Meituan's 7.45 million delivery army races wildly

Author | Wang Xiaojuan

Editor | Zhou Zhiyu

The army of Meituan's delivery riders is still speeding ahead.

Recently, Meituan CEO Wang Xing internally announced to all employees that last year, about 7.45 million delivery riders on the Meituan platform, an increase of 1.21 million compared to the previous year, collectively earned over 80 billion yuan in compensation.

In terms of providing employment opportunities, Meituan has made a significant contribution. It is also attempting to emphasize the social responsibility undertaken by the company by disclosing delivery rider data amidst widespread skepticism. Wang Xing also mentioned in the announcement that Meituan is striving to improve the protection level for delivery riders, with 4.5 million riders already participating in the national occupational injury protection pilot program.

While the number of delivery riders has increased significantly, the revenue from Meituan's delivery services has not grown in sync. This means that Meituan is still in the state described by Wang Xing as "losing one yuan for every order delivered." Additionally, this year, Meituan has been focusing on promoting low-priced takeaway orders such as "拼好饭" more aggressively, placing a higher emphasis on order volume than GMV. In the race for instant delivery, Meituan must maintain its leading edge.

Now, the instant retail industry is also becoming more competitive. Recently, JD.com increased its stake in Dada to 63.2%, further demonstrating JD.com's reinforcement in the instant delivery business. In addition, various e-commerce platforms are expanding their presence in instant retail, providing more employment options for delivery riders.

Under intensifying competition, it also means more challenges for each platform.

Bottom Line

Delivering takeout has been the last line of defense for many people seeking employment. And in the past two years, more and more people have reached this line of defense.

Taking Meituan as an example, last year about 7.45 million delivery riders earned over 80 billion yuan on the Meituan platform. While 80 billion yuan may seem like a lot, when divided among 7.45 million people, it averages to just over 10,000 yuan per year, which is clearly not the whole picture.

On September 19th, the Meituan Research Institute further explained the above delivery rider data and income.

Data disclosed by the Meituan Research Institute shows that among the 7.45 million delivery riders last year, 11% were high-frequency riders (taking orders for more than 260 days throughout the year), totaling about 819,500 people; about 48% of delivery riders with income received orders for less than 30 days throughout the year.

In other words, nearly half of the people treat delivery riding as a transitional occupation. It has become common in the industry to "do delivery while looking for other opportunities" during job searches.

Due to the low entry barrier for employment, the number of delivery riders has been increasing in recent years. For example, in 2021, Meituan had 5.27 million delivery riders; by 2022, the number increased to 6.24 million; and in the past year alone, it grew by 1.21 million people, representing a nearly 20% increase.

Of course, Meituan's instant delivery orders for takeout reached 21.9 billion last year, setting a new record.

For Meituan, the massive number of orders and delivery riders currently make it the "king of takeout," which is its most important moat at present. However, after gaining a competitive advantage in the takeout industry, Meituan also needs to adapt to market changes and further solidify its position. For example, in response to consumer demand for low prices, Meituan's "拼好饭" has been heavily promoted since last year and has become a project mentioned in this year's financial reportHowever, as the unit price of takeout decreases, the income per order for delivery riders is also decreasing. Based on calculations of 21.9 billion orders and 80 billion yuan, last year, delivery riders only earned an average income of 3.65 yuan per order.

According to a research report from Open Source Securities, from 2019 to 2023, the average income of Meituan delivery riders experienced a process of first rising and then falling, with a continuous decrease in average income per rider since 2022. The "2023 Gomart Gig Economy Interpretation Report" mentioned that in 2023, delivery rider income decreased by 25.93%.

Currently, 7.45 million delivery riders support the foundation of Meituan, but this foundation is still in a state of loss.

According to financial report data for the first half of this year, Meituan's revenue from delivery services was 44.09 billion yuan, while delivery-related costs were 48.03 billion yuan, resulting in a loss of 3.94 billion yuan, with the loss margin expanding compared to last year, at a loss rate of 8.9%.

However, this year, Meituan's overall performance has significantly increased. In the first half of the year, Meituan's revenue was 155.527 billion yuan, a year-on-year increase of 22.9%, with an adjusted net profit of 21.005 billion yuan, a year-on-year increase of 60.4%.

