By Ermao
What is the nature of business?
Jack Welch, the youngest CEO in the history of General Electric, has given an answer in his masterpiece The Nature of Business: Business is the process of searching for truth and building mutual trust.
This process is not easy. In recent times, whether it's consumers complaining that takeout is expensive, or merchants complaining about high platform commissions, or riders trapped in the system, takeout platforms have repeatedly been the focus of skepticism.
Survival of the fittest. The business is changing, and it's happening all the time. Recently, Meituan Takeout has reformed its rates, and the previously controversial commissions seem to be open to the public in a "real and transparent" structure.
We're curious to know what changes it will bring.
Opaque information is the cause of all the skepticism. It was also a point of contention with the old rates for Meituan Takeout.
Previously, Meituan Takeout used fixed rates. For merchants, regardless of the delivery distance, unit price and delivery time, the commission rate is fixed, which also includes the freight paid to the rider. The split between the platform and the rider is not clear to the merchant, and even less so to the outside world.
And the new rate divides the charge into two parts: the technical service fee (the real sense of the platform commission) and the fulfillment service fee (delivery fee).
The "technical service fee", as the name suggests, is the fee merchants pay for the platform and technical services provided by Meituan. It's well understood that behind the Meituan takeout business, a large number of servers, network bandwidth, and various personnel operating costs are required. The fee is currently charged at different rates in different regions. According to the order information provided by some merchants, Beijing is 6.4% (guaranteed 1.38 yuan), Shanghai is 6.2% (guaranteed 1.4 yuan), Xiamen is 5.8% (guaranteed 1.14 yuan).
"Fulfillment service fee", mainly refers to the merchants need to pay the commission to the takeaway operator, including wages, subsidies, personnel management and other costs, it will be subject to the order distance, price, time and other factors and fluctuations. The system sets a standard line, 3 kilometers, 30 yuan and 6:00 ~ 21:00, orders within the range, the least performance service fee.
That is to say, for merchants, within 3 kilometers, the customer price of 30 yuan and below, the order time between 6:00 and 21:00, is the lowest rate. Conversely, the farther away the price, the higher the price, and the later the time slot, the higher the rate - It's not hard to understand that the cost of a rider's job, which is supposed to fluctuate, is also volatile.
In fact, the push for commission transparency has become an industry-changing trend for takeaway platforms around the world. DoorDash, the largest takeout delivery platform in the United States, has recently made rate transparency adjustments, and its rules are roughly similar to those of the United States takeout: the platform commission and delivery fees are separated from the public, only called different - the platform base channel fee + delivery class The commission is different - platform base channel fee + delivery class.
According to the marketing needs of merchants and the size of the delivery area, Doordash charges three different levels of commission: Basic, Plus, and Premier.
The platform's basic channel fee is charged at a uniform rate of 6% of the amount of the order, and the delivery commission is divided into different ranges according to different levels: general, plus, and premium. Levels delineate different ranges: Ordinary Basic service, the delivery fee accounts for 15% of the order amount, can only enjoy the basic store orders and delivery services; if you choose the Preferred Plus service, the commission for the order amount of 25%, but also can enjoy a larger distribution range; if you choose the selected Premier service, the delivery fee is 30% of the order amount, this level can enjoy the order guaranteed!
More diverse and transparent services.
More diversified and transparent commission rates, allowing merchants to choose different services according to their needs and optimize their business practices.
Compared to DoorDash, Meituan Takeout has made one more change in its delivery fee reform - the right to choose. After the implementation of the new standard, the "fulfillment service fee" is not a mandatory option, if the merchant chooses to self-delivery or third-party delivery, this part of the fee, you do not need to pay.
On the merchant side, small and medium-sized merchants, like capillaries, have sensed the change.
Nanjing, a Chinese fast food restaurant owner Wang Lin calculated that most of its stores within 30 yuan per unit price, orders from the surrounding 3 kilometers or so. Previously a discounted order of 19.8 yuan, the platform charged a commission of 4.5 yuan, after the adjustment, the same price of the order, Wang Lin need to pay the technical service fee of 1.32 yuan, the fulfillment of the service fee of 2.84 yuan, adding up to 4.16 yuan, compared with the previous reduction of 7.6% of the expenditure.
Guangzhou Tianhe Tongdong "cold dishes - Hunan Changsha" store is located in the city around the village, the owner of Ms. Huang found that after the implementation of the new rate of the U.S. Mission takeaway, the commission cost is significantly reduced, although the actual reduction in the amount of money per single is not much, but due to the total number of orders is large, the gathering of sand into a tower for the alleviation of the cost of the pressure, but still very effective.
We have been working on this for a long time.
Wang Lin and Ms. Huang are the epitome of a class of merchants. Their service range is within 3 kilometers, the customer unit price is about 30 yuan, in the public eye, they have another name, "husband and wife store".
