Meituan God Member, Wang Puchong’s First Fire

Why is Meituan God Member the first fire of Wang Puchong? This article will show you the reasons. Of course, this article is also recommended for enterprises or individual business operators to read.

The first thing Wang Puchong did after taking office was to launch the "S" level project "God Member". From May, Meituan's core local business began to be built on a city-by-city basis, step by step, gradually opening up the home delivery and store delivery businesses.

The latest city is Chengdu, which fully launched in-store and home delivery on July 4. Photon Planet learned that Meituan had already informed merchants at the end of April and gradually started to attract investment. "Chengdu is a relatively late city to launch the service, while Guiyang, for example, had already launched it a month or two ago."

Starting late has its advantages. For example, Meituan’s BDs can use the successful cases that were launched earlier to more easily convince merchants to join.

A promotional page for the effectiveness of an event for merchants in Chengdu provided anonymous cases from four other cities. The average number of transaction orders in the four cases increased by 17%, the paid GTV increased by 20%, the order conversion rate increased by 4%, and the number of new brand customers was approximately 16%.

According to internal sources, the "high-quality" traffic from home visits will be injected into stores.

In the macro sense, the fierce competition between home delivery and store delivery is still increasing. Douyin has been engaged in food delivery for two years, but was forced to turn to instant retail. Not long after that, Kuaishou suddenly announced its entry into food delivery. Douyin e-commerce, which has turned to instant retail, will be fully launched in mid-July.

1. Meituan wants to “take advantage” of merchants’ budgets

According to a Meituan BD, the "God Member" service that connects takeout to stores is not limited to catering, but includes all in-store businesses such as hotels and travel, supermarkets, and entertainment.

On the merchant side, God Member is essentially a full-platform marketing tool. The platform mainly provides merchants with traffic and new ways to play, including the God Member entrance on the App homepage, the Guess the God Coupon label, the search label, the quick screening/search list page, and the store shelf page. In other words, for merchants, the main role of God Member is to achieve growth, and it is independent of store discounts and product discounts.

Specifically, the God Membership has two levels: basic and expanded. For the basic level, merchants pay 3 yuan, and the platform pays the rest. The expanded level is divided into four intervals according to the group purchase price after the merchant's instant discount, and the excess is subsidized by the platform. According to the platform's business case calculation, the expected rate is between 3.5% and 8.3%. Except for those below 100 yuan, the higher the group purchase price after the instant discount, the lower the rate.

It is worth mentioning that on June 17, Meituan changed the mutual exclusion of store discounts and product discounts to co-existence in 18 cities including Chongqing, Jilin, and Changchun. According to official suggestions, if merchants want to maintain their previous income, they need to increase the discounts on discounted products from 50% to 75% to 621% to 904%. Combined with the rates of God members, we can see that Meituan is trying to consolidate its pricing power through the means of membership + merchant management.

While Meituan is “leveraging merchant budgets”, TikTok’s live service is doing the opposite.

At the end of June, Douyin's live service released the software service fee announcement for the third quarter of this year. Among the 18 first-level categories, the commissions of accommodation, wedding, beauty, and jewelry categories have been adjusted. The accommodation category has been significantly increased, among which all second- and third-level categories of domestic accommodation have been increased from 4.5% to 8%, and overseas accommodation (including Hong Kong, Macau and Taiwan) has been increased from 3% to 8%. In addition, the beauty and body care part has been increased by 1%-2%.

However, the categories of jewelry under marriage and shopping, body shaping under beauty, and other tertiary categories were reduced by 3%-7%.

An insider told Photon Planet that Douyin’s adjustment of commission for its live service has three considerations.

One is that they want to verify internally on certain categories whether there is room for commission increase in the current model. "If the effect is not good this quarter, we will adjust it back next quarter." Secondly, after the structural and personnel adjustments in the first half of the year, the life service sector has an assessment requirement of breaking even. Finally, the third quarter is the peak season for hotels and travel, and the sale of holiday hotels and route products has the consideration of improving performance. Douyin's life service also hopes to catch a "ride".

After Douyin communicated with a domestic listed hotel chain about the issue of commission increase, the Douyin person in charge of this hotel chain privately told Photon Planet that Douyin’s incremental value is currently limited, and that it will increase commissions during the peak season simply by relying on traffic, and that the cooperation will be re-examined in the future.

Dabo and short videos are in the "demystification" stage.

A typical example is the Zhapi Hoof Flower, which has previously set off a wave of popularity. Through the continuous output of massive store visits and live broadcast content, various Zhapi Hoof Flower stores have sprung up in Sichuan and Chongqing. This trend came quickly and went away quickly. The failure of Zhapi Hoof Flower also shows that simply relying on content and traffic infusion cannot maintain prosperity.

"For many small shops and chains, the review system is crucial. Douyin's live service did not cultivate similar products and ultimately failed to retain these businesses." An industry insider mentioned that although it is difficult for restaurant chains to IPO in China, the primary market will still use review data as an important reference. "Investors will definitely not use Douyin as a basis for investment."

