Meituan announced on June 23 that it will fully expand its instant retail business while retreating from loss-making regions in its community group-buying unit, Meituan Youxuan. The company will reallocate resources to strengthen its competitive edge in instant delivery, with a focus on growing its Flash Buy service and XiaoXiang Supermarket’s warehouse-based delivery.
Why it matters:
As e-commerce growth slows, Meituan is betting on instant retail to capture new demand, aiming to lead in a sector expected to exceed RMB 2 trillion ($278.9 billion) in 2030, according to the Chinese Academy of International Trade and Economic Cooperation.
Details:
Meituan said its Flash Buy business will continue to diversify its categories and expand both storefronts and lightning warehouses. Its front-warehouse retail brand XiaoXiang Supermarket will extend coverage to all tier-one and tier-two cities. Meanwhile, Meituan Youxuan will undergo a strategic upgrade, focusing on profitable regions and exiting cities where the business is losing money.
- An internal notice regarding Meituan Youxuan’s strategic upgrade states that Meituan has committed to retaining all regular employees of the unit, with no layoffs. The company has completed the internal transfer of business operations to other units, including Kuailv and XiaoXiang, and is coordinating with other departments to arrange related positions. Employees’ compensation and benefits will remain unaffected.
- In regions where the business is being withdrawn, Meituan Youxuan will gradually cease operations, while services will continue in several major cities. In some areas, the platform has already announced that it will stop accepting orders starting June 23.
Context: The pullback from community group-buying comes after years of mounting losses. Meituan Youxuan launched in mid-2020 with aggressive nationwide expansion, reaching 2,600 counties by early 2021. However, heavy investment failed to yield profits. In 2021, Meituan’s new initiatives, including Youxuan, Flash Buy, and others, posted a RMB 38.4 billion ($5.35 billion) loss, widening from RMB 10.9 billion ($1.52 billion) the year before.
- In 2022, the company began cutting costs, shutting operations in high-cost cities like Beijing, and laying off staff across its new businesses. Meituan CEO Wang Xing acknowledged in March 2024 that after four years of heavy investment in Youxuan, the business would be restructured to reduce operational losses.
- In 2023, while losses narrowed, Youxuan’s growth slowed. New initiatives brought in RMB 69.8 billion in revenue, up 18% year-on-year, with operating losses of RMB 20.2 billion. Meituan said it would stop “burning money” on Youxuan, aiming instead to improve unit economics and focus on user retention.
- As competition intensifies in instant retail, Meituan is aggressively growing its reach. XiaoXiang Supermarket, which rebranded from Meituan Maicai in December 2023, now plans to cover 200 top agricultural regions in China, such as Shouguang and Enshi, and is testing an overseas version, Keemart, in Riyadh, Saudi Arabia.
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