Meituan Youxuan product analysis!

On September 14, 2021, Alibaba Community E-Commerce held a press conference in Changsha, Hunan, announcing that it would officially upgrade its brand to "Taocaicai".

Since the second half of the year, community group buying has become increasingly cold, and the decline of the “old three groups” has gradually emerged. Tongcheng Life has gone bankrupt, Shihuituan has withdrawn from cities and laid off employees, and the growth rate of Xingsheng Youxuan has slowed down. The new giants are also having a hard time. Chengxin Youxuan has shrunk and terminated. The second quarter reports of Meituan and Pinduoduo showed that the revenue performance of new businesses including Meituan Youxuan and Duoduo Maicai was lower than expected. This moment is just like that moment. Just like food delivery, taxi-hailing and shared bicycles a few years ago, the "money-burning" model seems to have come to an end again. What’s different is that the troublemaker “Tao Caicai” chose to enter the market at this time.

Facing Alibaba’s comeback after the integration, how should Meituan Youxuan consolidate its existing dominant position, and where will community group buying go in the future? This article will analyze the basic logic of the community group buying industry and the development history of its products from the perspective of Meituan Youxuan, starting from the industry, business model, user value, overall strategy of competing products, commercial value, product iteration, product structure and operation.

1. Industry Analysis

Community group buying combines the characteristics of social e-commerce and new retail models, relying on the online e-commerce platforms and offline supply chain systems of major giants, with the community as the unit, WeChat group as the medium, and group leader as the fulcrum, to create a four-party retail structure of "supplier-platform-group leader-consumer", and adopts the "pre-sale + self-pickup + next-day delivery" model to form a new community retail scene with a radius of 1-3 kilometers.

Community group buying first took off in 2018. Against the backdrop of epidemic isolation in 2020, it developed rapidly and gradually became an indispensable part of people's lives. From its inception to rapid growth, and then to integration and optimization, the development of community group buying is closely related to the influence of macro factors. Next, this article uses the PEST model to try to explore the reasons behind different development stages and the industry prospects of community group buying.

1. Politics

From 2016 to 2019, the State Council, the Ministry of Commerce and other government departments successively issued the "13th Five-Year Plan for the Development of E-Commerce" and the "Guiding Opinions of the State Council on Further Expanding and Upgrading Consumption to Continuously Release Domestic Demand Potential" and other decrees, actively encouraging social network e-commerce models, supporting e-commerce, logistics, commerce, postal services and other social resources to cooperate in building a rural shopping network platform, and further standardized related online transaction behaviors. Community group buying came into being with the support of policies and grew rapidly.

In 2020, the State Administration for Market Regulation and other relevant government departments held talks with major Internet platforms on several occasions, issued policies such as "Nine Don'ts" for community group buying, and required the rectification of industry practices and the crackdown on the use of monopoly position for unfair competition. Under the guidance of relevant policies, several major participants adjusted and standardized their community group buying businesses.

Since 2021, the country has made further instructions and requirements for achieving "common prosperity" and "rural revitalization". Giants such as Alibaba, Meituan, and Pinduoduo have responded positively, providing financial, information, logistics and other support to regions with unbalanced development, and continuing to promote infrastructure and informatization construction. Community group buying has also begun to return to a "long-term" and rational approach, shifting from "burning money" to occupy the market to empowering upstream and downstream industries. It is expected to truly clear the bottlenecks from "countryside" to "dining table", optimize resource allocation, achieve high-quality supply, and become a tool for achieving national strategies.

2. Economy

In 2020, the national per capita disposable income was 2,682 yuan/month, which means that people with an average monthly disposable income of more than 3,000 yuan may already belong to the higher-income group in the country. From this point of view, "saving" may still be one of the main concerns of consumers when purchasing goods for quite some time. In other words, compared with traditional offline retail industries and other e-commerce models such as forward warehouses, community group buying, which has obvious price advantages, will still have a large room for expansion in the future market.

3. Society

Socializing with acquaintances is a traditional social habit of the Chinese people. The community is the basic unit of people’s daily life, and people are more willing to buy goods from acquaintances. The supply side is based on communities, which can fully penetrate the sinking market and accurately match the real needs of consumers. Compared with the traditional convenience store model, it has less inventory and better costs. For consumers, the pace of work is constantly accelerating, and being able to save shopping time at convenience stores and pick up goods at a designated location the day after placing an order will become the choice of more and more people.

