Why did Meituan Preferred close down?
There was no warning when Meituan's Preferred business suddenly shut down. Although some cities like Shenzhen were retained, it's only a matter of time before these cities are closed as well.
Why did Meituan shut down its Preferred business?
To answer this question, we need to go back to 2020—why did Meituan start the Preferred business in the first place?
In 2020, with the concept of the 'pandemic economy,' community group buying became a hot trend, attracting the attention of major companies.
Even companies like Didi, which had no retail DNA, rushed into the market, hoping to find a second growth curve. However, retail was not Didi's strength, and it ended up losing 30 billion yuan in just one year before hastily exiting.
The success of a business is often closely tied to why it was started in the first place.
Even in war, justification is sought before action. If a business lacks a compelling reason to exist, it cannot endure—misjudgment leads to inevitable failure.
For Pinduoduo, community group buying was a must-do.
Pinduoduo had a key insight: in Hunan, the stronghold of Xingxing Preferred, wherever Xingxing Preferred performed well, Pinduoduo's main business was affected.
This showed that Xingxing Preferred's business model was successfully competing for Pinduoduo's users, posing a potential threat.
Thus, Pinduoduo had to heavily invest in community group buying. Huang Zheng even called it 'the touchstone for Pinduoduo'—in short, a war they couldn't afford to lose.
In contrast, how much did Didi's failure in community group buying affect its ride-hailing business?
Looking back, Didi was lucky to exit community group buying quickly, losing only 30 billion yuan.
After all, Meituan Preferred operated for five years, with losses easily exceeding 100 billion yuan.
A 100-billion-yuan investment led to a swift exit, with years of market cultivation handed over to Duoduo Grocery—a painful outcome.
So why did Meituan start the Preferred business back then? Here’s my take.
As we know, Meituan has long dreamed of becoming a 'super app.' At one point, it even referred to itself as the 'Meituan Super App' in its About section.
However, Meituan's business is concentrated in urban areas, especially Tier 1-3 cities. Services like food delivery and travel aren’t deeply embedded in lower-tier markets and aren’t frequent enough to be considered a 'national app.'
This pales in comparison to e-commerce—even in the most remote villages, as long as delivery is available, online shopping enthusiasm rivals that of big cities, reshaping local consumption habits.
Meituan needed a way to reach these users and bring them into its ecosystem.
When community group buying emerged, Meituan saw an opportunity.
It even launched an e-commerce business—Group Goods—alongside it.
Community group buying could funnel users into Meituan’s ecosystem, directing traffic to other services and even revitalizing its e-commerce efforts.
Just like how Meituan acquired Mobike, rebranded it as Meituan Bike, and shut down WeChat scan-to-ride to attract urban users.
The logic was the same.
But after years of effort, Meituan realized that users of Meituan Preferred only used Meituan Preferred.
No conversion happened—laughable.
Its Group Goods business was even more hopeless, with various models failing to make it viable.
In contrast, Duoduo Grocery and Pinduoduo’s main platform synergized, driving traffic to each other.
Meanwhile, Meituan Preferred and Meituan’s main platform remained disconnected, only superficially aligned.
In areas covered by Duoduo Grocery, 99% of online purchases could be delivered.
But in Meituan Preferred’s coverage zones, if food delivery and group buying supplies were insufficient, how could it funnel users and build loyalty?
Compared to competitors, the misalignment between Meituan’s community group buying and its core business was already painful.
Worse, its operational efficiency lagged far behind rivals—adding insult to injury.
I think Meituan must feel quite defeated after years of struggling with Preferred.
No sense of achievement.
In summary, for Meituan, this wasn’t a must-do, nor was it uniquely suited to do it.
But for Pinduoduo, it was a must-do—and they did it better.
No hope, endless battles—how could the team endure?
On top of that, rivals like JD.com and Alibaba aggressively attacked Meituan’s food delivery stronghold.
Meituan Preferred and Little Elephant Supermarket even competed internally for resources and market share.
The best time to plant a tree was ten years ago; the second-best time is now. The best time to shut down a business was before starting it; the second-best time is now.
As Duan Yongping often says, 'When you realize a mistake, correct it immediately—no matter the cost, it’s usually the smallest.'
Why did Meituan shut down Preferred?
Perhaps, like Didi, the answer lies in the question—it shouldn’t have been done in the first place.
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