After radical changes to its membership system, Meituan once again launched a local lifestyle campaign

Recently, many people have noticed that Meituan's God Membership will usher in another major upgrade. So, how to understand the logic of the transformation of Meituan's membership system? What are the advantages and disadvantages of God Membership for merchants? This article disassembles and analyzes the current development stage of the domestic local life track. Let's take a look.

In less than three months, Meituan’s stock price has doubled this year.

Compared with Tencent, Alibaba, and JD.com, which are veteran domestic Internet companies, although the overall market conditions are in a steady recovery, it is obvious that Meituan's growth curve is smoother.

Let’s first review what Meituan has done in the past three months:

In early February, Meituan’s highest decision-making body, S-steam, made organizational adjustments to its core local business, integrating two business groups (home delivery and store delivery) and two platforms (Meituan platform and basic R&D platform), and unifying them under the management of Meituan’s senior vice president Wang Puchong, who was previously the head of the home delivery business group.

This is the biggest organizational adjustment Meituan has made since its listing, and the purpose is very clear, which is to increase the priority of home delivery business and to achieve the effect of concentrating on defending against the enemy in local life, which is generally believed by the outside world to be TikTok.

In March, Meituan released its full-year results for 2023, with revenue of 276.7 billion yuan, a year-on-year increase of 26%, and operating profit of 13.4 billion yuan. The good news revealed in this financial report is that the main business is stable and the new business is shrinking losses. Thanks to the rapid recovery and growth of takeout and in-store hotel and travel after the epidemic, Meituan's profitability has gradually emerged and has left its competitors far behind.

What has been discussed a lot recently is that Meituan’s God Members will undergo another major upgrade. It has been less than a year since Meituan’s takeaway members were upgraded to God Members last year. In the future, the God coupons obtained by users will not only be used for takeaway, but also for in-store dining, hotels and travel, leisure and entertainment and other businesses.

Through this change, Meituan may be able to divert users from its single food delivery business to other sectors, thus forming a strong user stickiness. In other words, users can experience the same benefits and convenience when using Meituan's different services.

In terms of importance, this is the second round of major reforms for Meituan to promote business integration and increase market share after the organizational adjustment in February. The last one was aimed at the corporate organizational strategy, and this time, as a continuation, will be more directly aimed at all merchants and users. Under a series of radical measures, the battle for local life in China has become fierce.

1. The logic behind Meituan’s membership system reform

Meituan’s membership system has always been difficult to define, and its launch time is not clearly mentioned in public information. But according to some information, Meituan established a membership system within a few years after the launch of the main site, and developed it into the current takeaway membership system.

Although the forms are different, the underlying logic of all membership systems is similar: to improve customer loyalty and satisfaction by establishing long-term, stable customer relationships, providing attractive benefit packages, implementing effective membership relationship management, and using data analysis, thereby achieving sustainable development of the organization.

The points system should be the earliest membership system of Meituan. The platform sets different membership levels, and users have corresponding growth values ​​according to their usage. Users can get different points by writing reviews, and the points can be used to offset cash. Users of different levels are given different privileges, such as the opportunity to participate in tastings at different prices.

This purely free-to-play model has many disadvantages. For example, the most basic user engagement is difficult to quantify. Moreover, as the scale grows, the cost of redeeming rights and long-term operations must also be considered. Therefore, later on, for food delivery, Meituan continued the basic skills of Internet retail and launched a paid membership system: to stimulate purchases, increase user stickiness, repurchase rate and attract new customers.

Judging from the actual results, Meituan’s membership system has not formed sufficient differentiation.

The core of membership benefits is the extra red envelopes, which are very similar in type and function to those of other food delivery platforms and are used to deduct order amounts. As the platform develops, the scope of discounts has been further subdivided and shrunk. Previously, no-threshold coupons could also be used for non-catering categories such as buying medicine, but now they are basically focused on food delivery. As for other subcategories, they have also developed their own membership systems.

In terms of membership privileges, in addition to a few more red envelopes and greater discounts, Meituan still retains the previous gameplay of corresponding growth values ​​to different membership levels. Members of different levels enjoy discounts on other categories such as beauty and hotels. However, it should be noted that even for senior users of Meituan, these rights and discounts are not very noticeable.

The reason is simple. In this type of platform, what can influence users' decision-making and form the ultimate competitiveness, in addition to the merchant's store and delivery efficiency, is more about how much subsidies and discounts can be given to users. The platform has not designed additional services such as priority delivery and exclusive customer service specifically for members.

