Wang Xing still won Zhang Yiming

Author | Liu Baodan

Editor | Zhang Xiaoling

As the king of local life, no one could challenge Meituan's position until Zhang Yiming came along.

With Douyin's foray into group buying and food delivery this year, Meituan realized the danger and launched counterattacks such as live streaming and reducing commission rates. After six months, Wang Xing, the chairman of Meituan, held his ground and remained far ahead.

In the second quarter, Meituan's local life business achieved a revenue of 51.2 billion yuan, an increase of nearly 40%, reaching a new high in nearly five quarters.

In addition to the battle, Wang Xing also acquired Wang Huiwen's large-scale model startup company and occasionally paid attention to the latest news in the automotive industry, appearing to be at ease.

However, Wang Xing is now facing a more intense multi-party battle. Local life has become a fiercely contested battleground. In addition to Douyin, Kuaishou and Xiaohongshu are also eager to enter the market, and arch-rival Ele.me is secretly exerting efforts.

In terms of new businesses, Meituan has not yet turned a profit and is facing the pincer attack of Pinduoduo and JD.com.

The internet world is unpredictable, and no one can hold the throne, not even Alibaba and Jack Ma. Meituan and Wang Xing must constantly prove their capabilities to the market.

Counterattack

Since the "Hundred Regiments Battle" in 2017, Meituan has been unrivaled in the local life sector, with few competitors. Until Douyin launched an attack.

As early as 2018, Douyin entered the local life market and opened up the in-store business through low-price group buying, with a transaction volume of nearly 90 billion yuan in 2020.

On February 7th, there were rumors that Douyin would launch nationwide food delivery services, which had already started internal testing.

Later, there were also reports that Douyin was expanding its delivery algorithm team for local life. However, Douyin denied this.

The in-store business is Meituan's "cash cow" and the biggest contributor to its profits, while food delivery is Meituan's foundation. With the massive traffic of Douyin, it has penetrated deep into Meituan's territory.

The capital market reacted swiftly. On February 8th, Meituan's stock price fell more than 9% during trading hours and closed down 6.48%. Investors exclaimed, "The wolf is coming." Subsequently, Meituan's stock price continued to decline, falling by as much as 44%.

However, in the face of Douyin's "invasion," Meituan defended its position as the industry leader with its performance.

According to the financial report, in the second quarter of 2023, Meituan achieved a revenue of 68 billion yuan, a year-on-year growth of 33.4%, accounting for 75% of the growth in the local life sector, which exceeded expectations with a growth rate of 39.2%. Among them, the transaction volume of in-store, hotel, and travel businesses increased by over 120% year-on-year.

Behind this is a series of counterattack strategies implemented by Meituan.

Starting in June, Meituan reduced the commission rates for some catering businesses from 8% to 4%, which is precisely Douyin's expertise.

At the same time, Meituan quickly launched the live streaming feature, also tapping into Douyin's pool of traffic.

These measures have received initial feedback in the financial report, indicating that Meituan has won a round in the competition.

Meanwhile, Douyin's food delivery momentum has significantly slowed down. In June, there were reports that Douyin's annual GMV target for food delivery was lowered from 100 billion yuan at the beginning of the year to 5 billion yuan, but Douyin did not respond to this.

But behind the victory, Meituan has paid a great price.

Although the local life operating profit exceeded 10 billion yuan for the first time in a single quarter, reaching 11.1 billion yuan, with a growth rate of nearly 35%, the growth rate hit a five-quarter low.

In the second quarter, Meituan's sales and marketing expenses reached 14.6 billion yuan, accounting for 21.4% of the revenue, an increase of 3.8 percentage points year-on-year.

In response, Meituan admitted in its earnings report that the increase in consumer recovery and changes in the business environment led to increased user incentives, promotions, and advertising expenses. This means that Meituan's expenses in response to market competition are increasing.

Although Wang Xing seems calm, intense competition, especially price competition, has eroded Meituan's profits.

Fierce Battle

In the vast local life market, Meituan holds a 62% market share. Nowadays, when people want to order takeout, most of them choose Meituan.

Meituan's position as the leader was not easily obtained. Wang Xing spent more than a decade to achieve it.

In the "Thousand Group Battle" in 2011, Meituan was still a startup company. Local group buying was fiercely competitive under the influence of capital. Wang Xing led Meituan to break through and survive.

In 2013, Meituan expanded into the food delivery business. After a battle with Ele.me and Baidu Waimai, Meituan gradually gained the upper hand. Starting from 2017, Meituan's advantage further expanded, leaving its competitors far behind.

After reigning for 6 years, Meituan will once again face fierce competition. The first challenge is the in-store business, and even the high barrier to entry of Meituan's food delivery service has attracted competitors.

Douyin (TikTok) is the biggest enemy. Douyin's local life GMV exceeded 100 billion yuan in the first half of the year. Douyin achieved last year's results in just six months, maintaining a high growth trend.

Douyin's Chairman Zhang Lidong personally took charge and started to get involved in the local life business. More importantly, Douyin's food delivery service is expanding rapidly in pilot cities. On July 12th, it was reported that Douyin launched its food delivery service in 100 cities. Douyin told Wall Street News that its delivery service mainly relies on its own delivery system and has not been opened to all merchants.

Recently, there have been rumors of Douyin acquiring the Tongda Express delivery company, although it was denied, various signs indicate that Douyin is determined to enter the local life market.

Wang Xing and Zhang Yiming, former colleagues and fellow villagers, have reappeared in the local life arena as rivals after about ten years of entrepreneurship.

The "second place" Ele.me is also a force that cannot be ignored. Since being surpassed by Meituan in 2018, Ele.me has always been unwilling to accept it.

After Alibaba's restructuring in March this year, Ele.me was included in the local life group, and its second-quarter revenue increased by 30% year-on-year.

With greater autonomy, Ele.me seems to have gained an advantage, and the market is paying attention to its next moves.

In addition, Kuaishou, Xiaohongshu, JD.com, and others have also started to enter the local life market. Last year, Kuaishou upgraded its local life business to the fifth-largest business unit. The second-quarter financial report showed that the GMV of this business increased by about 200% compared to the previous quarter.

A fierce battle has gradually unfolded. This may be a battle no less significant than the "Thousand Group Battle."

Wang Xing once said that when it comes to competitors, it's like driving a car. Occasionally, you glance at the rearview mirror, but you can't drive while staring at it. Douyin's surprise attack is just a warning, and his new battle has already begun. On the evening of August 24th, during a conference call, the management of Meituan expressed their intention to actively confront competitors in order to maintain their leading position in the market.

The capital market also showed concerns. On August 25th, the first day after the release of the earnings report, Meituan's stock price closed at HKD 123.0, a decrease of 5.17%.

Unlike 12 years ago, Wang Xing has transformed from a contender in the local life sector to a target of attacks from all sides. Whether to go on the offensive or play defense is a test of his wisdom.

However, today's Meituan is not the same as it was 12 years ago. With its massive delivery team, strong fulfillment capabilities, and management of millions of people, Meituan is not a competitor that can be caught up with in the short term.

This time, can Wang Xing break through the encirclement of old and new rivals and solidify his position as the king? Only time will tell.