Meituan’s revenues for the first quarter surged by 25% to RMB 73.3 billion, up from RMB 58.6 billion during the same period last year. This growth was driven by strong performances across both its core local commerce and new initiatives segments.

The company’s operating profit saw a significant jump of 45.3% to RMB 5.2 billion, while profit for the period increased by 59.9% to RMB 5.37 billion.

Expanding Core Local Commerce

The core local commerce segment, which includes Meituan’s on-demand delivery services, saw revenues increase by 27.4% to RMB 54.6 billion. Operating profit in this segment rose by 2.7% to RMB 9.7 billion, maintaining a solid operating margin of 17.8%.

Meituan’s on-demand delivery business recorded robust growth. The introduction of innovative models such as Branded Satellite Stores, which offer high-quality, cost-effective food delivery without in-store dining, has significantly contributed to this growth.

Additionally, the company expanded its Pin Hao Fan model to more cities, enhancing consumer experience and improving order dispatch systems.

Rapid Growth in New Initiatives

The new initiatives segment experienced an 18.5% increase in revenues, reaching RMB 18.7 billion. Notably, the operating loss for this segment narrowed by 45.2% to RMB 2.8 billion, indicating improved operational efficiency and strategic focus on high-quality growth.

Meituan Select, the company’s community group buying service, played a pivotal role in this performance. By increasing the price mark-up ratio, reducing fulfillment costs, and improving marketing efficiency, Meituan has significantly enhanced its operational metrics.

Broader Business Insights

On-Demand Delivery and Instashopping:

Meituan’s on-demand delivery services saw significant transaction growth, with innovative models like Branded Satellite Stores and expanded Pin Hao Fan coverage driving higher engagement.

Meituan Instashopping continued its rapid growth, driven by increased user engagement and transaction frequency. Strategic initiatives during the Spring Festival, focusing on holiday products and gifts, contributed to higher revenues in categories like liquor, beverages, and daily necessities.

In-Store, Hotel, and Travel:

The in-store business experienced strong growth, benefiting from enhanced marketing capabilities and enriched content offerings. Live streaming campaigns and merchant support measures increased participation and consumer engagement.

Meituan’s hotel and travel segment reported robust year-over-year growth in domestic hotel room nights and GTV. The company capitalized on emerging trends by focusing on niche travel destinations, particularly in lower-tier cities.

Financial Highlights

For the first quarter of 2024, Meituan achieved notable financial milestones:

• Revenues increased by 25% to RMB 73.3 billion.
• Operating profit rose by 45.3% to RMB 5.2 billion.
• Profit for the period jumped by 59.9% to RMB 5.37 billion.
• Adjusted EBITDA and adjusted net profit saw year-over-year increases of 28.9% and 36.4% respectively.
• Number of on-demand delivery transactions grew by 28.1%.

As Meituan continues to navigate the evolving digital landscape, its strategic initiatives and robust financial performance position it well to capitalize on emerging trends and growth opportunities in China’s competitive internet sector. The company’s commitment to operational excellence and innovative service models is expected to drive sustained growth and market leadership.

Top e-commerce mobile shopping platforms in China

Quhuo revenues increased by 12.6% from RMB348.7 million in the three months ended March 31, 2019 to RMB392.6 million (US$56.4 million) in the three months ended March 31, 2020, primarily due to the increase in revenues generated from our on-demand food delivery solutions as a result of their continued market penetration and expansion, partially offset by the impact of the recent COVID-19 pandemic.

Revenues from on-demand food delivery solutions increased by 13.4% from RMB343.2 million in the three months ended March 31, 2019 to RMB389.3 million (US$55.9 million) in the three months ended March 31, 2020.

The increase was primarily driven by the increase in the average monthly delivery orders fulfilled by delivery riders on the platform from approximately 13.9 million in the three months ended March 31, 2019 to approximately 16.9 million in the three months ended March 31, 2020.

Revenues from shared-bike maintenance solutions decreased by 48.9% from RMB4.3 million in the three months ended March 31, 2019 to RMB2.2 million (US$0.3 million) in the three months ended March 31, 2020.

