Meituan is the largest online shopping platform in China delivering over 20 million products and services every day across its platform, connecting more than 260 million young buying consumers to more than three million local merchants. Its mission is to provide a one-stop daily life service platform focusing on food, drink, medicine, travel and more under its “Eat Better, Live Better” brand, driving constant product upgrades and empowering local businesses through digital, internet and mobile solutions that drive industry efficiency.
Meituan delivers food to a wide range of cities, including rural areas, and offers services that include entertainment, dining, delivery and travel, all through its Super App. It is a leader in its industry, with market share of more than 50% across the Chinese mainland and an expected CNY 62.4 billion (US$8.72 billion) in sales in the September quarter of 2021, a 9% increase over the previous quarter.
While Meituan has become a household name in the country, it is still in the early stages of establishing itself internationally, according to people familiar with its plans. It will initially look to expand into Hong Kong and possibly other markets. Its first international effort will be led by Tony Qiu, a former executive with Kuaishou Technology who was hired earlier this year, the people said.
The company has launched Meituan Grocery, a grocery delivery service in a number of China’s major cities, offering a wide range of fresh fruits and vegetables to its shoppers at competitive prices. It is also aiming to launch medicine and flower deliveries in the near future.
Despite the influx of competition from established players such as Instacart and DoorDash, Meituan has maintained healthy margins for its online groceries business compared to rivals in the space, which have generally incurred losses. Its efforts to improve operational efficiency and enhance supply chain and logistics capabilities should help control losses in the long run.
Meanwhile, its hotel & travel segment has suffered from lockdowns under China’s strict zero-covid policy but is still expected to generate strong growth for the next few years. With China lifting covid restrictions, the hotel & travel segment should benefit from pent-up demand for leisure and business travel.
As a result, Meituan’s top line should continue to rise in the short term while its profits will likely be impacted by structural challenges as well. However, its New Initiatives – which include challenging business lines such as group buys and online grocery – could be a drag on profitability in the foreseeable future though strategically they can enhance competitiveness and improve operational efficiency.
A key factor in Meituan’s growth is its food delivery platform which connects a large pool of consumers with a large network of restaurants and local vendors. This is a core part of its strategy to “Eat Better, Live Better” and will be an important revenue source in the years to come.
It has also made significant investments in launching new delivery business lines – grocery, medicine and flowers – to strengthen its position. These initiatives are projected to add around CNY 5 billion in 2020 and beyond.
