The Inside Story of How Meituan Dianping Built China's Largest E-commerce Platform for Services

September 10, 2018

HONG KONG - Back in 2010, serial entrepreneur Wang Xing founded Meituan in Beijing as a startup focused on restaurant reviews and local deals. In less than eight years, Wang and his team have built one of the largest e-commerce platforms in China.

The name for Meituan has two characters in Chinese: "Mei", meaning beautiful, and "Tuan", meaning together. A huge step in the company's growth came in 2015, with a strategic transaction that brought Meituan together with Dianping, the leading destination for discovering lifestyle services in China.

The combined company, Meituan Dianping, has pursued a clear mission: to help people eat better, live better. This is the story of the journey of Wang and the Meituan Dianping team. That team has grown to more than 45,000 people, among whom over 10,000 are engineers, and nearly 30,000 are local sales and business development representatives.

The overall strategy of Meituan Dianping is what Wang calls "Food + Platform". The company has built one platform to support multiple categories, so that it can cross-sell. Food is the most important and largest category, but Meituan Dianping goes well beyond it. Meituan Dianping is an e-commerce platform, yet it is not e-commerce for physical goods, but an e-commerce platform for services.

The company's platform uses technology to connect consumers and merchants. It boasts 340 million annual transacting users in the twelve months ended April 30, 2018, meaning one in four Chinese people has made a purchase on its platform. The company works with 4.7 million merchants, including restaurants, hotels, movie theaters, hair salons, and others across more than 2,800 cities and counties in China. The platform generated over 20 million transactions per day in the four months ended April 30, 2018.

Food consumption is more than a US$1 trillion market in China. To address that, Meituan Dianping has built a super platform based on high-frequency food services, including food delivery, restaurant review and promotion.

The restaurant business in China was a RMB4 trillion market in 2017, while overall food consumption was about double that, at RMB8.7 trillion. Meituan Dianping believes food delivery is not just an alternative for the traditional restaurant business. Food delivery addresses the market for total food consumption, as many young people don't cook, yet don't want to go out to eat every day.

Meituan Dianping has been at the forefront of this shift, making it the largest food ordering and delivery platform in China, and the world's No. 1 player in food delivery.

Meituan Dianping launched its food delivery business in 2013. Originally a marketplace, since 2015, the company has built its own delivery network, allowing it to work with almost all restaurants, greatly extending its food selection. The food delivery business now has more than 530,000 daily active riders, each carrying a smartphone that transmits real-time location and data. The company's technology platform collects this data and uses machine learning to optimize routing and dispatch of delivery riders.

Meituan Dianping also has an active in-store business. The company has been doing restaurant reviews for 15 years. As of April 2018, its user-generated content database contained approximately 4.6 billion user comments, including 1.5 billion in-depth reviews, 648 million photos and 5.3 million videos regarding more than 13.7 million points of interest in over 2,800 cities and counties in China and over 900 cities abroad. The company also offers a wide range of solutions to merchants to help with online marketing, delivery, ERP and payment systems.

By expanding beyond food, Meituan Dianping has built a business for which there is no direct comparison globally.

In the US, for example, users need many apps to enjoy this full range of services. To find a good restaurant, they use Yelp. To book a table, they use OpenTable. To order food delivery, they use GrubHub, Doordash or Uber Eats. To watch a movie, they use Fandango. To find a place to stay, they use, Expedia or Airbnb. Each app addresses a specific need. In China, consumers only need the super app, Meituan.

Based on its rich content, the company is developing a "local search + marketplace" model, under which Meituan is the destination for local search, connecting consumers to merchants, including some non-food categories.

The company has recently become the largest hotel-booking platform in China, in terms of room nights, as well as the leading bike-sharing service provider in China. Meituan Dianping is also a leading player for other lifestyle services, such as karaoke and movie ticketing.

Hotel booking is a great example of the power of cross-selling on the company's platform. Meituan Dianping entered hotel booking in 2013, when there were several public companies in the space. Meituan Dianping's platform and the high-frequency food business allowed the company to accumulate a large user base. By the first quarter of 2018, it had become the largest hotel-booking platform in China, in terms of hotel room nights. The company has a lower user acquisition cost because over 80% of its new hotel booking users are converted from food services.

Meituan Dianping's mission is to help people eat better, live better. Its overall strategy is "Food + Platform", and its top priority is to grow the number of food delivery transactions to a massive scale. Meituan Dianping hopes to become the most important technology company in the daily lives of Chinese people.