Shulou(Shulou.com)11/24 Report--

When Didi App resumes shelves, resumes subsidies to recover lost ground, and Gaode announces the creation of an integrated travel service platform, Meituan began to shrink the ride-hailing front.

On March 6, Meituan founder Wang Xing released an internal email announcing the adjustment of the ride-hailing business and transferring it to the Meituan platform. Zhang Xingyuan, the person in charge of the ride-hailing platform, reported to Li Shubin, the person in charge of the Meituan platform. At the same time, Meituan gave up self-management by taxi and turned to aggregation mode in an all-round way.

According to the email, Meituan will reduce the resources and manpower investment in the online ride-hailing business and travel light. At a time when Internet companies are shouting "reducing costs and increasing efficiency", it is not surprising for Meituan to give up the self-management taxi-hailing business of heavy assets and re-operation.

Industry insiders believe that Meituan's shrinking ride-hailing front can further focus on its main business and better cope with the competition from new and old rivals such as Ali and Douyin in the field of local life.

Meituan car-hailing abandoned self-management Meituan car-hailing platform was officially launched on February 14, 2017 and began to trial run the ride-hailing service in Nanjing. After 10 months of the pilot, Meituan set up a travel department, which was headed by Wang Huiwen. At that time, Meituan's daily taxi-hailing orders had exceeded 100,000. In that year, Gaode entered the car-hailing market in a convergent taxi-hailing mode, and Didi announced that there were more than 400 cities in China, with a total of 7.43 billion orders.

After a year of testing the waters, Meituan entered Shanghai in March 2018 and confronted Didi head-on, launching a subsidy war and handing out two-way subsidies to passengers and drivers. According to media reports, Meituan spent nearly $100 million a month in Shanghai, not including marketing, technology and other costs, in exchange for a 30 per cent share of the Shanghai travel market.

But at that time, Meituan was about to go public, and the overall business was still at a loss, which simply could not stand the money-burning war in the ride-hailing market. Coupled with tighter regulation, the subsidy war soon came to an end, and Meituan's taxi-hailing did not change the market pattern. In April 2019, Meituan launched the online aggregation mode in Nanjing and began to use lighter play to deal with players such as Didi in the field of ride-hailing. During this period, Meituan is still actively storing online car-hailing certificates around the country, waiting for the opportunity.

Until July 2021, Didi encountered security review, Didi App was removed from the shelves, Meituan, Gaode, T3 and other second-tier ride-hailing platforms ushered in the window, have opened subsidies to seize the Didi market. According to LatePost later, Meituan acted quickly and launched his own ride-hailing service in 37 cities within a month, but slowed the pace of expansion again after the third quarter of 2021, shrinking subsidies and not opening new proprietary cities.

In November 2021, Meituan adjusted the organizational structure and divided the intelligent transportation platform into two independent divisions: taxi hailing and unmanned vehicle distribution, which were headed by Zhang Xingyuan and Xia Huaxia, both of whom reported to Wang Xing. From this point of view, although the pace of expansion slowed down, the ride-hailing business was still valued within Meituan at that time.

In March this year, in Meituan's latest adjustment, the ride-hailing business was merged into Meituan's platform. Meituan gave up self-management by car-hailing and turned to aggregation mode in an all-round way. Meituan will also reduce the resources and manpower input to the ride-hailing business, while some of the current team will remain in the ride-hailing business, while the rest will be deployed to other business lines.

Looking back on the development in the past few years, Meituan's overall strategy of taxi-hailing has been relatively cautious. It has not been fully invested or given up, and the subsidy war at the beginning of the game has been a rare crazy moment. From completely imitating Didi's self-management model, to the two-line development of self-management and aggregation, and then to turning to aggregation in an all-round way, why has Meituan's taxi-hailing style changed?

Behind this, there are market reasons, regulatory reasons and Meituan's own development reasons. The inefficiency of taxi-hailing business has a direct impact on Meituan's financial performance. A person close to Meituan told the media that the background of this adjustment is that all the main businesses of Meituan are facing greater pressure this year, and the main tone of non-core business is to reduce costs and increase efficiency. As a light asset model, the aggregation model will obviously be more in line with the development needs of Meituan.

