At the end of August, Chinese food delivery platform Meituan went viral with its plans to abolish the controversial yet common practice of late delivery fines for riders and drivers by the end of the year. The announcement was made during an open day for riders and drivers about the “co-governing” of Meituan’s algorithms, marking the first time such an event had been hosted.
This measure comes against the backdrop of fierce competition in the “local life” services sector, from food delivery to “instant retail”. Competitors such as JD.com and Alibaba’s Ele.me and Taobao Flash Buy have been pushing others in the space to improve their treatment of riders, as a way to attract them to JD’s newly founded Takeaway branch. The same competition has also forced platforms to introduce heavy subsidies in a price war, resulting in a sharp drop in profitability.
- #美团将全面取消骑手超时罚款 Meituan to abolish late delivery fines for riders: 120 million views on Weibo, ranking number 1 on the Hot Search list
- #美团利润大跌89% Meituan profit drops 89%: 25.84 million views on Weibo, ranking number 6 on the Hot Search list
Wang Xing, founder and CEO of Meituan, stated that the company is against “involution” and was the first to stop the price war. However, he warned that the company’s current investments are likely to cause a further drop in short-term profitability, but is hopeful that they will pay off as the brand shifts its focus. Netizens, on the other hand, are generally positive about the news, as Meituan is one of the platforms that doesn’t impact merchants too much despite a price war and has still managed to be profitable. How the platform will differentiate itself after the “takeaway war” is certainly worth watching.
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