4. Technology

The continuous development of technology has made it possible to solve the imbalance in the allocation of production, supply and sales resources, mainly in terms of information and logistics:

Information: With the development of mobile devices and big data, people can easily conduct various transactions on online platforms. At the same time, merchants can optimize commodity reserves and distribution through analysis of user behavior to improve quality and efficiency.

Logistics: Various modes of transportation such as roads, railways, and aviation have developed rapidly, opening up channels for the cross-regional flow of materials, making it basically possible in terms of hardware for goods to be shipped overnight within major living areas across the country.

5. Industry Prospects

Community group buying was initially a supplementary format for traditional convenience store retail. With its rapid development in second- and third-tier cities and further down the market, community group buying has begun to gradually erode the retail market share of traditional convenience stores due to its four major advantages: a wide range of product categories, fast fulfillment, good quality, and low prices.

• Wide range of categories: Benefiting from the centralized purchasing and storage model, the daily SKU quantity on the community group buying platform ranges from 1,000 to 2,000, and about 30% of the products are rotated and updated, including a variety of fresh products and big-name standard products. Compared with offline convenience stores, it greatly enriches consumers' shopping choices.
• Fast fulfillment: The cut-off time for orders on the community group buying platform is usually 11 or 12 noon every night, and you can pick up the goods from the group leader starting from 16:00 the next day, which can meet most planned needs.
• Good quality: The brand guarantee of standard products, unified procurement and efficient delivery of fresh products make the quality of community group purchasing products more guaranteed.
• Low price: Benefiting from the fact that there is no need to bear the risk of unsaleable inventory, the optimization of the procurement and distribution chain and the scale effect of centralized procurement, the price of goods delivered to consumers in the community group buying model is lower than that of offline convenience stores. Among them, fresh products are generally 25%-30% cheaper, and standard products are about 20% cheaper.

According to statistics, the penetration rate of community group buying in Q1 2021 was 27%, and the annual scale is expected to be around 200 billion. Everbright Securities predicts that based on a repeat purchase rate of 3 times per week and an industry penetration rate of 37%, the scale of the community group buying industry will exceed 800 billion yuan in 2023. As consumers gradually gain recognition and develop shopping habits, the community group buying market has huge room for expansion.

From a profitability perspective, before Internet giants entered the community group buying industry, Xingsheng Youxuan's fulfillment cost rate in Hunan Province dropped to 3%, and the UE model initially achieved profitability. The current general operating loss rate is around 10%, which is related to the fact that the industry as a whole is in its development stage. In the later stage, with the integration of platforms and the increase in market penetration, there is room for compression of costs such as fulfillment (10%), group leader commission (8%-9%), subsidies (12-13%), and operations (5%-6%), and it is possible for the UE model to be profitable.

2. Business Model Analysis

Community group buying is a new fast-moving consumer goods e-commerce model based on the efficient feedback of information flow and commodity flow. Consumers place orders on the platform on the same day and can pick up the goods from the group leader the next day. "Pre-sale, self-pickup, and next-day delivery" is the most accurate summary of this model. The relationship between the various participants is as follows:

Supplier: Responsible for screening, producing, processing and packaging goods, and delivering them to the central warehouse. The sales of fresh products and other commodities are essentially agency sales by the platform, and their local suppliers are also required to assume after-sales responsibilities.

Community group buying platform: It is the main carrier of information flow and commodity flow, manages the entire operational process, and bears most cost items including logistics costs. The platform not only hopes to earn profits and cash flow, but also hopes to obtain traffic from the sinking market in order to gain an advantage in the overall competition in the Internet industry.

① Information flow: By building an Internet platform, we provide information support for product selection, logistics, customer acquisition, purchasing, transactions, after-sales and other activities, and reversely guide business activities by analyzing and processing data to achieve production based on sales, ensuring the orderly and efficient operation of each business segment.

② Commodity flow: Community group buying has customized a three-level warehouse system of "shared warehouse, central warehouse, and grid warehouse". The shared warehouse is set up to ensure that suppliers can complete the delivery of goods to the central warehouse in a short period of time. It is often located near the central warehouse, and the cost is borne by the supplier; the central warehouse and grid warehouse are basically only used for sorting and circulation, and the cost is borne by the platform. The three are in a "many-to-one-to-many" relationship. The logistics characteristics of suppliers delivering goods in a short time, warehouses being used only for transit and not preparing goods, and low-frequency and high-weight delivery to the group leader have greatly improved storage and transportation efficiency.

