Meituan stubbornly fights for low prices

Author | Liu Baodan

Editor | Zhou Zhiyu

Since Douyin broke the competitive landscape of the local life market, Meituan's sense of crisis has been deepening. Now, Meituan is striving to shape itself as the "Pinduoduo" version of local life in order to gain more market share.

Recently, the Meituan delivery APP introduced the "Money-saving Version" entrance for the first time, featuring "carefully selected, delicious and affordable" items. Upon clicking, a separate page displays product packages, prices, and the amount saved.

According to Wall Street News, the "Money-saving Version" has started grayscale testing in multiple cities, which is a trial among specific groups before the official release of the new feature, indicating that Meituan will fully launch this function in the future.

Compared to the launch of "Pinhaofan" and "Shenqiangshou" in 2022 and 2023, the former is group buying for takeout under 10 yuan, and the latter is low-priced group buying vouchers. The "Money-saving Version" is Meituan's true low-price strategy. While competitors' low prices are mainly online, Meituan has started to offer low prices in its expertise field of food delivery.

Currently, the "Money-saving Version" is an upgraded version of "Pinhaofan," providing a wider range of product choices with prices ranging from 20 yuan to 30 yuan. Popular items in the grayscale testing include dishes like Siniule Shanqiaojiaoniu and Pirate Shrimp Rice, with an average price of around 50 yuan per person.

With the launch of the "Money-saving Version," Meituan has found the key to unlocking the low-price model. For example, the "Pinhaofan" business saw explosive growth in the first quarter, with daily orders reaching nearly 5 million, a new high, accounting for nearly 10% of Meituan's food delivery scale.

More importantly, Meituan has found a new entry point for traffic growth through low prices. Meituan stated in a first-quarter conference call that the annual active users for food delivery have reached nearly 500 million, with a significant increase in transaction frequency. At the same time, annual active users and transaction frequency for real-time shopping have also increased.

According to financial reports, in the first quarter of 2024, Meituan achieved revenue of 73.3 billion yuan, a year-on-year increase of 25%, outperforming the previous two quarters. Meituan's net profit and adjusted EBITDA for the period were 5.37 billion yuan and 8.07 billion yuan respectively, with growth rates of 60% and 29%, maintaining high growth.

Since Douyin successfully entered the local life market, Meituan's market position and core competitiveness have been questioned, prompting the company to launch a series of counterattacks. The once glorious king of local life now needs to prove itself anew in the face of the new market situation.

In February, Meituan merged its "Daohome" and "Daodian" business groups, marking the first major organizational and personnel adjustment since 2021. By merging food delivery and online group buying into one strategy, Meituan aims to improve organizational efficiency and upgrade product experience.

It can be said that the "Money-saving Version" is the result of the aforementioned organizational restructuring. Compared to the passive state of the past two years, Meituan has regained the initiative in the market.

However, Meituan is far from being able to relax, as market conditions are constantly changing and competitors are intensifying their competition strategies On July 16th, news of the internal testing of the "Convenient Price" feature in the local life sector of Douyin surfaced. "Convenient Price" is similar to Taobao's "Buy with One Click" feature, emphasizing low prices. Douyin's local life sector aims to reach 600 billion yuan this year, doubling its scale. To achieve this, the company has implemented various measures, including organizational restructuring.

Kuaishou is also seizing market share in the local market. In March, Kuaishou's Senior Vice President and Head of the Local Life Business Division, Xiagu, announced that by 2024, Kuaishou will launch billion-level platform subsidies and hundred billion-level traffic to create a new trend in online retail services and increase consumption. The company believes that all group purchases are worth redoing on Kuaishou.

In the foreseeable future, Meituan's "Money-saving Version" will be officially launched. This is the most important move Meituan will make in 2024, signaling a new round of competition in the local life market