When a cup of subsidized milk tea swipes the circle of friends, the real war has burned to the hinterland of e-commerce. Meituan started with “takeaway subsidies”, but pointed to the retail basics of JD.com, Taobao, and Pinduoduo: using flash sales to cut 3C home appliances in instant fulfillment, and cutting user wallets with high-frequency alcohol every day, upgrading the traffic empire of local life to a “spoiler” of global retail.
Recently, the most lively thing in the Internet market is the takeaway war, many small partners around me buy milk tea for zero yuan, everyone’s wool is soft to the hand, the sugar water is afraid to drink until vomit, this boom is comparable to the taxi subsidy during the online car-hailing war, the Internet market has been silent for five years, suddenly lively, in fact, it is not a temporary idea, but the pattern of market competition is re-divided.
I wrote in an article earlier that “in the next ten years, Meituan is up, JD.com is down!” In the field of local life, Meituan almost monopolizes the entire market, and we also analyzed in the previous article that Meituan’s upward attack on the commodity retail sales market is inevitable for its development.
Meituan’s reconstruction of the membership system has already opened up the underlying user tags and behavioral data, and has all the basic conditions to improve the user’s ARPU value. Now that everything is ready, this subsidy war is just the beginning of blowing the charge.
From group buying genes to the breakthrough of the global battlefield Recently, the takeaway war has been hot, behind this subsidy war, hidden Meituan’s ambition in the retail battlefield, and the reason for choosing beverages as the main subsidy force, here is a suspense, you can leave a message, and there will be a special answer later.
1. Review the initial business development form of the local life group buying platform
Let me start with an old story: In June 2012, there was a heated discussion in the mainstream media and on Weibo: after a model worker in Heilongjiang transported 107 tons of rice to Beijing, the dealer suddenly ran away. This is anxious for the farmer’s brother, watching the rice in the warehouse deteriorate day by day, and having to pay for warehouse storage and other expenses, the cost of 400,000 yuan is the hard work of the old couple for a lifetime, and they are tormented by the anxiety of losing money every day.
Later, we came into contact with this farmer’s big brother, and we underwrote this batch of rice and put it on the shelves of Wowotuan for online sales, and at the same time supported offline self-pickup and logistics distribution (many of our colleagues are offline self-pickup), which is the initial form of our commodity list. (It was reported by the mainstream news media at the time) http://finance.sina.com.cn/nongye/nygd/20120620/152512363408.shtml
Regarding these 107 tons of rice, if we calculate the economic account, we also lose some money, we lack professional knowledge about rice, such as the storage of rice has many ways – rice needs to be stored in the shell after threshing, and the fresh rice after processing and milling has a very short shelf life, usually about 30 days, calculated from the hulling. Even with good storage conditions (such as vacuum packaging or low temperatures), some fresh rice can be stored for 45 days.
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And Master Ren’s rice has been stored in the warehouse for more than four months, a lot of rice has become moldy, we did not take it apart for quality inspection at that time, many users bought it back and could not eat it, customer complaints followed. It was a good thing to do, but it caused our own losses, and it was from this incident that I realized that although local life services & online product lists are sold by using traffic to reach users, the business methods of different categories of goods are completely different from local life, and cross-border operations still need to maintain awe, otherwise it is easy to stumble.
Bringing the topic back to the early stage of group buying, the entire industry was frantically exploring the group buying format model, and various group buying forms were emerging one after another. There is a local life service model represented by Meituan that we are now familiar with, which adopts the business mode of online ordering and offline write-off, and assesses the write-off conversion rate; There are also group purchases of vertical categories of products such as Jumei Youpin, group purchases of comprehensive products such as Juhuasuan, and travel group purchases on OTA platforms, and even many group buying platforms at that time also explored the local life takeaway model. In the fierce market environment, in the end, all group buying platforms followed the “28 principles” – cutting non-core businesses at key nodes and concentrating resources to deepen their main business.
Behind this is actually closely related to the assessment indicators of different formats: the in-store business looks at the write-off rate, and the commodity group looks at the performance and delivery ability. At that time, although many platforms had outstanding turnover and profit data in the short term, due to the lack of professional team support in customer complaint handling, operation and delivery, non-core businesses not only consumed resources, but also squeezed out the development space of the main business. In the most fierce stage of competition, decisively shrinking the front and focusing on the main business has become the key to survival.
Second, after consolidating the fundamentals, Meituan will develop in depth and become the hegemon in the field of local life services
In the decade from 2010 to 2020, Meituan, a leader in the field of local life, and e-commerce platforms such as Taobao, JD.com, and Pinduoduo formed a strategic balance like “Chu River and Han Jie”. Meituan focuses on local service scenarios such as catering takeaway, in-store consumption, and instant delivery, while the e-commerce platform focuses on the commodity retail track.
