“Special Edition” Meituan starts light mode expansion

This article explores the new "special price version" strategy launched by Meituan, analyzes its transformation to a light-mode operation, and its expansion in the local life service market. Read this article to learn how Meituan taps into price-sensitive users through special price group buying and social e-commerce expert distribution. I hope it will help you gain insight into e-commerce industry trends.

Meituan is creating more low-price supplies. On the homepage of the Meituan APP, "Special Price Group" and "Meituan Live" occupy the upper half of the screen. They aggregate many local life merchants from catering to leisure and entertainment, and use 20% or even 10% discounts to attract consumers. Meituan hopes to work with merchants to tap more price-sensitive users through a wide range of discount packages.

Earlier this year, Zhang Chuan, president of Meituan Daodian, said in an internal open letter that the key to 2024 is everyday low prices. In the past, Meituan Daodian's system was a shelf system, characterized by "more and better", but it was not enough to capture users looking for low prices. Through new businesses such as special group purchases and live broadcasts, Meituan has tapped more new users, "This is an opportunity for Daodian to take off again."

In addition to the main APP, in 2020, Meituan launched the Meituan Tuanjieshe mini program (later renamed Meituan Quanquan) based on the WeChat ecosystem, using the social e-commerce expert distribution method to provide users with discounted products. Since March last year, Meituan Quanquan has restarted its expansion in multiple cities.

According to an insider who revealed to Tech Planet, Meituan Quanquan supports the distribution of all types of goods, including sales submissions, merchant self-service submissions and submissions from Meituan's official service providers. Through these cooperation channels, Meituan Quanquan is continuing to attract large-scale merchants. After four years of development, can Meituan Quanquan, which has accelerated again, open up a new situation this time?

1. The “special price version” of Meituan begins light mode operation

As a special group buying platform, the core of Meituan Quanquan is cheapness. During the May Day holiday this year, at the main venue of Meituan's "5.1 Group Season" event, "Meituan Quanquan" was placed side by side with "Special Group Buying" in the "Low Price Good Goods" section to create the ultimate cost-effectiveness. At present, the main distribution channels of Meituan Quanquan include self-operated corporate WeChat groups, expert distribution networks, and Meituan Quanquan mini programs. An insider revealed to Tech Planet that the DAU of Meituan Quanquan mini program has begun to take shape.

This year, Meituan Quanquan began to change from a direct-operated model to a light-mode operation, with the BD of the "core local business" business directly recruiting merchants. From this perspective, it can actually help Meituan Quanquan further expand its business scale. A local life service provider told Tech Planet that recently a team from Meituan Quanquan has also approached them to seek cooperation, and they hope to find service providers with private domain resources such as experts and communities. Today, from the Meituan Quanquan expert page, you can see that there are columns such as today's new products, real-time best-selling lists, and big V follow-up lists. Food and catering merchants are still the main force, and the merchants in the "Daily New Products" column are still mainly food and catering, while the leisure and entertainment and surrounding attractions columns show "trying to replenish stocks."

Zhang Yuan, former BD (Business Development) of Meituan Quanquan, told Tech Planet that large chain brands and light fast food stores have certain advantages in Meituan Quanquan, as the former have their own traffic and the latter have low customer spending. In addition, self-service brands are also suitable for Meituan Quanquan. When merchants rely on low-priced packages to gain customer traffic in the short term, their store reception volume is also much higher than that of regular meals.

Zhao Ming, a Beijing-based merchant who ranks among the top in sales on Meituan Circle, told Tech Planet that his store recently opened in Meituan Circle, and he offers a package with a 2.7% discount, with daily sales reaching more than 2,000 copies. However, unlike the strong purpose of consumers placing orders on Meituan's main APP, the challenge of Meituan Circle lies in the actual write-off rate, which, according to his past experience, is about 30%. Mainly to attract traffic, Zhao Ming said that Meituan Circle can cover tens of thousands of users within 6 to 8 kilometers around through influencers and community forwarding, and his store has recently attracted many student groups. However, Zhao Ming said that considering that merchants have to pay 6%-7% commission to influencers and a certain percentage of commission to Meituan, the discount package setting can ensure that merchants do not lose money, but they will not make too much money.

Tech Planet saw from the Meituan Quanquan mini program that the discounts on packages offered by large chain brands such as McDonald's are consistent with the discounts on packages offered in the "special price group" on the Meituan homepage and in the live broadcast room. Some chain brands have set up exclusive discount prices for Meituan Quanquan. For example, a beef hot pot brand has launched a "39.9 yuan for 100 yuan" discount voucher only on Meituan Quanquan.

In this regard, Zhang Yuan said that the discounts offered by merchants in Meituan’s different special group-buying businesses are not necessarily the same, and it mainly depends on the negotiation ability of the sales team. Generally speaking, merchants who can offer the lowest-priced packages on the entire network will definitely get more traffic and expert recommendations, and ultimately achieve higher sales and rankings.

2. A year of restarting expansion

In the impression of local life service provider Wang Lu, Meituan Quanquan has been adjusting its strategy in the four years since its launch. "It was not very popular for a while, until it expanded again in multiple cities last year and began to gain a certain reputation in the market. Some popular coffee and tea products, including Jiangxiang Latte, Shuyi Herbal Jelly, and Mixue Bingcheng, have achieved good sales in Meituan Quanquan and have become very popular." Looking back, the development history of Meituan Quanquan can be described as twists and turns.

