Why didn’t Meituan do a good job in taxi-hailing?

On March 6, according to late LatePost news, Meituan CEO Wang Xing issued an internal email saying that after the S-team research decision, it announced that it would abandon its self-operated taxi-hailing business and fully turn to the aggregation model. The taxi-hailing business will be merged into the Meituan platform, and the business BM Zhang Xingyuan reported to Li Shubin, the person in charge of the Meituan platform.

In the internal notice, Meituan stated that it will reduce the resource and manpower investment in the online car-hailing business in the future, and move forward lightly. Part of the current team will continue to stay in the online car-hailing business, and the rest will be deployed to other business lines in batches. ;

For a long time, Meituan has been working hard to expand new business areas such as online car-hailing, but it has never been able to dominate the online car-hailing market like Didi and other brands.

This article will analyze the development history of Meituan in the online car-hailing market and discuss its future development prospects.

01. Online car-hailing, the cake coveted by Meituan

In 2012, Didi (now Didi Chuxing, hereinafter referred to as “Didi”) was established in China. Didi connected taxi drivers and passengers through Internet technology, which improved the utilization rate of taxis and provided passengers with more convenient taxi-hailing methods. After that, more and more online car-hailing platforms were established one after another. The automobile market ushered in rapid development.

In 2016, the Chinese government began to supervise the online car-hailing industry and promulgated the “Interim Measures for the Management of Online Taxi Booking Operations and Services”. This policy has had a profound impact on the development of the online car-hailing industry and forced the industry to enter a standardized development track.

In February 2017, Meituan Taxi launched its taxi-hailing business in Nanjing, Jiangsu Province, and entered the online car-hailing market, launching the “Meituan Travel” application. At that time, it was just a platform to display taxi information, with a market share of less than 0.1%.

Image source: Zhiyan Consulting

The market development of Meituan Taxi was not smooth. It was not until December 28 that Meituan Travel launched the online car-hailing service in 7 cities across the country. At that time, the competition in the online car-hailing market was extremely fierce, and Meituan Chuxing faced pressure from competitors such as Didi. As early as August 2016, Didi Chuxing merged with Uber China and became the largest company in China’s online car-hailing market. Since then, it has continued to expand its service scope, and has successively launched various services such as free rides, express cars, luxury cars, and car rentals. form.

In 2018, Meituan Travel obtained the online car-hailing business licenses in Nanjing and Shanghai. When the pilot car-hailing business entered Shanghai, it won 30% of the market share within a week. At that time, Wang Xing believed that the online car-hailing market would not emerge. Oligopoly structure, hoping to win 30% of the national online car-hailing market share. However, on April 5, the Meituan Taxi Service was suspended again by the government due to the driver’s operating qualifications.

In addition, due to reasons such as the control of financial performance after the listing of Meituan and the poor operating efficiency of taxi-hailing, Meituan taxi-hailing changed from a self-operated model to an aggregation model in 2019. In the 2018 financial report, Meituan also stated that in 2019, the company will focus on businesses with long-term competitiveness to its core business, will be more prudent in new business investment, and will further increase the value of online car-hailing and shared bicycles. Operational efficiency, strengthen the strategic synergy with the platform, and continue to reduce losses.

However, at the same time, Meituan is still actively storing online car-hailing qualification certificates in various places, waiting for opportunities.

In 2020, due to the impact of the new crown epidemic, China’s online car-hailing market will decline as a whole, and Meituan’s travel will also be affected. However, Meituan will continue to seize the market share of mainstream cities through generous subsidies, and said that it will not stop until it reaches more than 10% subsidy. In May 2021, Meituan Chuxing announced that it will launch its own brand of electric vehicles in several cities in China to further expand its online car-hailing service.

In July 2021, the window period for the online car-hailing market has arrived due to Didi’s delisting. Meituan Taxi acted quickly and launched its self-operated online car-hailing business in 37 cities across the country within one month. However, after the end of the third quarter of 2021, Meituan Taxi slowed down its expansion again, reduced subsidies, and did not open new self-operated taxis. Cities have not promoted large subsidies and recruitment of drivers in newly opened cities.

