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Ben Jiang

China’s largest on-demand service provider Meituan reported on Wednesday a 21 per cent jump in second-quarter revenue, bolstered by steady growth in its core local commerce operations of food and grocery deliveries.
Beijing-based Meituan brought in 82 billion yuan (US$11.5 billion) for the quarter ended June, up from 68 billion yuan a year earlier, as the company stepped up efforts to offer discounted meals through a range of campaigns as well as an expansion of its on-demand e-commerce operation, helping it fend off competition from rivals including Alibaba Group Holdings’ Ele.me and ByteDance’s Douyin. (Alibaba owns the South China Morning Post).
Profit for the quarter came in at 11 billion yuan, a 142 per cent surge from 4.7 billion yuan a year earlier.

In its earnings statement, the company said it has focused on operational improvements and enhanced “value-for-money” offerings in the June quarter.
“We actively explored new product formats to capture different consumer demand, particularly in the low-price domain”, it said.
Revenue for the bread-and-butter core local commerce segment, including on-demand food and grocery deliveries, hotel and travel bookings, and merchant marketing services, was 60.7 billion yuan, a 18.5 per cent increase from last year’s 51.2 billion yuan.
Speaking on the post-earnings call, Wang Xing, founder and chief executive of Meituan, said the company was still in the early stage of overseas expansion and would continue evaluating opportunities in different regions, adding that “the overseas market is the right long-term strategy for Meituan”.
Growth in the so-called on-demand e-commerce business, which delivers goods to online shoppers within hours rather than days, remained a bright spot.
The operation, called Meituan Instashopping, saw robust growth in the June quarter, thanks in part to higher transaction frequency and growing supply on the platform as Meituan gathered pace in teaming up with domestic and international brand retailers, bringing their offline stores to its platforms including the namesake Meituan app and the crowdsourced review platform Dianping.
In a post-earnings note, analysts at consultancy Third Bridge said they expected the growth rate of Instashopping orders to be around 40 per cent this year, especially in the categories of electronics, alcohol, cosmetics, and household items, as brands have significantly increased their investment in Meituan.
Earlier this month Meituan partnered with China’s Midea, one of the largest home appliance makers in the world, to connect Midea’s 25,000 offline storefronts to Meituan platforms.
The tie-up will enable Meituan’s hundreds of millions of registered users to order products ranging from refrigerators to dishwashers “with the same ease as placing a food delivery order”, a company executive said at the announcement of the partnership.
Over the years Meituan has struck similar deals with brands including toymaker Lego, authorised Apple resellers, confectionery and food giant Mars, sporting goods retailer Decathlon and electronics retail chain Suning, contributing to a supply proliferation that helped convert its food delivery users to buyers of grocery and electronics products within Meituan’s apps.

The abundant supply of products has led to a surge in the number of on-demand transactions on the platform, which grew 14 per cent to 6.1 billion in the second quarter.
Meituan’s Hong Kong-listed shares closed down 3.2 per cent at HK$102.8 ahead of the earnings announcement.
The second-quarter results came days after the company announced in an internal memo structural changes, the latest in a series since earlier this year, according to multiple local media reports, as the company moves to consolidate and streamline its operations.
The latest move would see Meituan bundle its software-as-a-service, shared bike, and power bank renting businesses together under a new Software and Hardware unit, as well as rebranding its overseas business as Keeta.


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The company reported revenue of 82 billion yuan for the quarter, up from 68 billion yuan a year earlier, as it stepped up efforts to offer discounted meals


China’s largest on-demand service provider Meituan reported a 21 per cent jump in second-quarter revenue, bolstered by growth in its core local commerce operations.


Meituan