For the same meal, ordering through Meituan's regular delivery service might cost you 20 yuan, but if you switch to "Pinhao Fan" on the app, you'll only need to pay 10 yuan.
Amidst the ever-changing consumer market and the rise of lower-tier cities, the food delivery industry is undergoing a new transformation. With the growth of key metrics like order volume and transaction value slowing down, Meituan Delivery has chosen to disrupt the market with "low prices."
It is estimated that by 2023, the volume of "Pinhao Fan" orders on Meituan Delivery will exceed 1.16 billion, accounting for about 6% of Meituan's total orders, with a potential future share of up to 20% in food delivery orders. Low-priced food delivery is rapidly becoming an undeniable force in the food delivery market.
In recent years, in the battle for local living services, from breaking the ceiling of traditional dine-in and delivery services to entering the live streaming arena, Meituan Delivery has been continuously pushing boundaries. However, in the current landscape where acquiring traffic is becoming increasingly expensive, low prices seem to be the most straightforward and effective strategy.
What is "Pinhao Fan"?
"Pinhao Fan" first appeared in 2020.
At that time, the battle for consumer traffic had shifted towards lower-tier cities. In an era where traffic growth was reaching saturation, the overlooked lower-tier cities became a goldmine waiting to be tapped into, leading to the rapid rise of Pinduoduo, seizing the potential economic opportunities.
The first to sense the crisis were e-commerce platforms. In that year, both Jingxi and Taobao (also known as JD Pingou and Taobao Special Edition) were launched successively. Although both claimed "we are different from Pinduoduo," their ambitions to capture users through low prices revealed a shared anxiety.
It is not difficult to guess that the early version of "Pinhao Fan," also known as the "Meituan Delivery Special Edition," targeted small-town youth in third and fourth-tier cities, aiming to accelerate penetration into the lower-tier market through low prices.
"Pinhao Fan" has always been embedded within the Meituan Delivery app and mini-programs, accessible through the main menu on the homepage.
The process of ordering together on Pinfanfan is similar to Pinduoduo. Users can join others' orders or initiate their own group orders. The platform matches users to form a group or shares the food links for group purchases. Both parties need to complete the payment within a specified time for the group order to be successful. In addition to discounted group orders, Pinfanfan also emphasizes free delivery and packaging.
Unlike Meituan's food delivery service that recommends restaurants, Pinfanfan focuses on individual food items or meal sets as the smallest operational unit. When users open Pinfanfan, they can easily find discounted individual items or meal sets.
But although Pindao Fan offers more affordable prices compared to Meituan delivery, it also comes with specific usage rules. Most stores only list a small portion of their menu on Pindao Fan, do not allow modifications, do not show related product reviews, and do not support using Meituan delivery's own member discounts for price reductions.
According to reports from LatePost, the average order value for Meituan's food delivery was around 50 yuan, with an average delivery cost of about 7.5 yuan per order. However, from Pindao Fan's homepage, it can be seen that most food items are priced around 10-15 yuan, mainly in the form of set meals.
In the early stages of Pindao Fan's launch, due to low profit margins, there was low participation from businesses. Meituan allowed the sales volume from participating Pindao Fan merchants to be accumulated into the overall sales volume of their delivery stores to help increase traffic weight, attracting many merchants to join.
For merchants, Pindao Fan is mainly just an additional channel for meal delivery. Although the average order value is less than 15 yuan, after deducting the delivery fee and merchant commission, profits are extremely low, sometimes even resulting in losses.
Similar to how Pinduoduo initially had more white-label small businesses as suppliers, Pindao Fan's core supply is also concentrated on some individual small businesses, including those with qualifications but no physical stores.
Research from Aurora shows that the overall chain and scale of the food delivery industry is relatively low, with nearly 70% of food merchants being individual businesses. Over 60% of merchants have fewer than 5 employees, and over 70% of merchants have average order values ranging from 10 to 29 yuan.
These merchants lack brand endorsement, so offering low-priced meal deals on Pindao Fan can help attract customers. Lowering prices to stimulate sales growth also helps achieve higher inventory turnover rates and profit goals.
Through Pindao Fan, Meituan can expand its user base, increase market penetration, and significantly boost overall order volume by catering to low-price orders. Handling low-price demands effectively will optimize the user experience model and enhance the overall profit elasticity of the food delivery business.
Targeting low prices
Surprisingly, the demand for low-priced food delivery extends beyond just lower-tier markets.