Reduce costs and efficiency under the contraction of the ride-hailing front at present, reducing costs and efficiency has become the main theme of the Internet industry. Since last year, Tencent, Ali, byte and other big companies have adjusted their business units, cut down non-core business lines, and focused on the development of their main business. Meituan's current business is mainly divided into two parts: core local business and new business. Ride-hailing, Meituan selection, Meituan shopping, catering supply chain (fast donkey), shared bikes, shared motorcycles and portable battery all belong to the new business segment.

The financial report shows that in the first three quarters of 2022, the operating loss of Meituan's new business division reached 22.1 billion yuan, dragging down the company's overall operating loss of more than 5 billion yuan. In order to improve the operating condition, it is imperative to adjust the inefficient business. Meituan's operating loss rate narrowed from 69.9% in the first quarter of 2022 to 41.6% in the third quarter, mainly due to the continuous improvement in the operational efficiency of the commodity retail business and the effective cost and expenditure control of other new businesses.

At the third quarter earnings call, Meituan CFO Chen Shaohui said, "the key still lies in optimizing the business model, improving core competitiveness, and will continue to reduce costs and expenses, and improve operational efficiency. But short-term cost optimization can not be at the expense of destroying the long-term development of the business. We will balance long-term development and short-term cost reduction." Based on the return on investment, to allocate resources, according to the development, cash flow to adjust the new business accordingly. " This may have explained the reason why Meituan took a taxi to shrink the front.

It is worth mentioning that Meituan is also under great pressure in the core area of local life. Old rivals such as Didi and Ali are in front, followed by new rivals such as Douyin, Kuaishou and JD.com, which are all attacking the local life market. Meituan is facing the offensive and defensive battle of the main battlefield.

Industry insiders believe that Meituan's contraction of the ride-hailing front can further focus on the main business and deal with the competition from new and old rivals such as Ali and Douyin.

Is it really delicious for the giants to join in the aggregation mode? At present, there are three main operation modes in the ride-hailing industry, namely, self-management mode (T3, Cao Cao, etc.), self-operation + aggregation mode (Didi, Gaode, etc.), and aggregation mode, but the boundary between self-management mode and aggregation mode has been gradually blurred. After this adjustment, Meituan taxi-hailing will become a platform of pure aggregation mode.

As a light asset model, the entry barrier of aggregation mode is not high, especially for Internet giants with traffic and technology, they can access many service providers with relatively low operating costs and realize their own traffic without having to leave in person. Last October, Gao de taxi has announced that it has made a profit.

Or business collaboration, or improve the ecology, Tencent, Huawei last year have entered the bureau ride-hailing market in the mode of aggregation. At the end of the year, Douyin also quietly opened the qualification of platform service providers for transportation travel services, such as T3 travel, a ride, fast dog taxi and other platforms.

According to a report by LatePost later, some people in the industry believe that Meituan's adjustment cannot be regarded as an "end", but may be "another beginning." Meituan took a taxi and devoted himself to aggregation, hoping to promote the business faster at a lower cost and lighter way.

However, it is worth noting that because the service quality of ride-hailing enterprises is uneven, and the aggregation platform is difficult to manage the third-party enterprises and other practical problems, the aggregation platform also faces the problem of safety and compliance.

In August last year, the Ministry of Communications conducted reminder interviews with 11 ride-hailing platforms, mentioning the powers and responsibilities of the pooling platform for the first time. It is required that the aggregation platform should ensure that the connected ride-hailing platform complies with the relevant regulations, and urge the connected ride-hailing platform company to strengthen the management of vehicles and personnel; in the event of a security incident, the aggregation platform shall perform the responsibility of paying compensation in advance in accordance with the law, and work with the ride-hailing platform company involved to deal with the accident.

This means that the aggregation platform is ushering in strong regulation. According to the statistics of the online ride-hailing regulatory information interaction system, in January 2023, the top three order compliance rates of the online ride-hailing aggregation platform were DiDi, Gaode taxi-hailing and Meituan, respectively, with order compliance rates of more than 70%. After turning to the aggregation mode in an all-round way, it remains to be seen whether Meituan can maintain such service capability and user experience.

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