Before Meituan Takeout's God Membership was officially launched, the expansion coupons were a privilege for members to purchase. Consumers could use them to enjoy more threshold-free discounts beyond the 5 yuan threshold at participating merchants. For non-member users, the platform would also randomly distribute some red envelopes with a certain amount of discount, in which the God Coupons could be further expanded, similar to another gameplay "Subsidy Alliance", which allows users to obtain additional subsidies and discounts within a specific merchant range.

To give a simple example, Meituan’s previous marketing strategy of offering discounts to new users and raising prices for old users meant that the original monthly membership fee of around 20 yuan was not enough to attract users to pay. Users often had to wait until a certain opportunity when the fee dropped to single digits before choosing to take advantage of the service.

At this time, the opening of the God membership becomes very important. Similar to Alibaba's 88VIP, Meituan's membership system is likely to usher in the two most intuitive changes. First, it will be more focused and simplified to enhance the synergy of internal business; second, membership fees are expected to become a major source of income.

It seems that Wang Xing has not forgotten his dream of becoming Amazon, which is almost the most successful membership system in the world: in order to enjoy more comprehensive discounts, consumers will be more inclined to pay for higher Meituan membership fees; the platform may also change consumers' purchasing behavior by providing higher value services.

2. The pros and cons of God Membership for merchants

The benefits of Meituan red envelopes have always been borne by merchants and the platform. From the perspective of merchants, the upgrade of Meituan God members has also brought certain positive effects to merchants.

For example, by providing more display spaces and reducing marketing complexity, it has brought a large number of new orders to merchants and improved their operating efficiency.

At the same time, merchants who sign up for Shen Membership can participate in Shen Coupons and Saving Wallets at the same time, which increases brand exposure and merchant influence, and also brings them more potential customers and partners. This virtuous cycle between businesses not only brings more income to merchants, but also promotes the development of the Meituan platform ecosystem.

But on the other hand, the upgrade of God Members means that merchants need to bear higher marketing costs. Merchants need to participate in the platform's activities and promotions to obtain more traffic and orders, which means that they may need to provide additional offers and discounts to attract consumers to become God Members.

To give a simple example, Xinmo learned from some merchant channels that in the past, when there were only ordinary paying members, the merchants normally bore about 3 yuan in subsidies. After upgrading to a god member, the starting line was uniformly changed to 5 yuan. This stimulated consumption by stimulating merchants to spend extra money and thus meet the platform's discounts.

Now that the God Membership has been upgraded, there is no doubt that the scale of God Member merchants will be further expanded, but this is actually not friendly to some non-branded individual catering merchants. Although the order volume may increase, the profit margin of merchants may be compressed due to the need to bear higher marketing costs and provide additional discounts and discounts. In addition, if the red envelope amount set by the platform is too high, merchants may need to bear more subsidy costs, further reducing profits.

You should know that most of the people who participated in the expansion of magic coupons in the past were brand merchants with sufficient cash and exposure. Between increasing discounts and obtaining more traffic, they are more willing to choose the latter, so the benefits of magic coupons are more reflected in these merchants.

What this means is that small businesses that cannot afford high subsidies will either quickly turn around, with corresponding reductions in exposure and order volume, or lower their product standards to adapt to a more inward-looking business environment.

This also explains why even with greater discounts, some consumers still have doubts, that is, they worry about the quality of products provided by merchants.

Since the launch of the "Super Member" last year, Meituan has made it clear to the market that it will use greater discounts to attract more users and take up more market share. Although Ele.me has also made corresponding policy adjustments later, such as the super foodie red envelope expansion coupons, it is indeed a step behind Meituan in terms of coverage and discount strength.

The data also verified its effectiveness. In the month of its launch, the number of orders from Meituan users using the "God Membership" increased by 38% year-on-year, and the number of Meituan's takeaway orders that month exceeded the historical peak.

We might as well make a bold guess that when God Members move from food delivery to all categories of the entire platform, and even to in-store services such as hotel and travel, leisure and entertainment, this may be the most direct counterattack given by Meituan when dealing with latecomers in the local life track such as Douyin and Xiaohongshu: Originally as a food delivery platform, it has the most loyal group of consumers, and in the future, it will attract more people to flock in. They will no longer just order food delivery in Meituan, and in-store visits to the platform will change from an alternative option to a must-have option.

For Meituan, the next thing to consider is how to unify the rules for the two completely different businesses of in-store and home delivery. For the industry, local life is a tough competition between quality and price. Meituan’s membership upgrade has once again intensified the internal competition. If they cannot withstand the bloody price war, they may become cannon fodder in the future.