Recently, Jinbo Biological (832982.BJ), the first stock of collagen on the Beijing Stock Exchange, announced its cooperation with Meituan Medical Health in Taiyuan.
This is the first time since the public conflict between the two companies last September that they have sent a &#34;reconciliation signal&#34; to the outside world.
Behind the shift from controversy to collaboration is a new change in the supply chain of the medical beauty market.
In fact, Jinbo Biological is not the only upstream medical beauty material supplier cooperating with Meituan; more upstream medical beauty material suppliers, such as Huaxi Biological (688363.SH) and KeYiren, are increasing their cooperation with Meituan.
This represents another upgrade in the medical beauty supply chain and channels.
In the past, upstream medical beauty material suppliers mainly completed sales by connecting with downstream medical beauty institutions, resulting in limited contact with consumers.
However, now upstream medical beauty material suppliers are stepping into the spotlight with the help of Meituan. Numerous flagship stores of upstream medical beauty material brands, such as Runbaiyan and Haitai, are entering the &#34;Find Brands&#34; project on the Meituan APP.
More changes are occurring at the backend.
Meituan is becoming a supplier for many small and medium-sized downstream medical beauty institutions. Meituan acts as an &#34;agent&#34; for these institutions to collectively purchase from upstream medical beauty material suppliers, thereby achieving a rebalancing of product authenticity, costs, and other factors.
Currently, this represents a new balance after negotiations among the platform, consumers, upstream medical beauty material suppliers, and downstream medical beauty institutions.
However, challenges still exist.
Although the Meituan model addresses the issue of authenticity, the current competition in the medical beauty industry is fierce, forcing downstream medical beauty institutions to attract customers through low-priced promotions on the Meituan platform, which puts some upstream medical beauty material suppliers under pressure to lower prices.
It remains to be seen how long the current situation among the platform, consumers, upstream medical beauty material suppliers, and downstream medical beauty institutions can be maintained.
<h2>Gains and Losses of &#34;Shaking Hands and Making Peace&#34;</h2>
The conflict between Jinbo Biological and Meituan erupted last September.
At that time, Jinbo Biological criticized WeiYimei, which entered Meituan's 10 billion subsidy list, in a letter to consumers, stating that it had not obtained authorization or certification from them, nor had it purchased from authorized channels.
Jinbo Biological also sent a letter to Meituan requesting the removal of the product and demanded that WeiYimei sold on its platform must come from authorized channels.
The unauthorized products listed on Meituan are similar to the Wuliangye on Pinduoduo, usually resulting from major distributors or channel parties &#34;diverting goods&#34; to small and medium-sized medical beauty institutions under price pressure.
&#34;The SKU and price of medical beauty companies fluctuate based on the order volume of institutions; that is, large institutions order in bulk, and the price is cheaper. This can lead to large institutions 'diverting goods' to small institutions for profit, which small institutions find attractive because it is cheaper than ordering directly from medical beauty companies,&#34; a medical beauty industry insider in Shanghai told Xinfeng.
It is evident that while Jinbo Biological's statement appears to target unauthorized products, the root of its criticism towards Meituan still points to the disruption of its product pricing power by the &#34;10 billion subsidy.&#34;
At that time, the market guidance price for WeiYimei was around 6,000 yuan per bottle, but on Meituan's &#34;10 billion subsidy&#34; page, the price could drop to as low as 1,339 yuan per bottle.
In the short term, the decline in terminal prices will not affect the ex-factory price of WeiYimei, but the long-term &#34;price-cutting&#34; phenomenon downstream is likely to squeeze Jinbo Biological's profit margins
But less than a year later, Jinbo Bio and Meituan have &#34;reconciled&#34; through a collaboration.
In July this year, Meituan Medical Health and Jinbo Bio signed a strategic cooperation agreement, focusing on collaboration in core areas such as product research and development, market promotion, and channel expansion. Wei Yi Mei also launched a hundred billion subsidy through official cooperation.
Yang Xia, chairman of Jinbo Bio, pointed out: &#34;Jinbo had good control over channel prices at that time. After the subsidy, product prices dropped, and customers frequently came to cause trouble. Under pressure, we ultimately chose to send a lawyer's letter to Meituan. I didn't understand the subsidy at that time; I wondered why my products needed to be subsidized by your platform?&#34;
&#34;After sending the lawyer's letter, we started communicating with Meituan, and by this year, we finally partnered.&#34; Yang Xia further stated.
After launching the hundred billion subsidy, the terminal price of Wei Yi Mei saw a certain degree of decline.
Xinfeng noticed that on July 29, in Meituan's &#34;hundred billion subsidy&#34; interface, the first order price for new customers of Wei Yi Mei at a certain medical beauty institution in Beijing could be as low as 790 yuan, which is more than a 40% drop compared to last year's subsidized price.
The staff of the medical beauty institution told Xinfeng that after the first order consumption, the subsequent price for Wei Yi Mei is 1380 yuan per injection, which is not much different from last year's hundred billion subsidy price.
&#34;The competition in the medical beauty market is indeed too fierce now, and coupled with the impact of consumption downgrade, the competitive pressure on downstream institutions is very high, and this pressure is also being transmitted to upstream manufacturers. It is very difficult for upstream manufacturers to control prices; rather than forcibly controlling prices, it is better to cooperate for a win-win situation,&#34; said a person from a medical beauty materials company in Beijing to Xinfeng.
