Apps

Chinese food delivery giant Meituan considers consolidating data from its different platforms after loss widens amid price war with Alibaba

  • Meituan’s losses widened to 83.3 billion yuan for the third quarter ended September
PUBLISHED : Tuesday, 27 November, 2018, 5:03am
UPDATED : Tuesday, 27 November, 2018, 5:26am

Meituan Dianping, the Beijing-based on-demand services giant, is exploring the option of integrating all data from its multiple platforms – including food-delivery operation Meituan Waimai, local listing site Dazhong Dianping and bike sharing app Mobike – to “better manage all the data” and gain more leverage in the face of fierce competition across its business sectors.

“The move could eliminate repetitive data,” a Meituan spokesman said. However, the integration of the data is not expected to diminish the overall number of users, he said.

Meituan’s proposal comes after it posted a wider loss for the third quarter ended September, with losses for the period ballooning to 83.3 billion yuan (US$12 billion) compared with a 4.4 billion yuan loss for the same period a year earlier.

The company’s ability to generate a profit is being hurt by the fierce battle for market share with Ele.me and Koubei, which are both incorporated under Alibaba Group Holding and compete in Meituan’s core food delivery business. This summer Alibaba, which owns the South China Morning Post, pledged to pour “billions” of yuan into Ele.me to further expand its food delivery business.

Meituan’s revenue generated from its food delivery business amounted to 11.2 billion yuan (US$1.6 billion) for the third quarter, contributing 58.6 per cent of its total revenue. The third quarter growth rate for the company’s core business was 84.8 per cent year on year, below its overall growth rate of 97.2 per cent.

Meituan shares plunge most since IPO on wider losses

While embroiled in a subsidy war with Alibaba, Meituan is trying to shrink its expenses in other areas. Wang Xing, the company’s chairman and chief executive, said on the earnings call last week that the company would not further expand into the car-hailing business beyond the two trial cities of Nanjing and Shanghai that it currently operates in.

Wang admitted on the same call that Mobike, the bike sharing company that Meituan acquired earlier this year, was not “very well operated” and that he planned to shrink the fleet size of the bike-rental subsidiary.

Such a move would be in line with Wang’s focus recently. “After the IPO, I’m spending more time on building our organisational capability,” Wang said last week. The company raised US$4.2 billion from its Hong Kong IPO in September.

Revenue growth in the company’s hotel and ticket booking business was up 46.8 per cent year on year, but the fastest growing business for Meituan was so-called “new initiatives,” which saw 471.3 per cent year on year revenue growth to 3.5 billion yuan (US$504 million). This business segment includes ride hailing, bike sharing, restaurant management systems and food supply solutions.