Home » Yuanguang | Meituan’s takeaway commission has become a “mystery”?Detailed explanation of “Internet rent”_proportion_catering_amount

Yuanguang | Meituan’s takeaway commission has become a “mystery”?Detailed explanation of “Internet rent”_proportion_catering_amount

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Yuanguang | Meituan’s takeaway commission has become a “mystery”?Detailed explanation of “Internet rent”_proportion_catering_amount

Original title: Yuanguang | Meituan’s takeaway commission has become a “mystery”? Explain “Internet Rent” in detail

If you want to give an example of a company whose business model is constantly being questioned, Meituan must be on the list.

On March 25, Meituan released its 2021 Q4 and full-year financial reports. The annual revenue was 179.13 billion yuan, a year-on-year increase of 56%. Operating loss was 23.13 billion yuan, compared with a profit of 4.33 billion yuan in the same period last year. The increase in revenue and the decrease in profits is consistent with Meituan’s usual situation after expanding new businesses such as community group buying.

Since the outbreak, Meituan’s entire line of business has been affected to varying degrees. Food and beverage delivery, which is the main source of income, is in a crisis of public opinion. Businesses such as the main source of profit, such as in-store, wine and travel, have begun to pick up, and the growth rate has changed from -4.6% last year to an increase of 53.1%. Since the beginning of the year, Meituan has lost about 38.4 billion yuan under the new business.

Under the headwind, “cultivating internal strength” has become the consensus of Internet companies. When we look at the company Meituan, its “strong subjects”, “traffic sources”, and its so-called business logic of “high frequency and low frequency” all originate from the “initial starting point” of food delivery.

However, among the “high” commissions, exclusive agreements, riders’ social security, and many other businesses that have caused a lot of controversy for Meituan, takeout is also the first to bear the brunt. Aside from the “choose one” that has been resolved by anti-monopoly and the flexible employment issue under discussion, only the commission issue is still controversial. In this financial report, Meituan also began to change its caliber and fully disclose the commission details.

What is the commission ratio of Meituan? The answers given by merchants and Meituan are very different.

The dispute over the commission of Meituan originated in early 2020 when the epidemic broke out. At that time, many catering associations called on Meituan to reduce commissions. The Guangdong Catering Service Industry Association issued a document saying that on the Meituan platform, the commission for newly opened catering merchants is as high as 26%. During the same period, Sohu Technology also visited some chain restaurant merchants in Beijing, and it was generally reported that the commission ratio was between 19% and 20%.

Subsequently, Meituan said in its response that more than 80% of merchants’ commissions last year were 10%-20%, and the real figure was far lower than various rumors and imaginations.

The monetization rate can fully reflect Meituan’s overall promotion of catering merchants. Monetization rate is revenue/transaction amount.The caliber of commission changes, and Meituan’s revenue in the field of food delivery mainly includesCommissionandOnline Marketing Servicestwo income.

However, some people close to Meituan told Sohu Technology that advertising (online marketing) has always accounted for a low proportion of revenue and is difficult to increase. According to the financial report, commissions still account for the majority of Meituan’s catering takeaway revenue, accounting for about 90%, and online marketing revenue is only around 10%. “Meituan Takeaway is a service based on geographic location information, which makes advertising not like e-commerce that can radiate across the country, so the customer base it faces is relatively limited.”

Looking at the financial report of Meituan, the monetization rate of catering takeaway has been between 13%-14%, and the commission ratio is 12%-13%, which is far lower than the 20% generally reported by merchants, and even lower than the Guangdong Catering Service Industry Association. 26% of new merchant cases cited.

(unit, thousand yuan)

In this financial report, Meituan further disassembled the previous “overall commission” into “food delivery service” + “commission”. After the caliber was changed, Meituan’s commission ratio fell to 4.07%, but in fact, Meituan’s takeaway The monetization rate of Meituan has not declined significantly, but has risen slightly, which means that Meituan’s overall promotion has not decreased with the change in the “commission” caliber, and is still between 13-14%.

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So, what caused the huge “rift” in perception between Meituan and merchants?

If you start from the data, then the first thing you need to determine is that the so-called “transaction amount” refers to the original price before the merchant’s discount, or the actual payment amount of the consumer. Considering that the proportion of red envelopes for takeaway discounts, full discounts, and member red envelopes is usually high, this is very likely to cause a “distortion” of the commission ratio.

“The caliber of each factory is not the same, and there will be no unified rules.” An auditor told Sohu Technology, “After all, the role of packaging performance must be considered, and sometimes it is just playing with the caliber.”