Looking back over the past few years, it can be found that the overall strategy of Meituan Taxi has been relatively cautious. It has neither fully invested nor completely given up. Although its market share is far behind that of Didi Chuxing, it has also become a major player in China’s online car-hailing market. an important force in the

02. Can’t eat the market, can’t beat Didi

For Meituan Travel, the delisting of Didi is an important opportunity. On July 4, 2021, the Cyberspace Administration of China notified the app store to remove the “Didi Chuxing” app in accordance with the relevant provisions of the “Network Security Law”. The registration of new users will be resumed only on the day.

In the past one and a half years, Meituan has also spent huge sums of money to launch large-scale promotional activities, attracting a large number of users, but this bonus period gradually disappeared as Didi Chuxing resumed new user registration.

For a long time, Meituan Travel has faced two problems: one is the slow growth of market share, and the other is that user stickiness is not strong enough. These two issues have directly affected the performance of Meituan Travel in the online car-hailing market.

In terms of market share, Meituan Chuxing is far behind Didi Chuxing in terms of market share. According to the data from Zhiyan Consulting, as of December 2022, in the urban car industry (excluding aggregation platforms), the penetration rate of Didi Chuxing’s active population reached 19.27%, Didi Chuxing 8.75%, Huaxiaozhu Taxi 2.89%, and T3 Chuxing 1.92%, Caocao Chuxing 1.08%, while the penetration rate of active people on other platforms is less than 1%.

Compared with Didi, the user stickiness of Meituan Taxi is also insufficient. Initially, when Meituan Chuxing entered the online car-hailing market, it adopted the strategy of “get on the car first and then subsidize”. Both registered passengers and drivers can get rewards: the first 50,000 registered drivers can enjoy zero commission subsidies for three months . Passengers who sign up can also receive a newcomer meeting gift, get three 13-yuan no-threshold taxi tickets, and put on the slogan “Take a Meituan taxi for 1 cent”, etc.

Although this strategy can quickly attract a large number of users, it also brings a series of problems. After the free ride ends, users may not use Meituan to travel again due to service level and price reasons. And drivers may also regard Meituan as a platform for receiving subsidies, and they will return to Didi after making a few orders, rather than staying in for a long time.

A few months after Didi was taken off the shelves, DoNews interviewed Meituan taxi drivers in several cities. Some drivers said that they had registered for Meituan taxis a few years ago, but they had never run. Recently, they were only rewarded for running three orders. It only costs 21 yuan to go online every day: “Only when something happens to a big platform, small platforms such as Meituan will come out to give some discounts. Before that, there were no hundreds of yuan in the whole year.”

Another driver bluntly said that Meituan has its own shortcomings: “Meituan’s navigation is not accurate. The map is for the riders’ motorcycles. It is troublesome to withdraw cash. If you mention it a week, it may be gone. Sometimes you call I called the customer service, but there was no customer service, and there must be customer service when Didi calls, so it feels irregular.”

Another Meituan driver who has been driving in Shanghai for a year told DoNews: “There are too few orders, and we can’t cancel the order three kilometers away, but Didi can. Yesterday, there was a taxi driver, quite far away, and Meituan halfway. No one picks up the order within an hour, which proves that there is no car nearby. If you can’t get a taxi once or twice, you don’t need it next time. You can earn 15,000 yuan (single month) in Meituan, and you may have to work more than 14 hours a day , but Didi took about 12 hours. At the beginning, when Meituan was recruiting people in Shanghai, Meituan actually had a lot of drivers, but there were too few customers, and there were few orders on the platform, so it couldn’t keep people.”