Group leader: The core functions are customer acquisition and contract fulfillment. Customer acquisition means attracting new customers on the one hand, and providing after-sales service to ensure retention of old customers on the other hand. Contract fulfillment means helping the platform sort goods to consumers and complete the last mile of delivery.

3. User Value Analysis

From the business model, we can see that there are four participants in community group buying: consumers, group leaders, platforms, and dealers. For the platform to continue to develop, it must serve consumers well, require suppliers to improve the variety and quality of their merchandise, and provide convenience for group leaders. Next, we will sort out the target users and needs of consumers, group leaders, and dealers, and analyze how to meet their needs from the perspective of the platform.

1. Consumers

1) Target users

The broad target consumers of community group buying are residents in the sinking market (third-tier and below urban and rural areas), accounting for 68.4% of the population. With economic development, the growth rates of residents' disposable income and online retail in lower-tier markets have exceeded those in first- and second-tier cities, indicating huge consumption potential.

Consumers in a narrow sense are mainly married women, who usually purchase as a family unit. According to statistics, among all community group purchasing users in 2020, female users accounted for 86%, married users accounted for 92%, and the 30-49 age group accounted for 64%.

2) Demand scenarios

The target users’ demand scenarios have the following typical characteristics:

① Trust acquaintances and tend to buy goods from acquaintances;

② Mainly based on the family unit, focusing on daily necessities;

③ More sensitive to cost-effectiveness and current popularity;

④They have more free time and are not very sensitive to timeliness.

Some consumers with higher income levels also have the following characteristics:

⑤ Expect a wider selection of products and convenient door-to-door delivery;

⑥ They do not have high requirements for brands, but are willing to choose branded products under the premise that the brand premium is low.

To sum it up, the people are familiar to you, and the shopping experience is fast, good and economical.

2. Team Leader

Group leaders are generated based on consumers and are mainly divided into the following two categories:

① “Store-type group leaders” who own their own convenience stores hope to increase the popularity of their own stores by using them as pick-up points and earn extra income at the same time.

② "Mom-type group leaders" who have extensive interpersonal relationships, some of whom have micro-business experience, can quickly acquire a large number of customers through good relationships and earn commissions through the platform.

3. Suppliers

Suppliers in this article generally refer to upstream suppliers, including wholesalers, unbranded factories, fresh food suppliers, regional small brands, large brand companies, etc. They are mainly divided into:

① Local suppliers, including regional brand owners who actively cooperate, are mainly responsible for product selection, delivery to central warehouses, fresh product processing and after-sales service. They expect to achieve growth in their own sales scale and profitability as the platform grows, while minimizing the risk of unsalable inventory.

② Some large brands are worried about disrupting the existing price and channel control system, or even causing cross-selling problems, and have strict restrictions on cooperation and supply with community group buying. On the other hand, the distribution system of super brands is very mature and they will not actively restrict channel dealers from participating in community group buying.

4. Community group purchasing platform

Consumers are the final node in the community group buying chain and are the key to meeting the needs of all parties and ultimately realizing monetization. Next, we will start from meeting consumer needs and analyze what measures Meituan Youxuan has taken to balance the needs of all parties.

1) Use WeChat groups as a base to get familiar with people

Meituan Youxuan, based on the community WeChat group, was the first to launch a WeChat mini-program. Through recommendations from group leaders and old users in the group, users can look for group leaders when they have questions. This has successfully created a circle of acquaintances, eliminating the concerns of users in the sinking market when trading with "strangers" on the other side of the screen.

2) Control the source of procurement to achieve "more", "saving" and "better"

Meituan Youxuan collects and aggregates consumer demands through a pre-sale model, avoiding the risk of inventory pressure caused by too many categories, and at the same time gains strong bargaining power from suppliers by virtue of its large volume. On the other hand, for suppliers, they can determine production based on sales and do not have to carry inventory, which greatly reduces their costs. The community group buying model reduces the platform's procurement costs at the source, which in turn results in lower prices for consumers.

At the same time, Meituan Youxuan has established a targeted product recruitment and operation selection team to control the selection of products, and strictly control the quality before sales. Compared with the post-quality control model of receiving complaints and then pursuing accountability, the quality of products in the hands of consumers is better.

3) Optimize warehousing logistics to achieve “speed”

Meituan Youxuan adopts a three-level warehouse model, requiring suppliers to deliver goods to the central warehouse before 2 a.m. the next day, and the central warehouse will deliver them to the grid warehouse in batches before 4 a.m., and then send them to the pick-up point before 8 a.m. Through continuous optimization, mergers and refined management of warehouses, the delivery efficiency has been improved, achieving a fulfillment rate of 70% before 11 a.m. the next day and 100% before 4 p.m., an out-of-stock rate of less than 0.6%, and a mismatch rate of less than 1%, greatly improving consumers' shopping experience.

