THE IMPORTANCE OF THE FOOD DELIVERY INDUSTRY IN CHINA
The food delivery industry in China is experiencing continuous growth, catering to the increasing demand for convenient dining options. Therefore, this expansion has revolutionized the way people enjoy a wide variety of foods without the need to step out of their homes or workplaces. An example of this is Meituan, the Chinese Just Eat, or not?
Similar to other sectors in China, numerous mobile applications have emerged to streamline and enhance the accessibility of food delivery services for the public. These apps serve as user-friendly platforms, enabling customers to effortlessly browse through menus, place orders, and have their favorite dishes delivered right to their doorsteps or offices. They also respect an efficient delivery system, ensuring that customers receive their meals promptly and in optimal condition.
Consequently, the popularity of food delivery apps in China has created a profound impact on the dining landscape, revolutionizing the way people buy food. As a result, the food delivery industry has become an integral part of modern urban living in China, contributing to the overall lifestyle and well-being of its people.
Also, as with social media, global food delivery apps, such as Just Eat, are not available in China.
MEITUAN: MORE THAN A CHINESE JUST EAT
What is Meituan?
Meituan is a major e-commerce company founded in 2010 based in China. It is renowned as a leading home food delivery company in the country. By 2021, the platform boasted nearly nine million active merchants and an impressive user base of 690.5 million.
In the year 2015, Meituan underwent a significant transformation by merging with Dazhong Dianping, a platform that allowed consumers to post restaurant reviews, much like Yelp. This merger led to the birth of Meituan Dianping (美团点评). The amalgamation combined the strengths of both companies, enabling Meituan Dianping to offer an even more comprehensive range of services to its users.
Although Meituan is best known for its on-demand food delivery service, it has evolved into a comprehensive Super App that goes beyond food and beverages. Embracing a diverse range of service providers, the platform now supports booking services for hotels, local attractions, and various other tourism-related activities. In fact, Meituan also offers online hotel reservations, bike-sharing, and car-hailing.
In fact, always during 2015 Meituan Dianping also introduced a hotel booking functionality, akin to the popular services provided by Ctrip and Expedia. This move marked the company’s expansion into the hospitality sector, broadening its scope of offerings beyond food delivery and restaurant reviews.
In a subsequent development, in the year 2020, the company made a decision to simplify its brand name, and officially rebranded as “Meituan” (美团). This streamlined identity retained the essence of its core business while reflecting its continuous growth and diversification in the market.
MEITUAN’S TARGET AND BUSINESS CUSTOMERS
Meituan’s main target audience is young people looking for convenience, who like to explore new restaurants and bars in their neighborhoods. In addition, these users have a penchant for locally sourced products.
For businesses wishing to take advantage of Meituan’s platform, the company charges a fee per transaction, which varies depending on the nature of the business and the services provided. This commission model allows companies to take advantage of Meituan’s large user base and make themselves known to a large market of potential customers.
MEITUAN’S MAIN AREAS OF ACTIVITY
In order to be the china leading food delivery app, Meituan operates through three primary business segments, each catering to specific aspects of its comprehensive platform:
Food Delivery and Services:
The Food Delivery Services segment encompasses a nationwide food ordering and on-demand delivery system facilitated through Meituan’s platform. This service extends beyond just meals and includes groceries and medicine deliveries as well. Meituan generates revenue from various sources within this segment. First, it charges platform and food delivery service fees to participating merchants for their inclusion on the platform. Additionally, the company earns revenue through online marketing service fees paid by merchants to promote their offerings on Meituan’s platform, gaining greater visibility and attracting more customers.
In-Store, Hotel, and Travel:
The In-Store, Hotel, and Travel segment revolves around the provision of vouchers, coupons, tickets, and accommodation reservations by merchants who are part of the Meituan platform. This segment complements the food delivery services, offering users additional incentives and deals on a wide range of products and services. Meituan generates revenue from this segment through commission fees, earning a percentage of each transaction conducted through the platform. Additionally, the company earns online marketing service fees from merchants who seek to enhance their visibility and attract more customers through promotions and advertisements on the platform.
New Initiatives and Others:
The New Initiatives and Others segment encompasses a diverse array of emerging ventures and services introduced by Meituan to expand its business offerings and meet evolving consumer needs. Some notable initiatives in this segment include:
- Meituan Instashopping (美团闪购), which provides fast and efficient shopping experiences for users.