Didi Chuxing has a diversified service system in terms of technology and services, such as Didi Express, Didi Shunfengche, Didi Luxury Car, etc. The service model of Meituan Travel is also relatively single, which is difficult to meet the diverse needs of users. Meituan’s business manager told DoNews: “As of today, Meituan Taxi has not launched a ride-hailing business on both the enterprise and user sides.”,

According to statistics, at present, Meituan’s daily order volume is about 1 million, of which the proportion of self-operated orders is about 40%. Meituan Taxi set an annual goal at the beginning of this year, not only to reduce the loss rate from 15% to less than 8% in 2022; As for the upper limit of investment in the taxi-hailing plan in 2023, Meituan gave 1 billion.

However, in order to control losses, since the beginning of the year, Meituan Taxi has stopped subsidizing drivers on the self-operated side. In December last year, Meituan’s self-operated taxi-hailing business had about 120,000 daily active drivers, mainly concentrated in cities such as Shanghai, Nanjing, and Chengdu. As of February this year, it had lost nearly 50%.

After cutting off its self-operated business, Meituan may further lose its influence on the market.

03. Can Meituan become the next AutoNavi?

In the field of online car-hailing, Meituan has had two major attacks, one with Didi and the other with AutoNavi.

Compared with AutoNavi, from the second half of 2021 to the first half of 2022, the growth rate of Meituan taxi-hailing is only about 400,000 orders, compared with the growth rate of more than 3 times of AutoNavi and the growth rate of one million orders on other platforms. , is not prominent. As of June 2022, the daily order volume of Meituan taxis is only about 1.1 million, and the ratio of self-operation to aggregation is about 4:6.

This is also different from the nature of each other’s platforms. Meituan started from local life, while AutoNavi focuses more on travel. From a strategic point of view, the importance of Gaode Taxi to the entire AutoNavi is much higher than that of Meituan Taxi to the entire Meituan.

In 2022, the daily order volume target of Meituan’s taxi-hailing business is set at 1.2 million, and there is no requirement for profit. Meituan’s taxi-hailing business focused on Shanghai, Hangzhou, Nanjing, and Chengdu last year. Large market precipitation methodology, rather than blind pursuit of growth.

But AutoNavi is different. In 2023, AutoNavi raised its target to 12 million orders, which is several times that of Meituan. At present, AutoNavi also occupies nearly 30% of the online car-hailing market, while Meituan’s share in China’s online car-hailing market is only in single digits.

In addition, the management scales of the two are also different. In 2022, Meituan Polycar will only access 12 medium-sized online car-hailing platforms, including Shenzhou, Shouqi, Caocao, Hello, and Happy Wanjia, and will enter 96 cities in total. . AutoNavi has access to more than 200 local online car-hailing platforms, and needs to maintain a larger platform ecology and strengthen compliance management and control.

Today, Meituan has shifted from self-operated to an aggregation model, but AutoNavi has long been the biggest player in the online car-hailing aggregation model. In terms of order volume, as a travel platform with 120 million daily active users, AutoNavi will steadily provide a total of more than 5 million orders per day for its connected platforms in 2022. The maximum order volume is maintained at around 1 million orders.

Compared with Gaode Taxi, Meituan Taxi also has a big gap in terms of technology and service.

From the initial provision of map navigation and meter services, to the gradual development into a comprehensive mobile travel service platform, and then to the launch of its own online car-hailing platform “AutoNavi”, AutoNavi has been performing very well in the online car-hailing market. Excellent, in addition to constantly innovating and expanding the scope of services, improving user experience, etc.

AutoNavi has made many innovations in product design and service process. For example, AutoNavi has added a variety of payment methods to facilitate users to pay fares; in terms of driver recruitment and management, AutoNavi implements a “zero negative evaluation” system to ensure the quality of driver service.

At the same time, on February 20, 2023, AutoNavi also merged with Ele.me’s in-store business to continuously enrich and expand its service scope. The “AutoNavi Travel” APP also integrates various travel methods such as taxis, buses, subways, and shared bicycles, and launched an integrated travel platform on February 21 to provide users with more three-dimensional life services.

For Meituan, it still needs a lot of hard work to become the next AutoNavi.

Source: DoNews