4) Add delicious recipes to solve the problem of "what to eat" every day

Meituan Youxuan APP introduced recipes in the bottom menu bar, which effectively solved the daily problem of "what to eat". The recipe lists all the ingredients needed and indicates the cooking difficulty and time required. Consumers can choose relatively abstract ingredients through concrete recipes, which reduces the difficulty of decision-making. Subsequently, a live broadcast column was opened to provide a platform for suppliers to showcase their products.

5) Meet the needs of different users

Meituan Youxuan has developed different clients for consumers, group leaders, logistics, and product sales staff, respectively, presenting information and data of interest to different users based on their needs, allowing users to have a controllable and intuitive experience when using the app.

4. Overall strategy analysis of competing products

According to statistics, in August 2021, the daily sales volume of the entire community group buying industry was approximately 80 million pieces. Among them, Meituan Youxuan and Duoduo Maicai have daily sales of more than 25 million pieces, each accounting for about 30%, and are in the first echelon; the second echelon includes major players such as Taocaicai (Ali MMC), Xingsheng Youxuan, Jingxi Pinpin, and Chengxin Youxuan, of which the latter two have chosen to withdraw; other companies have a low market share and belong to the third echelon.

The following is an analysis and comparison of the current operating strategies and main business features of the first-tier companies Meituan Youxuan and Duoduo Maicai.

In summary, the overall strategies of the two leading community group buying players each have the following characteristics:

Meituan Youxuan adopts a management model of centralized decision-making at the headquarters and regional execution. It has formulated detailed and clear standardized processes in each link and implemented an operating model that emphasizes process and refined management. It has a relatively fast iteration capability and requires greater short-term investment, but is expected to achieve cost reduction and efficiency improvement in the long term. It also has a strong ability to control product quality and upstream and downstream. From a strategic perspective, the division of labor with Meituan Maicai to enter the e-commerce and physical retail business has taken on the important task of expanding the sinking market, which is a new growth curve for Meituan's business system.

Duoduomaicai fully unleashes the subjective initiative of various provinces and regions, adopts a management form in which the headquarters sets the overall goal and the provinces and regions make decisions and implement it, is result-oriented, and purchases are made through bidding and replacement of non-compliant products, giving full play to the role of the market, with less investment and the ability to quickly seize the market in the early stages. The user profile of Duoduo Maicai is highly consistent with that of the main site, which is a natural extension of Pinduoduo's community group buying direction. In the future, it will inevitably become an indispensable part of the group's overall revenue and traffic.

5. Commercial Value Analysis

This article focuses on the analysis of Meituan Youxuan’s consumer-side products, so only consumer-oriented products will be further discussed in the future. Next, we will start from the product perspective and analyze what efforts Meituan Youxuan has made to increase its overall revenue through the GMV indicator.

1. Increase the number of platform users

Currently, community group buying is still in the expansion stage. Only by continuously acquiring new customers can revenue be guaranteed and at the same time, it can be in a favorable position in the competition with competitors. Meituan Youxuan mainly acquires customers through the following methods:

1) Old employees mentoring new employees

In the areas where the service has been launched, rewards will be given to group leaders and old users who successfully attract new users to achieve the goal of spreading the service to new users.

2) Local marketing to acquire customers

By visiting customers’ homes or setting up promotional booths, introducing product details and giving away small gifts, you can quickly build a group leader system in the planned launch area and acquire new customers.

3) New users actively use

The public is made aware of the brand mainly through inviting celebrities to endorse the brand and placing a large amount of advertisements, such as inviting Shen Teng and Jia Ling to endorse the brand; taking advantage of the "Sister 2" group night to invite celebrities to endorse the brand, etc.

2. Improve conversion rate

After users start using Meituan Youxuan, we should try to make them buy products, let them experience the products through preferential activities, and improve the conversion rate. Specifically:

1) New user discount

After activation, new users can enjoy special discounts, including new user red envelopes and exclusive products. At the same time, elements such as countdown and remaining quantity are added to make users feel a sense of urgency and achieve conversion.

2) Flash sales and special sales

Meituan Youxuan has set up the entrances to "Flash Sales" and "Special Price Market" in a prominent position in the center of its homepage, and selected special price products for display, guiding users to enter the secondary page to view the special price products and place orders, ultimately completing the conversion.