As the dust settles on the Hundred Regiments War, Meituan continues to broaden the boundaries of local life services: the group buying category has gradually extended from the early KTV, cinema, and group meals to hotel tourism, leisure and entertainment, medicine and health and other multiple scenarios, driving low-frequency demand through high-frequency services, building a service ecology covering all scenarios of offline life, and finally establishing Meituan’s indisputable monopoly position in the field of offline life services. Many small and medium-sized merchants dare to be angry but dare not speak, and the operating pressure is huge.
However, when Meituan’s scale touched the ceiling of the local life market, Meituan began to set its sights on the retail sector. Around 2020, Meituan strongly entered the community group buying, which directly cut into the core hinterland of e-commerce platforms – retail, as the basic plate of e-commerce platforms for many years, is not only a traffic entrance but also the key to user retention.
This move quickly triggered a collective counterattack from e-commerce giants: Taobao launched “Taocaicai”, JD.com launched “Jingxi Pinpin”, and Pinduoduo made efforts to “Duoduo Grocery Shopping”.
3. Meituan broke through and singled out B2C e-commerce giants
As mentioned in the previous article “User Competition in the Next Ten Years, Meituan Upward, JD.com Down”: Build a traffic foundation with high-frequency local life to store and takeaway business, cut into the consumption scenario of middle-class households through instant retail, and finally achieve the improvement of user ARPU value (average income per user), which is the inevitable path for the large-scale development of Internet platforms. Meituan’s strategic evolution is accelerating along this main line.
After the community group buying track gradually calmed down due to changes in the market environment, Meituan quickly adjusted its strategic focus, tilted its resources to the flash sale business, and officially launched a frontal general attack on the B2C retail field.
Meituan’s advantage lies in its extensive instant delivery network, such as using scenarios to meet the immediate needs of users, Meituan’s flash sale to attract the supply chain network of offline home appliance digital retailers to adopt the tactic of large subsidies in the “3C category” of middle-class consumer goods, and accurately target JD.com’s core advantage areas;
In addition, department store resources such as husband and wife stores and front-end warehouses provide instant retail supply to users through high-frequency alcohol, daily necessities and other categories, and continue to divert users – let’s calculate an account, under a relatively fixed market capacity, every point increase in the proportion of users’ consumption in flash sales means that the user stay time and consumption frequency of Taobao, JD.com, and Pinduoduo will be squeezed accordingly, and the core of retail consumption scenario operation is to shorten the user consumption decision-making link.
From the above series of actions, it can be seen that Meituan has changed from a “city defender” of local life services to a “spoiler” on the B2C retail battlefield, and the competition dimension with traditional e-commerce giants such as Taobao, JD.com, and Pinduoduo has also been upgraded from long penetration to direct competition.
Meituan’s expansion path: take high-frequency demand as the entrance (in the early days it was catering group buying, now it is takeaway), gradually penetrate the field of low-frequency and high-margin profit, and reconstruct retail efficiency with instant fulfillment capabilities.
4. The next competition: When the battlefield between e-commerce and Meituan will definitely turn from online to offline
In the face of Meituan’s fierce offensive in the retail field, Taobao, JD.com, and Pinduoduo’s three major e-commerce platforms will inevitably launch a “defensive offensive” strategy – while building a solid retail base, they will take the initiative to penetrate into the local life scenes that Meituan is good at, and build competitive barriers through the layout of offensive and defensive integration.
Let’s digress, through Meituan, JD.com, Taobao’s recent main site APP subsidy war, we can see that the user consumption scene is not fragmented, it can complete all user needs on one APP side, for the platform, whether it is necessary to divide home, store, e-commerce retail into several APPs, presumably after this war, everyone will have new thinking.
Back to the topic, the essence of the strategy of e-commerce platforms lies in the defense as the attack: it is the e-commerce giants who infiltrate the local life scene through the spillover of capabilities while maintaining the retail basics, not only to resist the cross-border impact of Meituan, but also to find growth space in the new track. However, when online traffic touches the growth ceiling, the next step is estimated to open the competition for offline traffic entrances.
I personally judge that the offline retail business ecology may usher in a new development window, but according to my understanding of traditional offline retail enterprises, the barriers of the offline retail ecology are not so hard for capital, and whether this window of opportunity in the future is an opportunity or a destruction for traditional retail enterprises, it depends on the response ability of retail enterprises and the speed of digital and intelligent transformation – after all, the advantage of online players is that digital infrastructure has reached the ultimate in management efficiency and refined operation, and this is precisely the shortcoming of traditional offline retail players.
This seemingly one-to-many war is essentially a subversion of the “shelf logic” of traditional e-commerce by local life giants, so the question is, why do each platform subsidize milk tea and drinks? Everyone is welcome to leave a message to express their opinions.
