermarket and Kuaidu.
Zhang Chuan joined Meituan in early 2017 as President of Meituan's Platform and Integrated Business Group, and at the end of that year, he became President of Xinjie Business Group.
For a long time after the end of the Thousand Regiments War, Meituan's in-store business did not have a real threatening opponent. After completing the occupation of first-, second- and third-tier cities, the in-store business has slowed down its penetration into the sinking market. The in-store business is a major contributor to Meituan's profits, supporting a series of new business ventures.
In the eyes of some Meituan store employees, Zhang Chuan is an extremely diligent manager, who works more than 10 hours a day, and uses his experience in platform operation and management to help improve the profit margin of the store business. Compared with the "hand-to-hand" combat with competitors, Zhang Chuan is better at using mature experience to bring income to a stable business, and is a "city defender".
In the 6 years that Zhang Chuan has managed the store, Douyin local life has risen rapidly, Douyin began to try the local life business in 2021, and in 2022, it tried all the core categories of Meituan's store, and decided to invest further, but Meituan did not respond effectively in the first time.
"LatePost" learned that Douyin Local Life achieved a turnover of 90 billion yuan in 2022, and this figure has risen to 300 billion yuan in 2023.
In January 2024, Zhang Chuan said in an open letter to the in-store division that Meituan was facing competition that "the opponents we have defeated in the past have weaknesses, and the opponents we came this time are all all-rounders", and called it a "brutal and torturous trench battle" and the "battle of Stalingrad" for the in-store team.
In the letter, he also reflected on the changes in the business group to the store, the organization is chaotic, and the tools are not perfect, so he reviewed his responsibilities, and proposed that the management and team should improve their style, go to the front-line battlefield, re-understand users and merchants, explore low-price supply, cover more cities, and establish a low-price supply system every day.
In addition to these adjustments, the three most important segments of Meituan's new business segments - Preferred, Xiaoxiang Supermarket (formerly Meituan Grocery Shopping), and Kuaidun, have not changed. Among them, "Little Elephant Supermarket" was renamed by Meituan Maicai on December 1, 2023, and is a full-category retail platform.
In September 2021, LatePost mentioned that Meituan upgraded its strategy from "Food + Platform" to "Retail + Technology", raising retail and technology to a strategic level for the first time. A month later, Meituan set up a special group to discuss retail business, G-team, and integrated businesses such as Youxuan, Kuaidun, and Maicai.
But there are very few new retail models that Meituan can explore. The three exploration businesses directly managed by Wang Xing, unmanned vehicles and drones belong to the "technology" strategy, and the outbound business belongs to the "retail" part, but Meituan has relatively limited space to explore in the domestic retail business, and the current stage of going overseas is more to copy its own advantages in Chinese mainland's takeaway business to overseas cautious pilots.
Perhaps Meituan does not need a new model and a new direction now. "LatePost" learned that after the new management team of Alibaba Taotian Group took office, they reflected internally that Taobao had bet too much on new directions, which led to the company's investment and attention at the basic needs of e-commerce far from enough.
Integrating into stores and homes, Meituan entered a wartime state
The challenge for Meituan today is that every emerging Internet giant that has won in its main battlefield wants to enter the field of life services and redo Meituan's business with their own paths.
Previously, Douyin once wanted to enter the food delivery business, initially setting a GMV target of 100 billion yuan, which was later lowered to 10 billion yuan, and finally completed 5 billion yuan.
Meituan's integration into the two major business groups of Diandian and Daojia means that it has entered a wartime state, and it needs to gather business, coordinate scheduling, and concentrate on defending against the enemy.
Meituan has regarded Douyin as a key competitor since the second half of 2022, lowering merchant rates and entry thresholds for all segments, issuing more subsidies at the expense of profits, and converting more agent cities to directly operated cities to improve the quality of operations.
It is understood that they not only asked the salesperson to persuade the merchant to launch the package on Douyin to Meituan at the same time, but also included the proportion of transaction volume generated by the same store on Douyin and Meituan into the performance evaluation of the salesperson.
In order to further attract merchants, the Meituan in-store team also gave merchants real discounts. For example, when some core merchants generate a certain amount of transaction volume in Meituan, the platform will refund part of the commission to encourage them to sell better priced products there.
At the same time, Meituan has launched the influencer distribution tool "Meituan Quanquan" and the live streaming tool "Baotuantuan" to emulate Douyin's approach to growth.
The core goal of Meituan's in-store business group in 2024 is to increase GMV and market share at the same time, and focus on "shelf + low price" to expand more low-price supply while maintaining the fundamentals to meet the needs of new user groups.
Many Meituan people believe that Douyin's biggest impact on Meituan at this stage comes from the impact of small and medium-sized merchants and head chain merchants. The above-mentioned person told "LatePost" that Meituan has now formulated a series of counterattack plans to make efforts from the two directions of "big brand day" and "special group buying" to provide richer supply and more advantageous prices than Douyin.
Among them, "Big Brand Day" hopes to access 60% of domestic chain brands, display them in prominent positions on the homepage of Dianping and Meituan apps, and attract consumers through activities such as brand special sessions. "Special group buying" hopes to attract more small and medium-sized businesses, and make efforts to provide more low-cost supply with discount packages below 7% off.
In terms of pricing strategy, Meituan hopes to achieve dynamic pricing, real-time price comparison, and require that the price must not be higher than that of its competitors.
At the same time, Meituan also hopes to focus on live streaming and look for growth possibilities on Douyin's strengths. Meituan's live streaming system went live in March 2023 and reached about 13 billion yuan in turnover in the nine months since. In 2024, Meituan Live hopes to achieve more than 5% of its total GMV.
A Meituan executive described Byte as "the Meituan of the line" a few years ago, both of which are a new generation of entrepreneurs who compete fast and do business big before the industry's first respond, reflecting "the judgment and strong trading ability to further rotate the situation".
In the past, Meituan faced competition where everyone competed more efficiently in the retail business and won with fewer mistakes, but now, when "Meituan online" attacks "Meituan offline", there is a huge disparity in traffic between the two sides, which is a competition in different dimensions, and Meituan has reached a moment where it must change.
Gong Fangyi also contributed to this article.