To B in the take-away industry has begun.

Editor’s note: This article is from WeChat public account “Retail boss reference” (ID: lslb168), author He Hanxiu .

Core reading

  • Why the business bottleneck of takeaway platform has been difficult to solve;

  • Supply-side upgrade has become the key to the new growth of takeaway platforms;

  • Is hungry? What is the difference in the focus of To B ’s business?

    From November to December, Word of Mouth and Meituan have proposed a common strategic goal: the goal of supplying digital output to local life businesses. Are you hungry? Word of mouth is called a “new service” strategy, and Meituan is called a “next-generation store.” The common point of the two is that they are all from the original take-out model of incremental goods to the model of upgrading the restaurant store’s operating capacity.

    When it comes to digital output to physical stores, in fact, there have been many cases of retail digitization since 2017. For example, Ali Amanda, Dada, Multipoint, and Tencent Smart Retail are all doing similar things: get ready at home + digital upgrade of stores.

    Compared to the retail industry, the digitalization of the catering industry is long overdue, and the driver is still from the takeaway platform. This will make people instinctively curious: Is the digitization of the catering industry a real need for the catering business? Or in the end in order to facilitate the strategic transformation of the takeaway platform?

    After all, the catering industry and the retail industry still have essential differences. Compared with the retail industry, the entry barriers for the catering industry are low. Especially after the development of takeaway, shop rents have dropped a lot. Many entrepreneurs, rushing to the low threshold of catering, have the ability to make a profit and walk away. This has also led to a large number of catering companies, in fact struggling on the line of life and death. The average life cycle of enterprises in China’s catering industry is also the bottom of the major industries.

    On the other hand, as long as a merchant runs a new brand restaurant in the restaurant industry for a long time, he can make a profit. This means that the catering industry maintains its existing simple business model and is able to maintain good operating returns.

    The above reasons have led to a serious lack of motivation for the digitalization of the entire catering industry. In the past, digital management aimed at the catering industry could only advance to the level of financial software. Increase the scan order, purchase order, etc. of some store tables at most. But these single instrumental products have not penetrated into the digitalization of the catering industry itself.

    In the second half of this year, Ali’s local life service business group (Hungry Word of Mouth) and Meituan both expressed their intent to deeply intervene in the business operation of merchants.Opinions on the necessity of the development of the platform. This indicates that the next track of the takeaway platform is officially opened.

    From a specific operational level, the two platforms have their own priorities in advancing digitalization.

    Are you hungry? Vice President Guo Li said that Ali’s local life business services are based on the entire Ali ecosystem. In addition to being hungry and word of mouth, it also includes many services provided by Gaode, Tmall, Taobao, Alipay, and Ant Financial. The scope of services involves front-line ordering in the front office, shopping for kitchens, single-volume forecasting, global marketing, small loans, and so on. The digital transformation of businesses is not limited to takeaway platforms.

    From the perspective of the next generation of stores created by Meituan, the most important requirement of Meituan is to move the offline food stores to “move” the platform to enable it to provide services on the takeaway platform. According to Meituan, the “next-generation store” is a store that mainly used diners, and iteratively upgraded it to a store that has both online and offline operation and service capabilities through software and hardware transformation and business management model iteration. Meituan provides one-stop services from site selection, operation activity design, automated production equipment, intelligent meal fetching, line design, and scene marketing, so that businesses can spare more energy to make the main position of catering operations-stores.

    Hungry? Are you doing additions to allow businesses to have more comprehensive online and offline operating capabilities based on digitalization? Meituan is doing subtraction so that merchants don’t think about other things and focus on doing good store services.

    Supply-side growth becomes the key to takeaway platform growth

    The topic of catering is difficult to Internet, has been discussed countless times in the group purchase war 10 years ago. In the past, the Internet of takeaway platforms for catering businesses was limited to the level of providing traffic, online purchase orders, and delivery services.

    This is enough to show that the digitalization of catering business is an extremely difficult bone. Now, Meituan and Hungry Me both regard it as the key to the next stage of growth, especially Meituan, which regards the transformation of food-dominated stores as the focus of the “five-year plan”. This means that the digitalization of the catering industry, whether the business needs it or not, at least the Meituan thinks that it has found a good way.