Wang Jiyue, a senior investment banker, told Sohu Technology: “Generally speaking, the transaction amount is calculated before the discount.” A person familiar with Meituan’s financial structure also said that from the data disclosed in the financial report, the transaction amount displayed is very high. There may be data before the discount.

According to Meituan’s 2021 financial report, using the transaction amount/number of transactions for food delivery, it can be seen that the amount of a single order of Meituan has reached as high as 48.2 yuan, which is not in line with daily cognition.

If Meituan does use the amount before the discount, and the merchant adopts the actual payment amount of the user, it is not surprising that the perceived bias in the commission ratio is caused. Even, we can calculate from this that about 1/3 of the “preferential moisture” in the transaction amount of Meituan.

(Calculation method: Taking an order with a transaction amount of 100 yuan as an example, the revenue calculated at a monetization rate of 13.5% is 13.5 yuan. Based on the 20% commission rate stated by the merchant, the actual payment is 67.5 yuan. The discount amount is about 32.5 Yuan, the ratio is about 1/3.)

From a business point of view, some merchants choose self-delivery, which will also reduce the commission ratio. A typical example of this is the mom-and-pop shop in the sinking market. They often choose to distribute themselves to reduce costs. In addition, some chain restaurants such as McDonald’s and KFC also have a relatively low commission ratio due to their self-built distribution teams.

A fact that needs to be clarified is that whether it is the 20% commission rate stated by the merchants or the overall monetization rate of 13%-14% shown in the Meituan financial report, Meituan does use a large proportion of the commission for payment. The cost of the rider, an HR in charge of recruiting riders for Meituan, said that in the Haidian area of ​​Beijing, the cost of each order delivered by a rider is about 9 yuan, plus 2 yuan during nighttime hours.

Unit: thousand yuan

Although the ratio of rider expenditure to income has decreased year by year since 2018, the proportion is the lowest at 71%. In other words, behind the seemingly heavy commissions, the amount drawn by Meituan is around 30%, and most of them are still paid to the riders.

2. Transparency? confusion?

In March last year, Meituan tried to break down the commission (platform service fee) into “technical service fee” and “performance service fee” to clarify the actual benefits of Meituan. This year, this change in business caliber began to be reflected in the financial report.

In the introduction of fee transparency, Meituan once stated that overall, the technical service fee (the real “commission”) rate is between 6-8%. In fact, the number shown in the financial report is 4%.

In the detailed rules of the caliber change, the technical service rates will vary according to different regions. The basic principle is that the rates in the advantageous regions of Meituan are relatively high. According to the order information provided by some merchants, Beijing is 6.4% (guaranteed 1.38 yuan), Shanghai is 6.2% (guaranteed 1.4 yuan), and Xiamen is 5.8% (guaranteed 1.14 yuan).

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Details of Meituan takeaway rates in Shanghai

The performance service fee is adjusted according to factors such as distance, order price and time period.

After the rate adjustment, the fees of merchants in Nanjing area change

After the rate adjustment, Meituan has announced that in some cases in the Nanjing area, the commission rates of different merchants have declined to varying degrees. But there are also merchants claiming that Meituan extracts more than just the figures in the claims.

According to a report by the Red Star Capital Bureau, backstage data from a small restaurant in Chengdu showed that customers actually paid 27.36 yuan, including 1.51 yuan for technical service fees, 3.55 yuan for performance service fees, and 0.02 yuan for environmental protection donations. According to Meituan, the owner Xu Gang should get 22.28 yuan after taking out these two parts, but the backstage of Meituan’s takeaway shows that Xu Gang actually only got 19.24 yuan.

Looking at another page, you can see that the difference of 3.04 yuan is the same as the “delivery fee” amount on that page. In other words, Xu Gang’s order was actually taken away from the “delivery fee + technical service fee + performance service fee”, accounting for 29.7% of the order amount, far higher than the 20% fixed rate before the “reform”.

Dismantling the cost of a Meituan takeout order

Dismantling a customer order, we can find that the so-called “performance service fee” is not “the rider’s delivery fee”, but the “delivery fee borne by the merchant” as identified by Meituan.

In this order, the fulfillment service fee was 3.5 yuan, but the actual income of the rider reached 8.4 yuan. Of the remaining 4.9 yuan, 3.7 yuan was borne by the customer (the customer actually paid 32.7 yuan – the amount after the product discount was 29 yuan), and Meituan then took 1.2 yuan from the 1.86 yuan technical service fee for weather subsidies, etc. Only 0.66 yuan in hand. From the financial report, we can also see that Meituan does need to “subsidize money” for delivery services. For the whole year of 2021, Meituan’s catering takeaway delivery service revenue will be 54.2 billion yuan, and distribution-related costs will reach 68.18 billion yuan in the same period.

