There has been a “rain of financial reports” in the e-commerce industry.

It coincides with the financial reporting season. Recently, Meituan, a representative of e-commerce services, and Pinduoduo, Alibaba, and JD.com, representatives of physical e-commerce, have released Q1 financial reports.

Compared with the first quarter of last year, whether it is physical e-commerce companies Alibaba, JD.com, Pinduoduo, or service e-commerce companies Meituan, the performance growth rate is very high, and it is also significantly higher than the same period in 2019. growth rate.

Vertically, compared with the first quarter of last year, whether it is physical e-commerce companies Alibaba, JD.com, Pinduoduo, or service e-commerce companies Meituan, their performance growth rates are very high, and are significantly higher than The growth rate in the same period in 2019 is another example of China’s economic recovery and consumption rebound, and is a great benefit for the entire e-commerce industry.

From a horizontal perspective, each company's financial report reflects the company's operating conditions for a certain period of time. A horizontal comparison of multiple companies reflects the industry trend and the differences in the business models behind it.

You can see the whole leopard by looking at a spot, and you can see the vast ocean by looking at a drop of water.

By analyzing several financial reports, Xiao WiFi has seen the deep differences in the business models behind it, and these underlying logics are also one of the main basis for us to judge its future development trend.

The average profit of each takeaway order is 0.38 yuan

The core deviation behind commissions and service fees

In the field of communication, there is a famous Sapir-Wal Hu's hypothesis, simply put, is that our language shapes (determines) our thinking patterns in some way. There is a very famous popular example of this hypothesis: if Aristotle spoke Chinese, his philosophical logic would definitely be different.

The interesting thing about this hypothesis is that we have always believed that language is a tool for expressing thoughts, but we have not thought about how language affects the way we think. People who study English may have some experience. The writing logic of English is very different from that of Chinese, and the way of thinking between European and American people and Chinese people is also different.

Both platforms have commissions, but they are called differently. Meituan calls it commission, while JD.com and Taobao may call it service fee. It actually means the same thing, but commission sounds like asking, and service fee sounds like giving.

In recent years, the impression of high commissions has easily made people think that Meituan has made huge profits. But is this really the case?

Alibaba’s operating profit in the first quarter reached 10.565 billion yuan after excluding antitrust fines, and it netted a “small target” every day; JD.com’s net profit in the first quarter was 3.6 billion; although Pinduoduo was in the red , the gross profit was as high as 11.4 billion, and the gross profit margin reached 52%. From the financial report, although Meituan’s gross profit margin in the first quarter increased compared with the same period last year, it was only 19.4%, only 1/3 of Pinduoduo.

Meituan Waimai has been operating for nearly 8 years. Since reaching breakeven due to an increase in gross profit margin in 2019, the average profit per order is 0.38 yuan, which is less than 40 cents. Therefore, if we take a comprehensive look, we can find that Meituan not only does not make huge profits, but its profitability is even somewhat weak compared to other e-commerce platforms.

In 2020, Meituan’s total revenue from food delivery was 66.3 billion yuan, of which commission income was 58.6 billion yuan, and fees paid to riders were 48.7 billion yuan. Rider costs accounted for 83% of commission income. In other words, more than 80% of the commission becomes the rider’s salary.

The physical e-commerce platform does not charge commission, but other fixed fees are also real merchant costs. For example, Tmall’s software service annual fee, Taobao’s Wangpu usage fee, and other miscellaneous technical service fees, etc., so in total, the fixed fees merchants pay to the platform are actually not many. If service e-commerce charges merchants as a "package" of charges, then the charging models of physical e-commerce can be said to be "variety".

On the other hand, look at income other than commission.

The profit models of Taobao and Tmall include advertising revenue, transaction commissions, annual service fees, technical support fees, etc. However, although Meituan has released a trend from commission revenue to advertising and marketing. Signaling a shift in dominance, but commissions still account for the majority of total revenue.