    Dining-oriented stores have always been a scarce resource for takeaway platforms. Good food shops do not have a strong willingness to go to take-out platforms. The reasons are as follows:

    First, there are only three or four hours of meals per day, and orders are concentrated. It is difficult to take into account both meals and takeaway needs. If there is not enough preparation (including personnel, ingredients, moving line design, etc.), not only will the offline customers be lost, but the take-out order will also be prone to errors and lose more than it pays. The only point of interest provided by takeaway platforms in the past-traffic, is not attractive to these merchants at all;

    Secondly, take-out is very different from the catering business model. For example, dine-in mainly considers the location and taste of meals, and takeaway is difficult to escape the bidding. Big brands in chain operation still have the scale to take the bottom,After deducting the platform commission and various service fees, the profit may be so low that the merchant gives up directly;

    Third, the original design of the dining room could not meet the needs of take-out. Redesigning the operation line requires not only capital but also time. The drastic improvements were not what the restaurant wanted.

    Regarding the digitalization of the catering and retail industries, many SaaS service providers have been involved for a long time, especially Xibei, Haidilao, and grandmother’s home. The goal of these SaaS services is to help companies improve the efficiency of their own supply chain and store management, not specifically targeting takeaway platforms. Although merchants want to upgrade their capabilities, they do not want to be constrained by the platform.

    High-quality offline stores not only lack traffic, but can also bring traffic. Are you hungry and Meituan, this year both expressed the view that the growth of takeaway users has slowed down. Guo Li said that in the past, users in the whole takeaway industry grew at a rate of 90%, which slowed to 60% last year, and this year it has remained at about 30%. The US group did not respond directly to this, but it was also directly reflected in the stagnation in the number of users in its financial report.

    The model that the takeaway platform relies on user growth to drive the development of the platform has begun to be limited. The platform needs to find another way to flourish the ecology. However, as the merchants and users at both ends of the platform, as long as they ensure that one end grows, they can pull the other end’s growth.

    So the platform takes merchants as the key to new growth. Despite the difficulties, it is a step that food delivery platforms have to take to regain high growth. If this thing can achieve results, it will be a good thing for the entire food delivery industry.

    Meituan, are you hungry to focus on the 2B market?

    The delivery bottlenecks represented by Meituan and Hungry Me have been the bottlenecks of business operations at the business level. The growth of takeaway platforms cannot always be achieved through continuous expansion of scale-that is, trade for growth. This will make people feel that the takeaway market is a little bit sunset.

    This has led to two results: First, the merchant’s loyalty to the platform is not high. There have been rumors that the two takeaway platforms have increased their commissions, forcing merchants to choose between the platforms. Second, the platform’s simple and rude commission model has led to increasing conflicts between merchants and the platform. Looking at the recent financial reports of Meituan at this point, there is indeed an increase in the number of active merchants, which cannot keep up with the increase in commission income.

    In addition, the platform’s ranking bidding model is based on sacrificing consumer experience. Imagine that the consumer chose the number one merchant on the platform, but the merchant’s taste and service are not good enough, which will definitely affect consumers’ evaluation of the entire platform.

    In this regard, Guo Li said that he is currently hungry to establish recommendations for catering businesses similar to “thousands of people and thousands of faces” to enhance the consumer experience and support the growth of high-quality businesses on the platform.

    In order to prevent any impact on the development of the platform, compared to the hungry yet unlisted, Meituan is facing great pressure for transformation. But can’tBeing able to deeply intervene in the operation level of merchants is also an important step for Meituan to go from a pure platform to a B-side service provider.

    To B business has many benefits for the platform. First of all, this is a business that protects droughts, floods, and harvests. It is not only not affected by the off-peak season of take-out, but even in a fluctuating economic situation, it can remain relatively stable. Secondly, going deep into the core of merchant operations can improve the stickiness of merchants to the platform and enable merchants to provide continuous and stable services. Finally, the To B business can ease the tension between the merchant and the platform, because the platform is essentially a service role.

    Meituan has been in the business for a long time, but the To B business requires a lot of precipitation. Coincidentally, in 2019, Meituan and Hungry have reached the stage where they can officially land this strategic transformation.

    Meituan has been exploring the store model since 2017. In the adjustment of the organizational structure at the end of 2018, it was reorganized into the store business group. It will include the original in-store catering, catering ecology, in-store integration, and smart expenditure business reorganization. Undertake online and offline collaboration to get through in both directions. It was not until this year that the plan to transform the next generation of stores was officially proposed, which should be the result of internal precipitation.

    Ali has a natural B2B service gene. Is he hungry? This year’s integration into the ecology is even as accurate as the code. Relying on the entire ecology, the service capabilities of hungry merchants have also reached a new level.

    Next, what Meituan needs is the determination to promote innovative To B business, even if it will affect the original O2O model.

    As a hungry main body of Ali’s local life service company, do you need to maintain sufficient patience and innovation. The To B war in the takeaway industry must be a tough local life battle between Ali and Meituan, which will continue until 2020.