- Meituan Select (美团优选), a community e-commerce program focused on offering carefully curated products and services to users.
- Meituan Grocery (美团买菜), a service for online grocery shopping.
- A business-to-business food distribution network (快驴), enabling efficient food delivery between suppliers and merchants.
- Ride-sharing and bike-sharing services, catering to users’ transportation needs.
- Power-bank-sharing service, providing users with convenient access to portable power sources.
- A micro-lending business, offering small loans to individuals and businesses.
- A restaurant management system (RMS) initiative, aimed at assisting restaurants in enhancing their operational efficiency and customer experiences.
MEITUAN, THE CHINESE JUST EAT OR NOT: COMPARISON
Can Meituan be considered the Chinese Just Eat or not? Certainly both app are prominent players in the online food delivery industry, but they operate in different regions and have distinct business models. Here are some of the similarities and differences between the two:
- Online Food Delivery: Both Meituan and Just Eat are major platforms that facilitate online food ordering and delivery services. They connect customers with a wide range of restaurants and eateries, offering convenience and choice for users to order food from their favorite places.
- Large User Base: Both companies have a significant user base, with millions of customers using their platforms to order meals regularly. This extensive user reach has been critical to their success and growth.
- Restaurant Partnerships: Meituan and Just Eat collaborate with various restaurants and food establishments to provide a diverse selection of cuisines and dining options to their users. They aim to offer a comprehensive dining experience that caters to different tastes and preferences.
- Geographical Presence: One of the primary differences between Meituan and Just Eat is their geographical presence. Meituan is based in China and operates mainly in the Chinese market, where it has a dominant position as the leading food delivery platform. On the other hand, Just Eat primarily operates in Europe, with a strong presence in countries like the United Kingdom, Netherlands, Spain, and others.
- Business Model: Meituan is a comprehensive service platform that offers not only food delivery but also a wide range of other services like hotel bookings, travel arrangements, and more. It has expanded to become a “Super App” in China, providing various lifestyle services to its users. In contrast, Just Eat focuses solely on food delivery and does not offer additional services beyond that scope.
- Corporate Structure: Meituan has a complex corporate structure and is part of the Meituan Dianping group, which includes various subsidiaries and business units. Just Eat, on the other hand, has a more straightforward corporate setup, operating primarily as an online food delivery platform.
- Competitive Landscape: While both Meituan and Just Eat face competition from other food delivery platforms in their respective regions, the competitive landscape varies significantly. Meituan competes with companies like Ele.me and Dianping in China, while Just Eat faces competition from companies like Uber Eats, Deliveroo, and Takeaway.com in Europe.
MEITUAN: THE CHINESE JUST EAT OR NOT? REVENUE AND PROFITABILITY
Between 2017 and 2021, Meituan’s total revenue experienced impressive growth. With a compound annual growth rate (CAGR) of 39.5%, rising from RMB (Ren Min Bi, currency of People’s Republic of China) 33.9 billion to RMB 179.1 billion. During this period, the company’s gross profit consistently increased. However, there was greater variability in both operating profit and net income.
Meituan’s primary revenue driver is commission fees, accounting for 29.5% of its total revenues. Food Delivery Services fees contribute 30.3%, while Online Marketing Services generate 16.2% of revenues. The remaining 24.0% comes from Other Services and Sales. (Source: Investor Insights Asia)
MEITUAN AND KEETA: CHINA LEADING FOOD DELIVERY SISTER APP
Meituan has taken a notable step by launching its first-ever sister app outside mainland China in Hong Kong. Named KeeTa, the food delivery service made its debut on May 22 in two residential areas: Mong Kok and Tai Kok Tsui.
Meituan aims to expand KeeTa’s coverage to encompass the entire Hong Kong market by the end of 2023, as per the company’s statement during the app’s launch. However, Hong Kong’s unique market dynamics and established local competitors may present challenges for Meituan.
While the launch of KeeTa represents a significant milestone for Meituan’s expansion strategy, its success in Hong Kong will depend on how well it can adapt to the region’s preferences and effectively compete with existing players.
Meituan: Leading player in the food delivery industry
In essence, Meituan has become a one-stop destination for users seeking seamless access to multiple conveniences at their fingertips.
Its diversified portfolio of services showcases Meituan’s commitment to innovation and continuous growth, allowing the company to cater to a wide range of consumer preferences and needs, solidifying its position as a leader in the e-commerce industry.
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