3. Increase average order value

1) Improve the user experience of the platform

Platform experience is the basis of user retention. Like most platforms, Meituan Youxuan allows users to check product quality through reviews when shopping, and check delivery progress through order status after placing an order. After the goods arrive, there is a place to praise, a place to complain, and a place to provide after-sales service and protect rights, which improves the visibility and controllability of products and allows users to place orders with confidence. Later, the live broadcast function can be combined to present highlights such as production and transportation to consumers, demonstrating the excellent quality and efficiency, and "the fragrance of wine must be served to the door."

2) Discounts and free meals for members

Distribute discount coupons regularly to guide users to make impulse purchases and add to their orders. Distribute coupons after they have been used, and at the same time, continuously raise the threshold for using coupons to gradually cultivate users' consumption habits.

Adopting the "saving card" membership system, users can enjoy exclusive prices for new customers after registration, guiding users to join as members. After becoming a member, some products can enjoy exclusive prices. In addition, there are free vegetables when you spend more than 25 yuan, and discount coupons are issued regularly to increase user stickiness.

3) Information guidance

By collecting users' consumption behaviors and information, the platform can obtain and analyze their user portraits and consumption habits, and push relevant products to the APP homepage, the product recommendation column of the shopping cart, etc.; push relevant products during festivals; and guide users to exchange products at checkout, all of which invisibly increase users' shopping tendencies.

6. Product Iteration Analysis

Meituan Youxuan first launched the WeChat mini program in July 2020, and the APP on December 8, 2020. The time span was relatively short, so the number of version iterations was limited (a total of 33 large and small versions); at the same time, the WeChat mini program is still one of the main scenarios for transactions. In terms of functions and content, the APP is currently still a copy of the mini program.

Considering that it belongs to the same Meituan system and has similar business directions as Meituan Maicai, the author speculates that the mature experience of Meituan Maicai APP was used for reference in product design. The overall functional modules are similar, and no major changes have occurred after the launch.

Next, this article selects the main version iteration information of Meituan Youxuan (including mini programs), and briefly analyzes its iteration logic based on the download volume of the APP on all platforms, as follows:

According to Qimai data, the download curve of Meituan Youxuan APP across all platforms shows that around February 2021 (after the launch of versions 6.5.3 and 6.7.0), the curvature of the user download curve began to increase, which is a "J-shaped" curve. Combined with operation-related actions, it can be roughly divided into two stages:

Phase 1: Functional transplantation

The stage from version 6.0.0 to version 6.5.3 is the cold start stage of the mobile APP, which mainly transplants the mini program functions to the APP side and verifies whether the user needs of the APP side are met.

Phase 2: More users and richer application scenarios

After version 6.5.3, with the arrival of the 2021 Spring Festival and the increase in operational promotion efforts, the number of APP users has seen rapid growth. To facilitate operations and customer acquisition, the APP moved holiday specials and new customer discounts to the homepage; gradually increased shopping and promotion scenarios, such as adding special offers and flash sale columns; at the same time, it continuously optimized the user experience and launched self-pickup point navigation.

At the time of writing this article, Meituan Youxuan had launched live streaming for merchants to sell goods, a feature that is not available on the mini program. It can be foreseen that with the enrichment of user usage scenarios, the APP will gradually develop into the main battlefield of Meituan’s preferred business in the future, which will inevitably put higher requirements on product iteration.

7. Product structure analysis

Next, we will analyze the product structure and functions of Meituan Youxuan, as well as their correspondence with user needs.

1. Product structure and function

The latest version 6.18.20 of Meituan Youxuan APP has a product structure diagram as follows:

It can be seen that Meituan Youxuan is mainly divided into five major functional sections: homepage, classification, menu, shopping cart and my, which cover the core functions of e-commerce shopping platforms such as product management, order management, and account management. In addition, a recipe function has been introduced to facilitate users' shopping decisions.

2. Typical user flow and scenarios

In this section, we analyze the user's needs in three different scenarios: before shopping, during shopping, and after shopping, by sorting out the process of users shopping and picking up goods using the Meituan Youxuan APP. Assuming that a user has completed registration, the specific usage scenarios and processes are as follows:

3. Matching of user needs and product functions

Through the above analysis, we have sorted out the various functional modules of Meituan Youxuan and the usage needs of users in different scenarios, and then summarized the matching between them.

Below we analyze from a typical perspective how users’ needs in different scenarios are met through various functions.