However, in the eyes of merchants, the difference between the amount actually paid by the customer and the amount received is the “commission” of Meituan, and in this order, the commission of Meituan is as high as (32.7-23.64)/32.7=27.7% .

However, it is worth noting that this algorithm of extracting the technical service fee for use as a weather subsidy contradicts the logic of the new algorithm announced by Meituan—the technical service fee and the performance service fee are extracted separately.

All in all, complex algorithms test the business ability of merchants. As for why this “seemingly” illogical algorithm was adopted, an Internet practitioner told Sohu Technology that it was mostly a product of historical evolution.

In addition to taking commissions, Meituan has launched promotional activities such as “Daily God Coupon” and “Discount Package” one after another, which has further increased the difficulty of business operations, and some businesses have criticized this. A merchant in Shanghai said: “Promotions can indeed increase the number of orders, but because the merchants fully bear the preferential costs, there are sometimes negative orders.”

A Shanghai merchant displays order details, and the estimated revenue is -3.73 yuan

A staff member of a food delivery agency told Sohu Technology that many middle-aged mom-and-pop stores would not operate food delivery platforms, which led to loss of money after taking part in the event. According to the report of Jiguang Big Data, the participants in the food delivery industry are mainly small, medium and micro businesses, nearly 70% of the food delivery businesses are self-employed, and 62.2% of the businesses have less than 5 employees.

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3. “Dance” on the edge

Seemingly high commissions have become a new type of “Internet rent”.

However, compared with the fixed, rigid rent that must be paid regardless of whether the business is good or bad, there is a view in the market that the commission of the food delivery platform is more flexible – it needs to be paid because there is an order.

Although the rent is rigid, it is also fixed. Although the commission is flexible, as long as the merchant has a large number of orders and the price is reasonable, the upper limit of the order will become very high, which may cause Meituan to earn from a single store. The overall commission is higher than the rent.

In fact, such a trend has already appeared in the market. More than one merchant said that high order volume and high customer unit price are the only rules to deal with high commissions, which is also the most basic logical regression in the catering industry.

Some shop owners said that the current average of thousands of takeaway orders per month may still lose money. “It depends on what the merchant sells. If you sell fried noodles and fried rice, it will definitely be a loss if you sell 1,000 per month. But if you sell Peking duck with a unit price of 70-80, you may be able to keep your capital.”

High order volume and high customer unit price can resist the high commissions of the platform. The platform can also conduct reverse screening by testing the commission limit, which will lead to the merchants who stay on the platform with good business, and thus make the total commission limit also higher. will be high.

Of course, for merchants, the amount of commission is important, but using takeaways to reduce marginal costs and increase profits is the most important purpose.

Huaan Securities once disclosed the income structure of a typical catering merchant before and after joining the food delivery platform in the relevant research report “In-depth Review of the Food Delivery Industry: Bailout and Protect the Cold, Fulfill Social Responsibilities, and Have Strong Resilience on the Demand Side of Grassroots Research”.

Before joining the takeaway platform

After joining the takeaway platform

It can be seen that joining the takeaway platform does increase the income of the merchant by about 630 yuan, but the merchant does not need to pay more rigid costs such as rent and manpower, and only needs to pay an additional 151 yuan for takeaway commissions and 13 yuan for takeaway marketing. Expenses, raw material cost of 220 yuan and depreciation of water, electricity and miscellaneous expenses of 126 yuan. The extra profit of 120 yuan is about 2 times that of not joining the takeaway platform before.

Among them, the fee paid to the food delivery platform is 164 yuan (151 yuan + 13 yuan), which is not much different from the daily rent of 200 yuan. Therefore, some merchants jokingly call the commission of the food delivery platform “Internet rent”.

Aurora research shows that merchants can increase profit margins by 10% by carrying out takeaway business

But we can still see the positive meaning of this “rent”. According to the data of Jiguang research, since there is no need to pay additional rigid costs, the emergence of takeaway platforms can increase the profit margin of merchants by about 10%. This also means that the significance of the takeaway platform is to allow merchants to “dance” on the cost margin and broaden their income and profits.

“Meituan is the company that hopes merchants can survive the most, because only when merchants have business can Meituan have business.” An industry insider said.Return to Sohu, see more

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