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Meituan improves conditions for delivery riders as Q2 revenue impresses

Written by AJ Cortese Published on     2 mins read

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Meituan will relax its brutally efficient order dispatching and route navigation algorithms.

Meituan generated RMB 43.7 billion (USD 6.76 billion) in total revenues during Q2 2021, up 94.8% year-on-year and surpassing market expectations of RMB 42.4 billion (USD 6.56 billion), according to the firm’s latest financial results announced on Monday.

Despite the State Administration for Market Regulation’s ongoing antitrust probe into the company, Meituan posted strong results, buoyed by a rebound in demand for travel and offline leisure activities in China. Revenues from Meituan’s in-store, hotel, and travel bookings business increased by 98.8% YoY to RMB 15.19 billion (USD 2.35 billion) in the June quarter, showcasing Meituan’s strategy to acquire users through high-frequency services like food delivery and then cross-selling higher-margin services like travel bookings.

The company’s core food delivery business delivered more than 3.5 billion meals in Q2 2021, generating RMB 2.4 billion in profits during the period, up 95.2% YoY. In recent weeks, Meituan has come under fire from Chinese regulators that introduced new policies demanding improved working conditions and better benefits for the company’s millions of delivery riders. To comply with the new rules, Meituan will adjust its order dispatch and route guidance algorithms to alleviate pressure on delivery riders, founder and CEO Wang Xing told investors on the earnings call.

The company will offer riders protections like smart safety helmets, along with added conveniences like scooter battery replacement and recharging services. Meituan’s founder also mentioned that the company has prohibited the use of exclusivity agreements in its delivery business as the platform’s relationship with merchants has soured.

Within its new initiatives, Meituan continued its significant investment in its community group-buying business, as it attempts to fend off well-resourced rivals like JD.com, Pinduoduo, and Alibaba. The company expanded this line of business in lower-tier markets and is building up its nationwide cold chain logistics network to support the delivery of fresh food products. Meanwhile, the firm’s grocery business, Meituan Maicai, increased its coverage and warehouse density in tier-1 cities during the June quarter, recording increases in transacting users and volume for the quarter.

Meituan is looking to fortify its leading position in China’s on-demand services market amid intensifying competition from the likes of ByteDance’s Douyin and Alibaba’s local services ecosystem, which has integrated offerings into its mapping app AutoNavi. To this end, Meituan raised USD 10 billion in April by offering shares and convertible bonds on the Hong Kong Stock Exchange.

Read this: From viral videos to dining and trips, Douyin takes a bite out of Meituan’s business

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