In the past two years, as the entire consumer market has become more rational, cost-effectiveness has become a key competitive factor. Meituan delivery has responded to this shift in demand. Since 2023, Pindao Fan has gradually entered first and second-tier cities such as Beijing, Shanghai, Guangzhou, and Shenzhen. According to a report by Guotai Junan Securities, in Q2 of 2023, Pindao Fan's daily order peak exceeded 5 million orders. In the previous year, Pindao Fan's daily order volume had just reached the million level.
Pindao Fan also made its first appearance in Meituan's financial report. Meituan's 2023 annual report indicated that Pindao Fan has met consumers' demand for low-priced food delivery.
Due to Pindao Fan's continuous expansion in coverage and the resulting increase in customer base and order volume, Meituan's instant delivery transactions in 2023 increased by 24% year-on-year, while the average order value for food delivery showed a downward trend.
According to CICC, in 2023, the order volume of Pinghao Fandian is expected to exceed 1.16 billion orders, accounting for about 6% of Meituan's food delivery business. In 2024-2025, the order volume share may continue to increase to 8-9%, with a sustained impact on the average order value. The future total transaction growth of Meituan's food delivery platform will be mainly driven by the increase in order volume.
According to recent reports, insiders close to Meituan believe that "Pinghao Fan" will become even bigger, with the potential for takeaway orders to account for up to 20% in the future. Hongze Research also predicts that "Pinghao Fan" will break even by 2024.
Similarly optimistic about the potential of the low-cost takeaway market is another major player in the food delivery industry, Ele.me. Around 2022, Ele.me officially launched its group-buying feature.
Like "Pinghao Fan," Ele.me's group-buying feature is also accessible from the main menu on the homepage. Both products attract users through food recommendations, group ordering, and unified delivery.
However, at present, compared to Meituan's "Pindao Fan" service, Ele.me's group-buying performance has not shown significant progress, to some extent, this is also influenced by Ele.me's current market share.
Speaking of which, Meituan's initial foray into "group buying" can actually be traced back to the launch of the group ordering feature in March 2017, where users could select "group order" on the merchant's details page and send a group order invitation link to WeChat friends. At that time, the launch of the group ordering feature coincided with the fierce battle in the food delivery industry at the beginning of 2017. In just three months, Meituan's user base surpassed the then-leading Ele.me, establishing Meituan's leading position in the food delivery market and forming a duopoly market structure in the food delivery industry.
From a data perspective, it is clear that both Meituan and Ele.me are experiencing growth in user numbers, and coupled with the inertia of habitual use, consumers tend to show relatively high loyalty towards food delivery apps. This implies that both platforms must compete for incremental growth within the same pool of users.
Amid this dynamic, there have been many voices in recent years suggesting that "Ele.me cannot surpass Meituan" in the market.
According to Trustdata, in the first half of 2018, the market share between Meituan Waimai and Ele.me was at a ratio of 5:3 (59% : 36%). However, by Q1 of 2020, the comparison between Meituan Waimai and Ele.me had shifted to 7:3 (67.3% : 30.9%).
Nevertheless, this does not mean that Meituan Waimai has already secured its dominance.
Looking at the latest monthly active users, data from Quest Mobile indicates that in the TOP50 APP list by user scale in Q1 of 2024, Meituan ranks 14th with 449 million monthly active users, while Ele.me ranks 27th with 88 million monthly active users, and Meituan Waimai does not make the list.
In the March 2024 TOP list of WeChat Mini Program users, the monthly active users for Meituan, Ele.me, and Meituan Waimai are 302 million, 171 million, and 132 million respectively.
It is worth noting that according to the Quest Mobile report, for young people in small towns, the penetration rate of Ele.me in March 2024 was slightly higher than that of Meituan Waimai.
Today, exchanging value for quantity seems to have become the primary "metric" for major internet giants. Judging from Meituan's recent actions, average order value is no longer the top priority consideration. Meituan's CEO Wang Xing proposed in 2020 that the mid-term goal for Meituan's food delivery service is to reach a peak of 100 million orders per day by 2025.
According to research by Hongze, in Q1 2024, Meituan's food delivery orders are showing a 15-20% year-on-year growth trend, while the average order value has slightly decreased. With the merger of Meituan's dine-in and delivery services, the food delivery business will also integrate "group buying" and "ready-to-eat" services, emphasizing "low-price offerings."
Furthermore, in March of last year, Meituan launched the "Super Snatch" marketing campaign, positioned prominently in the top-level menu on the homepage and in the middle of the information feed.