At the end of 2020, Meituan Quanquan was launched as a special group purchase product benchmarked against "Lianlian Surrounding Tours". After more than a year of exploration, the volume of other cities has not increased much except Wuhan. With the suspension of sales services in Xi'an, the first city of Meituan Quanquan, in May 2022, facing the mature special group purchase products and services in the industry, the challenge faced by Meituan Quanquan is how to find a differentiated path.

An insider told Tech Planet that Meituan Quanquan has also undergone many adjustments and changes in Meituan’s internal organizational structure. At present, the organizational structure of Meituan Quanquan business belongs to the Meituan platform and is a distribution tool serving the entire core local business. Starting in March last year, Meituan Quanquan has successively expanded to Chengdu, Nanjing, Shenzhen, Hangzhou, Shanghai, Beijing, and Guangzhou. When Internet companies rushed to the local life business last year, Meituan Quanquan restarted its expansion, which was once considered by the outside world to be a defensive measure taken by Meituan. But in the view of Zhang Yuan, the former BD of Meituan Quanquan, this move is more important to increase Meituan’s own user traffic. In some cities, Meituan Quanquan does bring very considerable new user traffic, but the challenge lies in whether the profit model can be opened up.

For example, the commission of influencers accounts for a large part of the cost. For merchants, high commissions mean that they can mobilize the enthusiasm of influencers, attract as many influencers as possible to share, and bring more exposure and sales. Merchants can set the commission ratio by themselves in the background. From the homepage of the Meituan Quanquan mini program, we can see that the official recommended standard is that for sales prices above 200 yuan, the commission is set at 10%, and for sales prices below 200 yuan, the commission is set at 14%. In the early days, Meituan Quanquan provided large subsidies to both influencers and merchants. Zhang Yuan said that the weak performance of some cities in the later period was partly due to the control of subsidies.

A promoter of Meituan Quanquan also told Tech Planet that he had applied to the Meituan Quanquan team for more subsidies last year to stimulate the enthusiasm of merchants and users to participate, but did not receive a clear response in the end.

This is not difficult to understand. The era of Internet burning money to subsidize growth has long gone, and the same is true for Meituan Quanquan's business. Under the general trend of "reducing costs and increasing efficiency", in March this year, Meituan Quanquan changed from a direct-operated model to a light model, and began to try to explore expansion with a lighter model.

Zhang Yuan was not surprised by this. Previously, there were more than 20 BD members in a city. The labor input alone was a considerable expense. In his opinion, the focus of Meituan Quanquan has gradually shifted from market coverage to deepening package development, providing more abundant supply for platform users.

3. A tough battle of low prices

Nowadays, whether it is under the general background of the low-price strategy of various Internet companies or seeking incremental markets in the local life market, products and services represented by special group buying have begun to occupy a more important position in the development of Meituan. 36Kr previously reported that special group buying is also one of the fastest growing businesses of Meituan in the second half of 2023. The daily order volume of this business in Q3 last year has exceeded 3 million orders, and it is the main source of new users for Meituan. In the earnings call for Q3 last year, terms such as sinking market, low price, and high cost performance were also mentioned many times. Meituan also gave more traffic and marketing support. Starting in 2023, Meituan’s "Special Group" column was placed in a prominent position on the Meituan homepage APP, and Meituan’s live broadcast room’s "Explosive Group" IP now covers various subcategories such as new products, new store products, super-saving Friday specials, and travel specials. Compared with new businesses such as live broadcasts and special groups that rely on Meituan’s in-site traffic, the importance of Meituan Circle lies in relying on WeChat ecological traffic to obtain new growth for Meituan.

A Meituan employee told Tech Planet that last year, Meituan Circle further deepened its collaboration with Meituan's in-store and home delivery businesses in terms of supply and traffic, and the business entered a period of growth, providing a great boost to the in-store business in exploring off-site traffic and transaction growth opportunities. "But overall, after four years of launch, the development speed of Meituan Circle is relatively slow," said the employee. For example, the "Pinhaofan" in Meituan's food delivery business, which also uses a low-price strategy, has begun to roll out across the country this year. In the view of local life service provider Wang Lu, behind the special group buying business, merchants are bound to maintain low-profit operations, and the platform also needs to provide subsidies in a timely manner. The future development of Meituan Circle is undoubtedly a tough battle with low prices.

For example, the write-off rate is also a big challenge. Wang Lu said that one of the earning power of Lianlian Tours in the past was "no refund + deposit fund pool". In the product interface of Lianlian Tours, except for some products with labels of "refund at will" and "refund at will in store", when applying for a refund order for other products, a 20% penalty will be charged within the validity period of use, and a 30% penalty will be charged if the validity period is exceeded by less than half a year. In contrast, the discount packages of Meituan Circle can be automatically refunded after users purchase them.

However, as users pursue the ultimate cost-effectiveness, major brands have stepped up their low-price marketing. Relying on WeChat's huge ecological traffic, the restarted and accelerated Meituan Circle is also Meituan's current exploration of more possibilities in building low-price system capabilities.

(Note: Zhang Yuan, Zhao Ming, and Wang Lu are pseudonyms in this article.)