Scene 1: Before shopping

When entering the APP, users first select a pick-up point based on the location information, thereby limiting the range of products available for selection and avoiding the negative emotions of users finding that the product is out of stock when they choose a pick-up point after adding it to the cart. For users with clear shopping goals, they can quickly find the products they need through the search bar; for users with unclear goals, they can be guided through discount information modules such as "flash sales" and "special price markets", or choose according to the recipe module, and even find specific goals by filtering the homepage and category details.

The above functions are mainly concentrated on the homepage of the APP, and categories and recipes are placed on the second and third pages as relatively independent sections, which can enable users to easily find target products and make purchasing decisions quickly.

Scene 2: Shopping

When adding items to cart, users will be concerned about product quality, after-sales service, reviews and other information, which can be viewed on the product details page. After all target items have been added to the cart, users will often adjust the shopping list based on the "total price", which is essentially "adding, deleting, modifying and checking" the items in the shopping cart. These functions are centered around the shopping cart module, and can be operated through modules such as product recommendation/classification-product details/product details page/shopping cart. At the same time, discount information is superimposed, making the most critical information, "total price", clear at a glance.

After confirming the “total price”, the user completes the transaction by going to the payment module in the shopping cart menu bar. During the payment process, there will be a "Confirm Order" page giving users the option to modify the information of the consignee and pick-up point before payment; after confirming the order, Meituan Youxuan will finally confirm the most important "total price" information with the user. If the information is incorrect, the user can choose not to pay, delete the order and re-purchase, or re-confirm and continue to pay in the Order-Waiting for Payment module; if the information is correct, multiple payment methods are also provided to the user, and the transaction can be completed by clicking "Confirm Payment". There are three confirmations in total during the payment process, each with its own focus on confirming the order information with the user to avoid errors as much as possible; at the same time, more payment options are provided to meet the user's payment needs as much as possible.

The above functions are mainly centered on the shopping cart on the fourth page of the APP, which simulates the offline shopping scenario and superimposes payment and discount modules. Users are required to verify the key information of this shopping multiple times in a hierarchical manner to ensure that the information is correct.

Scene 3: After shopping

After successfully placing an order, users are most concerned about when and where to pick up the goods. The answers to these two questions can be found in the Order-Pending Pickup and Pickup Point-Navigation modules. After the user completes the pick-up, if he has no objection to the goods, the transaction is completed. He can then evaluate the shopping experience in the Order-Pending Evaluation module. If he is not satisfied with the experience, he can perform corresponding operations in the Order-Refund/After-sales module, or apply for platform intervention in the Customer Service module to protect his own rights and interests.

The above functions are concentrated in the fifth page of the APP, which forms a closed-loop feedback mechanism for transaction behaviors. The delivery progress after placing an order is visible, and after-sales operations are easy.

To sum up the above analysis, the basic functions of Meituan Youxuan can better meet the needs of users in different scenarios. At the same time, there are also highlight functions such as recipes. The high-frequency key functions are prominent, and the module division is clear and reasonable, which provides guarantee for Meituan’s community group buying business on the product side.

4. Main Function Experience

According to the KANO model classification, we will then experience and evaluate the basic functions and highlight functions of the product.

1) Basic functions

Scene 1: Before shopping

① Search

There are three search bars on the first-level page. The homepage and categories use a recall model that conforms to the business scenario. When searching, there are functions such as history records, product recommendations, and associations to assist in input. The search results can be classified, which can not only provide suggestions for users, but also drive traffic for its own products. In the future, we may consider adding voice input and photo intelligent recognition functions.

② Classification

There are two category columns in total. The category column on the home page can float at the top when sliding the screen, and there is a secondary category after clicking; the category entries on the category page are on the left column, with a total of 12 levels, covering daily necessities; the products are on the right, and the layout conforms to the operating logic, which can basically meet user needs.

③ Product recommendations

Both the home page and shopping cart have product recommendation functions. There is a secondary details page under the home page activity entrance, which provides detailed discount information. At the same time, the countdown and group purchase progress can give people a sense of urgency. There is also a confirmation page when exiting to increase user stay time.

Scene 2: Shopping

① Product details page

The first screen is the basic information of the product, the second screen is exclusive discounts and related recommendations, the third screen is detailed product information, and the fourth screen is a buying guide. This is a common split-screen layout, and the content can basically meet user needs.