Revenues from ride-hailing solutions decreased by 26.5% from RMB1.2 million in the three months ended March 31, 2019 to RMB0.9 million (US$0.1 million) in the three months ended March 31, 2020.

Revenues from housekeeping solutions and other services were nil and RMB0.2 million (US$36,000) in the three months ended March 31, 2019 and 2020, respectively.

Quhuo’s gross profit decreased by 52.4% from RMB23.3 million in Q1 2019 to RMB11.1 million (US$1.6 million) in Q1 2020. The gross profit margin decreased from 6.7%.

The operating loss decreased by 61.0% from RMB49.0 million in Q1 2019 to RMB19.1 million (US$2.7 million) in Q1 2020. Their net loss decreased by 53.5% from RMB46.4 million to RMB21.6 million (US$3.1 million) in Q1 2020.

Meituan in Q1 2020; total revenues down 12.6%

China online food delivery market totaled 67.73 billion yuan in Q4 2017 with an increase of 16.2% QoQ or 81.8% YoY according to data from Analysis.

The largest segment of China’s online food delivery market is the white-collar business market with 82.7% market share, followed by family community market and campus market.

Ele.me and Baidu Waimai have a combined market share of 49.8%, followed by Meituan (43.5%).

REPORT The rise of the Millennials consumers in China

Three factors contribute to instant noodles rebound in 2017. But the increasing popularity of food delivery apps might push this category back into decline.

When talking about consumption upgrading in China, people often use the category of instant noodle as a typical victim. As people chose to eat fresher and healthier food, they began to stay away from instant noodles. As a result, since 2013, the sales of instant noodles did enter a downward spiral.

However, instant noodle makers never give up their fight and managed to have a surprising comeback. Kantar Worldpanel data showed that in the 52 weeks ending December 1, 2017, the sales of instant noodles in the urban area increased by 6.2% in value and 4.1% in volume. There are multiple factors contributing to this category’s revival. We can analyze the trends in product, consumer, and channels.

New premium products unlock growth

Following consumers’ desire to switch from “eating enough” to “eating well”, instant noodle manufacturers have launched several premium products to cater to this trend. For example, Master Kong and President both have introduced instant noodles featuring tasty soups. Kantar Worldpanel data showed that the sales of premium instant noodles achieved double-digit annual growth in 2017. In the 52 weeks ending December 1, 2017, among all urban families, 31% have bought premium instant noodles. About 10.63 million families are new consumers to this category.

Rekindled interest from middle class families

Our data showed that middle-class urban families (household income higher than 9,000 yuan per month) have significantly regained interest in instant noodles: the annual spending from these families increased by 19% from a year ago. Middle-class families contributed 40% of sales value and 37% of sales volume of instant noodles in China. Their support is pivotal to this category’s revival.

Huge room for growth in e-commerce

While hypermarkets, supermarkets, and other offline channels are struggling, online sales of instant noodles have been doing very well: in 2017, the e-commerce sales of instant noodles jumped 28% from a year ago. The average basket size for online purchasing was much bigger: across all channels, the basket size for instant noodles was 5.4 units per purchase, while it was 9.0 units per online purchase.

Compared with the shining data from the current situation, the future of e-commerce is even more appealing. Now only 5.8% of urban Chinese families have bought instant noodles online – a very small number compared with the penetration of offline channels. More than 30% of urban families have bought premium instant noodles through offline channels.

Threat from food delivery apps

Besides abovementioned positive drivers for instant noodle category, there is a fast increasing service that might end its revival: food delivery apps. Since March 2016, Kantar Worldpanel APP Meter has begun tracking mobile app usage behaviour of 32,000 sample consumers across five city tiers in China.

We noticed when consumers get used to ordering food through food delivery apps, they will reduce spending on instant noodles. After a user begins to use a food delivery app, within the first half year, his/her purchasing of instant noodles won’t change much. But it will start to decline gradually if the user continues to rely on food delivery app for meals.

We are not alone in noticing this threat. Instant noodle manufacturers have taken proactive measures to counter these apps’ erosion. They’ve launched DIY noodles, snail noodles, and instant hot-pots to keep attracting new users.

Maybe it’s better to have a bowl of hot noodle that is instantly ready to eat on your desk than wait for a meal that is often late and arrives cold in your hands. Instant noodle manufacturers in China are trying their best to create value and stay relevant in consumers’ fast-changing lives.