It can be seen that physical e-commerce companies such as Taobao and Tmall have relatively simple cost structures, and their diversified revenue models can help them share traffic costs and increase profits. However, service e-commerce companies such as Meituan are different, and their income mainly relies on commissions. In terms of fulfillment costs, factors such as distance, labor, time period, weather, transportation, etc. need to be taken into consideration, and the factors that affect costs are also more complex.

Return to the underlying logic

The sharing economy model releases greater social value

The essence of the sharing economy is to revitalize the stock.

In essence, Meituan is a local life service e-commerce company, a transaction and service matching platform in the local life service field, and a sharing economy platform, that is, merchants provide various life services to connect with consumers. , the platform is just a connection. This is how Meituan’s core business, food delivery, operates.

In 2020, although the overall market size of the sharing economy has slowed down significantly under the impact of the epidemic, new business formats and models represented by the sharing economy have shown great resilience. and development potential, and has played an important role in ensuring the supply of people's livelihood, promoting the resumption of work and production, expanding consumption, and boosting domestic demand. It is expected that in the next five years, the average annual growth rate of my country's shared economy will remain above 10%.

Xiaowifi found that this time Meituan still showed strong business operations, explosive user growth, and rapid new business development.

In the first quarter of this year, Meituan’s revenue increased by 121% year-on-year, including new businesses such as community group buying, grocery shopping, and flash sales, with a growth rate of 137%; the number of transaction users exceeded 570 million, increasing in a single quarter. The number of new businesses reached 58.7 million, setting a historical record; the number of merchants reached 7.1 million, also a historical high. These new businesses are also an extension of Meituan’s “enjoyment economy model” in other fields.

With the development and progress of artificial intelligence, VR, blockchain, and Internet of Things technologies, the imagination space of the sharing economy in the future has been further broadened. Al technology has already begun trials in travel, medical, logistics and other industries, such as driverless cars, drone delivery, etc. In the era of the Internet of Things, everything is interconnected, which will usher in a new situation of shared economic development and bring greater value to human life.

“Helping everyone eat better and live better” is not only Meituan CEO Wang Xing’s commitment to Meituan, but also his commitment to society as an entrepreneur.

In the past few days, Wang Xing has converted the 57.319 million Class A shares he holds into Class B shares and transferred them to the Wang Xing Foundation, which will be used exclusively to promote public welfare undertakings such as education and scientific research. On that day, Wang Xing Foundation transferred 9.354 million Class B shares to an independent third-party organization for charitable purposes.

According to estimates, the market value of 57.319 million shares is approximately HK$17.62 billion, and the market value of 9.354 million shares is approximately HK$2.875 billion.

From individuals to enterprises, Meituan is releasing greater value.

For Meituan, it is now in the deep water period of the second stage of business transformation, with great business prospects.

On the one hand, the rich categories of service products mean that there are many vertical categories that can be expanded in the future, and there are also categories with large market sizes, such as food, clothing, housing and transportation.

On the other hand, there is still great growth potential in the existing market. From the perspective of the overall environment, Internet products are still in the stock era, and users in first- and second-tier cities that can be reached have been reached. The local service format can exactly reach the third, fourth and even lower tier markets, and can positively drive the progress of the main business from all angles.

In the deep water area of ????the second half of the mobile Internet, Meituan’s Q1 data users increased by nearly 60 million in the first quarter, surpassing the industry, and the number of merchants also reached a new high. This shows that the growth of service e-commerce has not yet reached its peak.

The main engine of Meituan’s growth comes from the “tip of the iceberg” driven by new businesses, which is enough to show the acceleration of the development of local service formats.

Be willing to bear high losses and be determined to develop new business. These local service formats have long-term value for both Meituan itself and the public.

Adhering to long-termism, focusing on the core and staying patient are exactly what Meituan is good at and has been doing.

Meituan’s story continues.

Author of this article: Heavy Rain

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