"God Snatcher" sells discounted takeaway meal vouchers through live streaming, short video feeds, limited-time flash sales, etc., with most meal packages priced at under 40 yuan. This strategy aims to increase the order frequency of medium to high-frequency users, iterate on high average order value products, and expand the user base. As of September 2023, "God Snatcher" has been launched in seven cities including Beijing, Shanghai, Guangzhou, Shenzhen, and Chengdu.
Although the average order value of "God Snatcher" meal packages is relatively high, these vouchers are actually cheaper compared to purchasing them directly from the merchants' pages. For example, a KFC "Chicken Panini Combo" is priced at 19.9 yuan in a normal Meituan store, but the voucher from "God Snatcher" is only 12.9 yuan.
In this light, "God Snatcher" targets users in high-tier cities to increase order frequency and enhance user stickiness, while Pinduoduo focuses more on expanding merchant coverage and increasing penetration in lower-tier cities.
Anxin International predicts that the daily order volume of Meituan Takeaway in 2023 will reach 53 million, with a CAGR of 21% from 2022 to 2025, reaching 77 million orders by 2025, with the peak expected to exceed 100 million orders.
The chaos behind the booming market
With the market booming, the vacuum behind the industry is also beginning to show, especially in terms of regulation and industry standards.
Similar to the early controversies surrounding Pinduoduo being labeled as "cheap but low quality," a search for Pindao Fan on Xiaohongshu (Little Red Book) reveals that one hot keyword is "cheap," while another is "poor quality."
However, unlike purchases on Pinduoduo, which are mostly low-price daily necessities, consumers are more cautious when it comes to food delivery, an essential aspect of their daily lives.
PConline compared two meals ordered separately from Pindao Fan and through normal channels. The price of the same restaurant's Roast Duck Rice was 17.8 yuan for a regular order and 12.1 yuan for a Pindao Fan order. Although they appeared similar to the naked eye, an interesting difference was found: the regular order contained a whole roasted duck leg, while the Pindao Fan order included some duck neck.
The price for ordering a small wonton soup and fried sauce noodles separately is 20.9 yuan and 14 yuan respectively. The regular order includes 13 wontons, while the combo meal only has 8.
The varying portion sizes can be attributed to pricing and cost factors, but when PConline searched "拼好饭" on Black Cat Complaints, they found that out of 1476 complaints, most were about delivery riders refusing to bring orders upstairs. Many users reported that delivery riders cited reasons like "拼好饭 doesn't deliver upstairs" and asked customers to come downstairs to pick up their meals.
Behind the inconsistent service lies a major issue with the treatment of delivery riders, which is directly reflected in the delivery fees.
Black Cat Complaints also received complaints from delivery riders. Some riders mentioned that delivering orders from 拼好饭 pays 2-3 yuan less than regular orders, and they are sometimes forced to make these deliveries. Among them, crowd-sourced delivery riders with poor attitudes are the most criticized.
It's worth noting that a report by Hongze Research pointed out significant changes in Meituan's assessment of food delivery agents in 2023. This includes making agents bear the cost of member discounts, increasing scrutiny on the number of delivery riders, and setting higher requirements for orders from 拼好饭 and Flash Purchase. Although 拼好饭 operates at a loss, not offering this service may lead to expulsion.
As early as 2022, media exposed food safety issues with merchants partnering with "拼好饭." Without industry entry standards, there will inevitably be unbridled development.
During the 2023 financial report conference call, Meituan's CFO emphasized that the 拼好饭 business focuses on quality growth, increasing return on investment, enhancing cost-effectiveness, improving user experience, boosting operational efficiency, and better matching goods of different price ranges with consumers and merchants.
According to reports from Wandian, in 2024, Meituan adjusted its strategy, stating that after 90 days of listing on 拼好饭, order sales and evaluations would no longer be counted towards the overall sales of the takeaway store.
The "independence" of 拼好饭 is becoming more pronounced. When users click on any 拼好饭 link, although they can see store details on the page, they cannot navigate to the regular Meituan Waimai merchant page. This means that if users want to use reviews as a selection criterion, they need to exit 拼好饭 and search for the merchant's name again.
Insiders close to Meituan believe that the adjustment logic aims to increase sales for main 拼好饭 merchants and attract more businesses to offer 拼好饭.
With the increasing number of 拼好饭 merchants in the future, user experience undoubtedly becomes more critical. For the industry to truly move towards standardization, leading companies need to establish their own quality control standards to guide others. When a link in this ecosystem falters, the repercussions will directly impact consumers, ultimately rebounding on the platform itself.
In the fiercely competitive local life battlefield, as Meituan enters combat mode, the platform's own supervision and regulatory standards will become increasingly crucial.