2. Members who prefer lower prices to higher ones

Over the past three years, Meituan’s in-store business has continued to be impacted by Douyin’s content. The high efficiency of content-planting-low-price conversion has allowed merchants to see a way to gain customers without going through “Dianping”.

Meituan has tried many methods to transform its content in a counter-measure way, but the effect has never been as good as that of city BD.

Since last year, Meituan has asked some small and medium-sized chain merchants to "benchmark" Douyin group buying. If the merchants agree, they will provide goods subsidies and traffic coupons. This strategy has an immediate effect. Many chain stores said that in the two months after the benchmark, Douyin's core sales were cut in half.

In comparison, the effect of Meituan’s sharpshooter live broadcast is not reliable.

We learned from many merchants participating in the live broadcast that the traffic of the sharpshooter live broadcast is neither wide nor deep. "White-collar workers are the main group of people who order takeout, but they really won't watch a 30-minute live broadcast to place an order. Mothers and middle-aged and elderly people who have time are not the main users of takeout."

A service provider posted live streaming data of a live streaming store for two consecutive days on WeChat Moments. The screenshots showed that the store broadcast for two hours every day, with an average of 500 viewers per show, a transaction amount of more than 3,000, and a single-digit number of new fans. The scale is not large, but the conversion rate is very high.

The biggest feature of Meituan's O2O scene search is its prominent LBS attribute, so the supply and demand cannot be compared with search advertising in other scenes. This problem also restricts Meituan's live broadcast. Search can still rely on precise matching (recall) and expanding the LBS range, and then solve the problem through structural means such as "stock up first and use later", but the effect of live broadcast is relatively limited.

Since live streaming still needs to be explored in the short term, Wang Puchong focused his energy on the God Members after taking office.

Photon Planet learned that in order to understand the membership system as quickly as possible, Wang Puchong and other senior executives had earlier contacted several consulting companies to research "predecessors" such as Taobao 88VIP, JD PLUS membership, and Sam's Club. Among them, the positive impact of 88VIP on Ele.me attracted the management.

After some research, it was finally decided to launch the "God Member" service on Daojia first to screen high-net-worth users, and then use the "God Member" as a "highway" to infuse traffic directly to the store section.

The purpose of membership systems such as Tmall 88VIP, JD PLUS, and Sam's Club is to use cost-effectiveness and benefits to screen old customers and stimulate consumption.

A good example is 88VIP. The average order value of 88VIP users on the Ele.me platform is 20% higher than that of ordinary customers. The core reason is that 88VIP users are high-net-worth users selected by big brands, and they have greater purchasing power.

Although there is no data on the boost to Meituan's in-store business from "God Members", LatePost mentioned earlier that the average customer price of flash sales is 80 yuan, which is 1.6 times that of food delivery. God Members are equivalent to screening out low-priced takeout users and attracting customers to the high-priced in-store business. It is equivalent to allowing those "cows and horses" who want to save money and order takeout to enjoy more expensive group purchase discounts through God Members.

In addition, Meituan’s first quarter report mentioned that the average customer unit price of food delivery and express delivery declined year-on-year. One core reason for this is that since last year, Meituan has been using low-customer unit price businesses such as Pinhaofan to deal with possible low-price offensives from Douyin.

As an important means to achieve price power, Meituan has built two sets of coupon systems. One is the free coupons that are directed from the private domain to the mini program, which have a threshold for use. This type of coupons either stipulates a minimum consumption or specifies a store. The coupons for saving wallets for members are actually paid, and there is no threshold for use.

3. Group buying does not require a moat

It is easier to go to a store than to get it home. After Douyin, Kuaishou, Xiaohongshu, and even WeChat Video Account are all getting involved in in-store delivery.

In-store shopping is a rare inherently open-loop business. Users need to verify their orders on any platform before the transaction is considered complete. However, the only driving force for users to verify their orders is actually the price difference - when group purchases are cheaper than ordinary dine-in single-point prices, users are obviously more fond of group purchases.

In the field of hotel accommodation, the open loop is more prominent. As long as merchants are willing to eliminate the price difference between in-store and online group purchases, the commissions and service fees that merchants originally paid will be converted into profits. In fact, during the special three-year period, many hotels have unlocked this skill in the face of difficulties.

The open loop also allows any platform to get involved in the store business, from Ant, which was engaged in payment in the early years, to content platforms and communities, and then to mini programs in WeChat. Meituan hopes to create a new dimension to connect merchants and users, so at this time, the God Member appeared.

The appearance of "God Member" is membership, but the inside is a row of low-price coupons, which are full of anxiety and determination to make Meituan's in-store service "great again".

Because the in-store business is related to Meituan’s past, present, and future. Meituan started with group buying and relied on the food delivery network to form a barrier. In the future, home delivery will always be a low-profit business, and only in-store business can truly make high profits for merchants.

Wang Puchong, who was born in 1984, wants to do something as stated in the book 1984: "Whoever controls the past controls the future; whoever controls the present controls the past."

Author: Wu Xianzhi

WeChat public account: Photon Planet (ID: 1089390)