Such a "husband and wife store" is also the main body of merchants on the takeaway platform. Liu Run, a business consultant, once said: 40% of takeaway orders in China are under 20 yuan, and 60% of takeaway orders are under 30 yuan. Most of these small orders come from small and medium-sized restaurants.
The difference in volume directly determines the risk tolerance of large and small restaurants.
The same cost up 1 dollar, for large restaurant groups, may just increase costs and reduce profits, it also has the ability to make up for it from other places, but for the original fragile "husband and wife store", which is equivalent to a death notice.
Similarly, the reduction in takeout commissions will also stimulate more vitality in the "husband and wife stores". Recently, the restaurant vertical media "restaurant bosses inside" for takeaway new rate to do merchant research, the data show that in the rate adjustment of merchants, 65% of the merchants have a clear perception of the rate adjustment, of which nearly 70% of the merchants believe that the cost paid to the platform is lower than before.
Of course, not all orders will benefit. Under the new rate policy, some long-distance orders with low per-unit prices during late-night hours may see an increase in expenses.
For merchants, the farther the delivery distance, the higher the fulfillment service fee to be paid, late at night + long-distance, delivery costs can even completely cover the order profit, or even lose money; for the platform, late night long-distance orders, will also give the rider more additional subsidies.
However, such orders are a necessity in the takeout ecosystem.
For merchants, this kind of 10 kilometers away also want to order customers, there are only two kinds: a strong desire to try new users, there is a very high degree of loyalty to the old users. The former can bring traffic, the latter can create word of mouth, even if it does not make money, it is worth doing.
Similar losing business, KFC and McDonald's are actually doing. Both in the distribution range of delivery costs are as high as 9 dollars, but still lose money, in order to protect the quality of service, they choose to specialize in third-party delivery, the cost is too high - but who do not dare not do, in the "user experience" under the big stick, KFC! Home Delivery was launched in July 2008, a month later, McDonald's launched McNuggets. In such a race, choosing to abstain is equivalent to giving users to the other side.
"Losing business" makes sense for the platform. The process of meeting user needs is creating value.
After all, for Meituan Takeout, the distribution of money loss is not a day or two.
A person close to the Meituan takeaway revealed that most of the current takeaway unit price within 30 yuan, and the average distribution cost of up to 7 dollars, has been losing money.
Of course, the takeaway business of Meituan, the importance of the traffic entrance far exceeds the profitability. The purpose of rate reform is not to change this situation, but to more transparently benefit merchants and users, and to realize universal benefits within the capacity.
For the business of takeout, the Internet is now changing the main participants and distribution model, but the cost is eternal.
The scale effect and marginal effect that the Internet model brings with it has not yet played a role in many parts of the takeaway. For example, distribution.
Every order generated on the takeaway platform needs to be completed by a delivery person and paid accordingly. This process, the system generates how many orders, corresponding to how many distribution costs. Scaling up will only result in an equal proportional increase in delivery costs, not a dilution of costs.
An example. Marginal effect in the courier business is at play, for example, the courier company in a certain region to establish warehouses or stations, the courier first centralized to this, and then distributed. Initially, an express bear the cost of warehousing is very high, but with the increase in the volume of express delivery, the cost of spreading to each piece of express delivery will be more and more low, or even negligible.
Takeout is not. The qualities of real-time delivery require it to provide a point-to-point service that is so time-sensitive that it can't build a buffer to allow marginal effects to come into play.
However, a good business model is necessarily dynamic. When takeout becomes an integral part of people's daily lives, and when the number of delivery workers is already in the tens of thousands, the evolutionary iteration of this business has become inevitable.
Rate adjustment is an important step in the transformation of the takeout industry. Its essence is transparency, the process of "building authenticity, building mutual trust" that Welch mentioned in his book. Merchants can further optimize their business strategy based on their order structure to get more revenue. This is also the best response to the question of "excessive commission".
2020 Meituan annual report shows that the total turnover of the takeaway business reached 488.9 billion, and the commission income was 58.6 billion yuan. Divided by 586 billion by 488.9 billion, the "nominal commission rate" is 11.986%.
Most of the commission income of Meituan takeout is used to pay the wages of delivery staff, training and other costs. The annual report shows that in 2020, Meituan paid $48.7 billion in costs to riders, accounting for 83% of takeout commission revenue. With the Mission real commission, that is, 58.6 billion minus 48.7 billion derived from 9.9 billion, divided by the total transaction amount of 488.9 billion, to get the "actual commission rate", in fact, only 2%.
Standing in the present, more transparent rate policy, is expected to eliminate these controversies to a certain extent. This choice is also more in line with the temperament of a long-termism company. The value of Meituan depends partly on its current competitive advantage, and more on its future growth potential and business imagination.
Of course, there is no such thing as a perfect business model, and iterating through controversy is the norm for a healthy business model.
This is also true for the takeout industry, which is still in the midst of controversy.