Meituan’s O2O dilemma: eliminating group buying, reducing costs, and relying on giants

It has to be said that Wang Xing has an extremely keen business sense. This year, Meituan has made a series of moves: large-scale advertising, focusing on food delivery business, completing a new round of financing, and introducing Shen Li, the former head of Baidu LBS, all in preparation for changing its strategy. Some people speculate that Meituan is doing this for the purpose of going public. E-commerce Jun thinks this topic is meaningless. For Meituan, it is to "get things done" in the end. Going public will not be the end of Wang Xing and his friends' entrepreneurship. If Meituan chooses to go public, it must be hoping to obtain greater capital support.

The O2O market has undergone a major change this year. Internet giants such as Baidu and Tencent have not only taken down group-buying competitors such as Nuomi and Dianping, but also made a series of acquisitions and investments in localized life services at the beginning of this year. The "Direct Number" launched by Baidu today will also set off a new round of upgrade wars in the O2O life service field. Meituan, which used to rely on the "Xiaomi plus rifle" approach to do the dirty work to expand its "base", must now advance into the "Northeast battlefield" and go all out to compete with the BAT Group, which has "planes and cannons".

In fact, in my opinion, today's Meituan is no longer a group buying company, but a vertical O2O enterprise that has established localized life services with certain advantages by relying on the offline market in China's first-, second- and third-tier cities and doing the "dirty and tiring work" of connecting with local merchants. In the film industry, the online seat selection and ticket purchase of Maoyan Movies under Meituan ranks first in the same vertical application; in the hotel industry, Meituan Hotel occupies 75% of the market share by relying on the advantages of group buying, and is in a leading position in the industry. Meituan.com's own catering transaction volume accounts for 53% of the overall transaction volume of group-buying catering. At the beginning of this year, Meituan derived a takeaway discount service from the group-buying catering business to create an independent "Meituan Takeaway" brand. The takeaway business has become the focus of competition among large companies in the local life service O2O field in the second half of this year.

I have been "praising" Meituan for so long, not to write a soft article praising Meituan, but to point out the huge challenges Meituan faces in its business model. When the IT system, customer base, and merchants are solid, when the offline teams in major cities have been built, and when Meituan has basically established certain competitive barriers in major vertical O2O fields, I believe that Meituan has everything ready, and only lacks a platform, that is, a unified localized life service O2O platform.

Why do we say that Meituan only lacks a unified O2O platform for the whole society? Because Meituan currently faces three major challenges:

The first challenge is whether Meituan can successfully get rid of group buying and become a leader in the important vertical fields of local life service O2O, especially in the fields of mainstream mass consumption and entertainment, such as movies, catering, takeout, KTV, fitness, etc. Moreover, it is not enough for Meituan to be a leader. The past model of building vertical applications of App on mobile devices will no longer be mainstream. A unified platform that allows consumers to switch consumption content at any time and quickly find suitable merchants and services may become a new competitive barrier in the next round of local life service O2O market.

The second challenge is that Meituan’s current model for connecting with offline businesses is too costly. This model worked in a few vertical fields before, but if it needs to connect with more merchants and services and expand to more regional cities in the future, this model may "drag down" Meituan. Therefore, Meituan urgently needs to find a more cost-effective way to connect with merchants. Establishing a unified O2O platform that national chain merchants can directly connect to and provide services may be a way for Meituan to get rid of the "cost curse."

The third challenge is that Meituan has chosen to develop independently and has not joined any camp. This is one of the reasons why Meituan CEO Wang Xing is currently attracting much attention. However, I would like to say that local life service O2O is a difficult emerging market that integrates mobile Internet, mobile hardware technology and offline real economy. Although we can still call it e-commerce, Wang Xing wants to learn from Liu Qiangdong's JD model to make Meituan the number one in the industry through capital transfusion and original accumulation of dirty work. I think this is unlikely. Meituan needs to give up the idea of ​​independent development and find suitable partners or backers to win the "Liaoshen Campaign" of the entire local life O2O.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.