Exclusive | Meituan Opts to Exit Loss-making Cities to Break Free from the Vicious Competition

Text by | Ren Cairu

Edited by | Qiao Qian

36Kr has learned from multiple independent sources that Meituan Select has announced the suspension of operations in some regions, while retaining its businesses in Guangdong, Hangzhou and other places. The decision was discussed internally last week and finalized today. Many members of the Meituan Select team have shifted to participate in the newly launched offline business of Xiaoxiang Supermarket, the "Project N", responsible for the operation of offline stores. This project is led by Gao Yulong, and the rest are seeking internal transfers.

Before the wave of instant retail came onto the stage, reducing losses in new businesses was the main proposition for Meituan in the past period, and Meituan Select was the top priority for loss reduction. "Whether to continue or shut down, there must be pressure," a Meituan insider told 36Kr.

Since last year, the business developments of Meituan Select have mainly involved organizational adjustments and commodity strategy adjustments.

At the organizational level, the idea of centralizing the middle - office is clear. A person close to Meituan Select told 36Kr that in September 2024, an internal structural adjustment was launched, integrating the original 17 provincial regions into 9, with the aim of "reducing costs and increasing efficiency". In addition, the operation line and the business analysis line were merged, led by Li Pengju, aiming to form strategic guidance with actual business data, which is also Meituan's consistent way of doing business.

The increasing importance of business analysis has further promoted the adjustment of Meituan Select's commodity strategy. According to 36Kr, under the continuous guidance of "reducing losses in new businesses" in 2024, the overall scale of Meituan Select dropped from over 100 billion yuan to 70 - 80 billion yuan. How to improve the profit margin has become the top internal concern, and commodities are the most important "anchor point".

In this context, promotional products, white - label products, and subsidies have all been rapidly reduced. In addition to removing a large number of white - label products, the profit margins of various commodities on the platform are required to be increased. A person close to Meituan Select gave an example to 36Kr, "Whether online or offline, eggs are the most classic promotional products in the retail industry. But during the period when the profit orientation was the most prominent, eggs were also positioned as profit - making products, which is obviously a wrong idea."

The "extensive approach" focused on profit has led to the loss of some business. And earlier this year, Meituan Select also stopped most of its subsidies.

Since around August 2024, the Meituan Select team has no longer closely monitored the situation of its competitor, Duoduo Maicai. "Previously, they would closely monitor the market shares of both sides. Meituan Select could capture more than half of the market share in its advantageous regions and 10% - 20% in less - advantageous areas." In terms of the specific business perception, it means "Duoduo Maicai is less mentioned in meetings."

In short, long - term losses and an unclear model path once put Meituan Select in an "awkward" situation. In contrast, why can Duoduo Maicai make money?

A Meituan Select insider analyzed to 36Kr, "Duoduo adopts a platform model, with multiple revenue channels such as merchant commissions and marketing revenues." This also conforms to Pinduoduo's platform - based nature. For Meituan, which started with the food - delivery business, the characteristics of Meituan Select, such as "serving the sinking market" and "low - value orders", are unfamiliar concepts. "The initial positioning was different. Meituan operates in a more self - operated way. Without continuous subsidies and promotions, it's difficult to outperform Duoduo in terms of market share."

Shutting down Meituan Select and launching the "Project N" that focuses on offline business and competes with Hema NB is the latest change in Meituan's new business. "If this model is to succeed, the private - label brands must be well - developed," the above - mentioned insider said. What remains unchanged is that the product strength and the underlying supply - chain capabilities are still the most important issues.