Meituan Merges E-commerce and Community Group Buying Business
Chinese food delivery giant Meituan‘s e-commerce business has recently been merged with the company’s community group buying business, Meituan Select, according to domestic media Finance Eleven on August 24, citing people familiar with the matter.
Both the e-commerce and group buying business were launched in 2020 and within the last two years, Meituan has increased its investment in the group buying business which many consider to be a new growth point. Meituan‘s e-commerce business is a relatively marginal one. In Meituan‘s financial report, its business is divided into three categories: food delivery, in-store, hotel & travel, new initiatives and others (including Select, Instashopping and Grocery). The financial report did not mention the e-commerce business separately.
Many insiders from Meituan mentioned that even if there is a major entrance in Meituan for the e-commerce business, it is not developing very well, with few users, orders, merchants, and a lack of overall popularity within the industry. However, its scope overlaps with that of Meituan Select, which gives it some ability to work out a partnership.
A retail insider said that Meituan Select and e-commerce cover different delivery services that focus on different time frames. Under the strategic layout of “retail + technology”, this integration is the way to maximize resources and benefits.
The merger of the e-commerce and community group buying businesses has been building up for some time. In April this year, Meituan Select suspended its service at its Beijing site prior to testing its next-day delivery business in the city.
Meituan is already a giant in the field of local life services, and the food delivery business contributes the main revenue to the company. At present, the domestic market share of its food delivery segment has exceeded 60%, but it is difficult for the department to grow.
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The company is also actively reducing costs and exploring new businesses. According to Meituan‘s 2021 financial report, the adjusted net loss in 2021 was 15.6 billion yuan ($2.27 billion) due to the continuous investment in new business. Since April this year, Meituan Select has closed several regional sites one after another, with the aim of reducing losses.