Also check out China’s luxury consumption trends here

This article was originally published on Kantar.com

With the increasing utility and availability of mobile payment methods, store-based O2O commerce has experienced steady growth, with total sales of US$91.1 billion in 2016, a figure which is projected to reach US$143.6 billion in 2019.

Online-to-offline (O2O) commerce has long been more prevalent in China than in the developed world, leading to China becoming the largest and most developed O2O market in the world.

With consumers having largely bypassed credit and debit cards in a rush to mobile payment apps, O2O maintains a strong position and strong prospects for growth within China’s consumer markets. Still, the industry is witnessing disruption and structural shifts in response to changing buying habits.

AS STORE-BASED O2O COMMERCE IN CHINA MAINTAINS STEADY GROWTH…

Because of its early start and ability to fill an important niche within e-commerce, store-based O2O commerce has long held a leading position in the O2O space within China.

With the increasing utility and availability of mobile payment methods, store-based O2O commerce has experienced steady growth, with total sales of 612.4 billion yuan (US$91.1 billion) in 2016, a figure which is projected to reach 964.8 billion yuan (US$143.6 billion) in 2019.

… HOME-BASED O2O COMMERCE FILLS A NICHE…

Meanwhile, home-based O2O, which includes sectors such as food delivery, online provision of home services, at-home spa and health services, and home delivery of groceries and goods, has begun to catch up rapidly. With shifts in preferences and a willingness to pay a premium to bring goods and services to their door, consumers have rapidly embraced the home-based O2O model.

From a low starting point, home-based O2O commerce came to take up 19.6% of the O2O market in 2016, a whopping 149.6 billion yuan (US$ 22.3 billion), and is expected to grow to more than a third of the market by 2019, with expected sales of 505.4 billion yuan (US$75.2 billion) that year.

… WHILE LAGGING IN SOME AREAS

At present, the home-based O2O market is greatly dominated by two services: delivery of prepared foods, and online education; in 2012 education accounted for 46% of the O2O market, with delivery in second at 27.4%.

By 2016, their positions reversed, with food delivery holding 54.9% of the market and education only 20.5%. Meanwhile, other fields like home repair, at-home health services, grocery delivery, and laundry services have grown less rapidly and still have some distance to go to make up ground on the major players.

Mobile payment has penetrated into every part of daily life in China such as online shopping, taking a taxi, supermarkets and food delivery in particular. About 70% Chinese internet users have ordered foods in a month and about 70% would pay on mobile according to DCCI. Alipay, WeChat Payment and Baidu Wallet have become the payment apps with the highest usage frequency.

45.8% of female internet users and 47.5% of male users ordered foods in 2014 in China according to iResearch, and more Chinese will use the food delivery service with the ever-improving food delivery market in the future.

Only 26.9% would rather pay cash on delivery and 73.1% users will pay online, among which 91.7% tend to pay on smartphones and 8.3% on the PC end. Alipay, WeChat Payment, and Baidu Wallet lead the mobile payment market becoming most frequently used mobile payment instruments.

Daily active users of WeChat totaled 570 million in China in September 2015 according to Tencent, and WeChat payment users are expected to increase by 7% in the next few months. Baidu Wallet is also promising by connecting with large profitable activities and various services with Baidu such as Baidu Library and Baidu Post Bar. However, Alipay may not attract more users considering its high penetration rate.

Alipay is convenient and simple to operate while Baidu Wallet is more secure and preferential. White-collars prefer Baidu Wallet, and second-tier city Chinese users like Baidu Wallet and Alipay better.

Chinese use mobile payment an average of 2 to 4 times a week that mobile payment has become the most commonly used method except bank cards and cash. DCCI report shows that in 2017, Chinese mobile payment users will be expected to be close to 400 million, representing an increase of about 80% compared with the previous year.

China’s food delivery market achieved over 160 billion yuan (US$25.11 billion), accounting for by 5.8% of the overall catering market, and this proportion will be expected to increase to 9% of over 300 billion yuan (US$49.09) in 2017.

Also read: China Offline Mobile Payment Insights in 2015