It can be seen that although takeout as the core business did not directly bring continuous profits to Meituan, it is enabling the platform to connect more businesses, thereby achieving diversified growth.

Currently, in the takeout business, Meituan is also committed to seizing the trend of consumption downgrading and becoming the "Pinduoduo" of the takeout industry.

Recently, there have been reports that Meituan has made strategic adjustments internally regarding its takeout business, shifting from pursuing GMV to focusing on order volume.

This year, Meituan's "Pinhaofan" is being expanded to more cities, especially in first-tier cities where takeout orders account for a high proportion. Meituan's forecast is that takeout will maintain a 10%-12% growth rate in order volume by 2024.

As this plan is implemented, more people will enter the delivery rider industry in the future.

In addition to income, delivery riders will also encounter a series of specific challenges on the road of racing against time, all of which need Meituan to balance specifically. As a platform connecting delivery riders, merchants, and users, only by balancing the relationships among the three can Meituan's moat be further strengthened.

Crowded

Currently, delivery riders are transitioning from delivering takeout to delivering everything.

Since the rise of home delivery services, major players have been continuously exploring the boundaries of delivering various categories of goods. Now, delivering everything is becoming a reality.

Taking Meituan as an example, in its homepage's primary entrance, in addition to takeout, services such as Xiaoxiang Supermarket, medical consultations and medicine purchases, and supermarket convenience are all part of instant delivery services.

Platforms like JD.com are also increasing their efforts in instant retail. JD.com specifically launched and upgraded services such as JD Daojia and JD Instant Delivery, building a system of instant retail services covering all categories and all time periods.

Previously known for its fast delivery speed of self-operated products, JD.com is no longer satisfied with next-day delivery but is now focusing on instant delivery within hours, seconds, etc., delivering to consumers at the fastest speed possible, leaving consumers with fewer opportunities to cancel orders.

In May, JD.com further upgraded its instant retail business to "JD Instant Delivery," integrating the original JD Instant Delivery and JD Daojia services to meet consumers' demand for "enjoying good products instantly," with "delivery in as fast as 9 minutes."In addition to the food delivery business of Ele.me, Alibaba also connects to many instant delivery services. On the Ele.me app, there are options for supermarkets, convenience stores, purchasing medicine, etc. In the primary entrance of Taobao, under the "hourly delivery" section, there are options like Hema, Dingdong Maicai, Yonghui Supermarket, etc., where you can buy anything available in offline supermarkets.

Even some 3C digital products and beauty products can be quickly delivered to consumers through nearby store delivery.

This delivery method not only captures users with temporary needs, solving urgent needs and grabbing business from convenience stores, but also, compared to traditional e-commerce express delivery, it minimizes the impulse shopping behavior without much contemplation, providing maximum satisfaction.

In the past few years, community group buying offered cheap prices with next-day self-pickup, but it has noticeably cooled down in the past two years, even being discontinued in first-tier cities. However, instant retail remains popular.

Instant retail is also considered the next trillion-dollar market.

The China Chain Store & Franchise Association predicts that by 2024, the market size of instant retail-related businesses will exceed 1 trillion yuan. According to the "Instant + 2023 Instant Retail Development Trend White Paper," it is estimated that from 2023 to 2030, the market size of instant retail will grow at an average annual compound rate of 25%, reaching 3.6 trillion yuan by 2030, equivalent to 6% of the total retail sales of consumer goods during the same period.

This has further motivated major companies to compete in this market.

Delivery riders have also transformed from traditional food delivery riders to more diverse riders. Food delivery riders usually concentrate on orders during peak hours, while other categories are not limited by time, making the working hours of riders more flexible.

Of course, as e-commerce platforms intensify their efforts in instant retail, the demand for riders, as one of the "reservoirs of employment," also increases.

However, the discounts offered by various platforms often start from low prices, which also means that the "cake" left for riders is limited.

With riders available on all platforms, there will also be a balance issue between delivery time and rider rights protection. Previously, JD.com received much praise for being the only company in the logistics industry to sign formal contracts with couriers and pay "five insurances and one fund." Currently, JD.com is also facing the challenge of balancing rider business, which will set a benchmark for the industry.

In recent years, various social conflicts have continuously occurred among riders. In the development process of instant delivery, delivery personnel play an important role, and safeguarding their rights will also be a part of future development