② Shopping cart, order and payment

On the home page, category page and shopping cart page, you can settle the bill through the floating bar at the bottom. The information content of "Shopping Cart-Order-Payment" is gradually reduced to highlight the key points. In addition, for users in the sinking market who are not familiar with electronic payment, the "ask someone to pay on your behalf" function can be developed in the future to promote transactions.

Scene 3: After shopping

① Order status and self-collection

After placing an order, the order status will be displayed under the Pending Delivery column. You can click to enter the order page waiting for pickup, and then click to enter the specific order details page. The order information is detailed and clear. Among them, the pick-up point navigation and pickup QR code are the highlight features. Click on the navigation to navigate directly through the built-in map, and the QR code pickup reduces the risk of taking the wrong goods.

② After-sales and customer service

After receiving the goods, users can evaluate their shopping experience, and returns and exchanges are time-efficient. In terms of customer service, the default is intelligent AI, which also includes voice call and transfer to manual options, taking into account the various needs of users. You can view historical order records in My Orders, and considering the possibility of user repurchase, an option to buy again is added.

2) Highlight features

The recipe (live broadcast) page is a highlight feature of Meituan Youxuan, which solves the daily problem of users not knowing what to eat and allows them to easily purchase the corresponding products. However, the platform did not filter the recipes based on the products at the pick-up points, and some recipes had no related products, resulting in a slightly poor experience. In addition, a one-click ordering function can be added in the future to reduce the number of clicks and improve user experience.

Currently, recipes are published in PGC mode, which can be changed to "PUGC+review" mode in the future, allowing users to upload their own recipes, increase activity, and ensure quality through review. You can even use short videos and live broadcasts, and at the same time attract internet celebrities and big Vs to join in and promote products, create a food community, and increase user stickiness.

8. Operational Path Analysis

According to Qimai data, since its launch, the Meituan Youxuan APP has been downloaded more than 300 million times across all platforms in just 10 months. It has long remained in the top 50 in the shopping software rankings of major application markets, and its users continue to be active, which is inseparable from the efforts of operations. The following article uses the AARRR model to briefly summarize the main operating activities during this period.

1. Attract new customers (A)

1) Meituan APP traffic diversion: Set the homepage of the mobile main site as the first-level entrance, and use about 1/3 of the first screen to display information on discounted products in Meituan Youxuan.

2) Advertising and celebrity endorsements

• In December 2020, advertisements endorsed by Jia Ling and Shen Teng were widely broadcast on CCTV, the Internet, bus stations and other platforms;
• In April 2021, during the second season of Sisters Riding the Wind and Waves, Meituan Youxuan took advantage of the opportunity to announce four big-name spokespersons, with Na Ying and Zhou Bichang as user spokespersons, and Huang Xiaoming and Qin Hao as group leaders.
• During the Mid-Autumn Festival in 2021, an advertisement with the theme of going home was released through the perspectives of three ordinary people;
• We have been distributing flyers offline through self-pickup points, exhibition points, etc. for a long time.

3) Old users bring in new users: group leaders can get commissions by bringing in new users, and old users can invite new users to place orders to “earn 14 yuan in cash” and other activities.

2. Stimulate activity (A)

After new users register an account, they need to be guided to place orders to increase daily activity and conversion rate, mainly through the following methods:

1) Supervision of old users: Old users can only receive rewards after new users complete their orders.

2) Special benefits for new users: "One gift for new users", red envelopes will be issued to deduct random discounts when placing orders; "Two gifts for new users", exclusive prices for 5 products; and other exclusive discounts for new users.

3) Offline activities: After placing 2 orders cumulatively, you can participate in activities such as "Square Dance Competition", "Tide Music Festival", and "Gateball Benefits".

3. Improve retention (R)

After user activation, it is also necessary to improve user retention rate in order to continuously create value for the platform. In order to enhance user stickiness, Meituan Youxuan mainly did the following things:

1) Develop a recipe function to facilitate users to place orders based on recipes.

2) Open “saving money cards” and issue discount coupons to guide users to continue shopping.

3) Regularly organize group purchases, flash sales, special vegetable markets, holiday promotions and other promotional activities to stimulate users' impulse purchases.

4) Other interesting promotional activities attract users to continue using the APP, such as signing in to receive red envelopes, receiving red envelopes by walking, earning eggs every day, receiving fruits every day, etc.

4. Share and spread (R)

In terms of spontaneous dissemination, Meituan Youxuan fully utilizes the role of group leaders, recommends products through WeChat groups, and guides users to forward them for group buying to achieve the purpose of dissemination.

5. Increase income (R)

The methods to increase revenue have been analyzed in detail in 5.3 Increasing Average Order Value, so I will not repeat them here.

IX. Conclusion

Through the above overall analysis of the community group buying industry and Meituan Youxuan products, we can draw the following conclusions:

1. From a macro perspective, community group buying has promoted the rational flow of social resources and provided consumers with high-quality, inexpensive supplies. On the premise of complying with national policies, it still has very broad development prospects in the future.
2. As far as the community group buying business model is concerned, the most critical things are information and supply chain, which are also the main components of its cost. In the early stages of community group buying in a region, it is often accompanied by huge investments in personnel and warehousing and distribution. With the increase in user scale and the completion of various basic investments, it is expected to turn losses into profits and achieve a deeper moat.
3. The core of the community group buying business is consumers. The platform must serve consumers well, coordinate supplier resources, and facilitate group leaders, so that users from all parties can stick to the platform for a long time and maintain the platform's activity.
4. Meituan Youxuan is a leading player in the community group buying industry, but compared with Duoduo Maicai, its advantages are not obvious. At the same time, it is also facing competition from the second-tier players including Alibaba's "Taocaicai". Meituan Youxuan should continue to strengthen refined and standardized management, continuously improve product quality and supply chain efficiency, while continuing to promote the centralized procurement business of fresh produce, make up for its shortcomings and enhance its strengths, and strive to maintain and expand its current advantageous position.
5. In order to achieve sustained revenue growth, Meituan Youxuan fully leverages the advantages of online traffic and offline BD teams to acquire a large number of customers in a relatively short period of time; secondly, it continues to guide new customer conversions through activities such as new customer discounts, flash sales and special sales; finally, it retains users through product recommendations, discounts and member discounts, thereby continuously generating value for the platform.
6. Meituan Youxuan’s mini program is a transaction platform for the initial stage of the business, so the first phase of functions launched on the APP are basically the same as those of the mini program, mainly to verify user needs; in the second phase, in line with operational strategies, it continuously updates and iterates product versions, places guiding information on the homepage, enriches application scenarios, and fully prepares to take on more users and create greater value.
7. Meituan Youxuan has developed different clients for consumers, group leaders, logistics, and store assistants’ product sales, among which consumer-oriented products are the most critical. The product functions meet the users’ various needs for e-commerce platforms in different scenarios. There are also many highlight functions such as recipes, and it also has a good product experience.
8. In operation, Meituan Youxuan uses different forms of high-density investments at the same time, and has achieved good results in attracting new products, promoting activation, retention, and self-dissemination.

In summary, this article analyzes the reasons behind Meituan Youxuan's first echelon of community group buying from the aspects of industry, business model, user value, overall strategy of competitors, business value, product iteration, product structure and operation. Only by deeply understanding the inherent connection between industry background, business logic and product functions, and integrating it into product design and development can the product return to its essence and better serve the business, which can truly be called a "good product".

10. Future prospects

Through analysis, we know the reason behind Meituan Youxuan’s ability to enter the first echelon of community group buying in a short period of time. So in the competition with Duoduo Maicai and "Taocai", how can Meituan Youxuan maintain or even expand its current leading situation? This article will continue to use SWOT model analysis to provide suggestions for subsequent development directions.

Through the above analysis, Meituan Youxuan will still need a lot of investment in the future for a considerable period of time, so the core point is to increase revenue and reduce expenditure, and continue to explore profit points on the basis of reducing costs, and turn losses into profits as soon as possible.

1. Avoid policy risks and actively carry out various tasks under the guidance of relevant national policies, such as continuing to invest in the directions encouraged by rural agricultural products such as rural agricultural products production, transportation, and storage, focusing on expanding business margins rather than "involving", and not competing with "street vendors". At the same time, pay attention to protecting the user's information security.
2. Further control costs. On the one hand, we continue to expand the market size, dilute fixed costs, and obtain stronger bargaining power for upstream supply; on the other hand, we continue to improve the efficiency of fulfillment, strengthen the management capabilities of central warehouses, grid warehouses and downstream group efficiency, and continue to improve turnover efficiency and reduce the loss rate when the order volume continues to increase.
3. Improve existing profitability, continue to develop sinking markets, and strengthen new customer introduction; adopt a variety of forms to cultivate user consumption habits, enhance user stickiness, and ultimately achieve an increase in conversion rate and customer unit price.
4. Find new profit growth points, such as actively developing 2B businesses, or using information advantages to provide value-added services for suppliers' business activities, etc., and expand overseas businesses.

Author: Riopold

Source: Riopold