Although product prices are under pressure after joining the &#34;hundred billion subsidy,&#34; the advantages of the cooperation mainly lie in the fact that upstream medical beauty material manufacturers can directly connect with consumers, strengthening the brand advantage of medical beauty products at the terminal.
The medical beauty section of the Meituan APP launched a &#34;Find Brand&#34; feature during this year's 618, allowing consumers to directly input the brand name of medical beauty products in the Meituan APP, with search results linking to the official flagship stores of various medical beauty brands, where consumers can choose the corresponding medical beauty institutions for the products.
&#34;Upstream brands can leverage Meituan to strengthen their image as genuine products in consumers' minds, ensuring consumer trust when choosing products. Through traceable genuine product verification, it addresses consumers' concerns about counterfeit goods and low-price risks, enhancing the brand's authority and market recognition,&#34; a person from the medical beauty industry in South China told Xinfeng.
<h2>Platform Supply</h2>
Jinbo Bio is just one cross-section of Meituan's efforts to streamline the medical beauty supply chain.
Currently, several upstream medical beauty material manufacturers, including Huaxi Bio and Ke Yi Ren, have signed cooperation agreements with Meituan.
According to a set of data obtained by Xinfeng, Meituan has cooperated with 57 upstream brands this year, with user search volume increasing by more than five times during the 618 period and transaction volume growing by 150%.
Among them, brands such as Huaxi Runzhi, Ai Su Fei, and Mei Di Mai achieved a doubling of transaction volume through the platform during the 618 period.
After strengthening cooperation with upstream medical beauty material manufacturers, Meituan is positioning itself as a collective procurement &#34;supplier&#34; for small and medium-sized medical beauty institutions downstream.
In the past, upstream medical beauty material manufacturers often connected with large downstream medical beauty institutions through direct sales and with small and medium-sized medical beauty institutions through distribution
However, faced with the high concentration of upstream manufacturers, the structure of downstream medical beauty institutions is more fragmented, often lacking sufficient bargaining power.
Many small and medium-sized medical beauty institutions sometimes procure products through ordering from larger peers due to insufficient minimum order quantities, leading to frequent instances of &#34;diversion.&#34;
In response, Meituan has provided a dedicated platform for small and medium-sized medical beauty institutions, allowing them to purchase upstream consumables through this channel.
&#34;Meituan covers numerous medical beauty institutions in major cities and lower-tier markets, which forms the basis for upstream companies' bargaining and centralized procurement. Therefore, Meituan can help small and medium-sized medical beauty institutions procure competitively priced products from upstream brands,&#34; pointed out a medical beauty industry insider in Beijing.
Currently, Meituan's medical beauty business covers over 300 cities nationwide, with around 14,000 online medical beauty institutions.
&#34;On one hand, this can ensure the authenticity of products, addressing consumers' pain points in medical beauty consumption; on the other hand, with Meituan's centralized procurement platform, small and medium-sized medical beauty institutions do not have to worry about excessively high procurement costs,&#34; the aforementioned industry insider stated.
For small and medium-sized medical beauty institutions, the emergence of this centralized procurement channel comes at a timely moment.
Currently, major platforms like JD.com and Xinyang are also entering the self-operated medical beauty clinic space, bringing more competitive pressure to small and medium-sized medical beauty institutions.
On one hand, small and medium-sized medical beauty institutions lack traffic inflow and often have to attract customers through low prices; on the other hand, they do not have cost advantages and are more easily impacted by the advances of larger companies.
Thus, it can be seen that the emergence of Meituan's medical beauty supply chain is forming a new balance among the platform, consumers, upstream medical beauty material suppliers, and downstream medical beauty institutions.
Upstream material suppliers can connect with more consumers through Meituan, expanding their market coverage; under the centralized procurement system, the authenticity of products and procurement cost dilemmas faced by downstream small and medium-sized medical beauty institutions are also resolved;
Consumers can select higher cost-performance services in a more transparent market, thus forming a virtuous cycle.
However, the biggest beneficiary may still be Meituan, which not only strengthens its bargaining power with upstream medical beauty material suppliers but also further consolidates its traffic advantage in the medical beauty market.
&#34;Although this model currently represents a relatively balanced relationship for all parties, the issue of price competition remains a challenge. Especially after institutions attract traffic with low prices on the platform, whether these new customers can be fully converted into clients still has uncertainties,&#34; pointed out a medical beauty industry insider in North China.
According to data provided by this insider to Xinfeng, among Meituan's over 800 million members, medical beauty users are concentrated in three levels: Lv.3 Gold, Lv.4 Platinum, and Lv.5 Black Gold.
However, the user base constituting Meituan's membership is primarily concentrated in the price-sensitive Lv.1 Ordinary level.
This means that if downstream medical beauty institutions want to further penetrate Meituan's Lv.1 Ordinary level users, low-price traffic attraction may still be an indispensable means. <img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/c2505fc9-3ed3-41c0-9c23-12d9a05bab84.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/c2505fc9-3ed3-41c0-9c23-12d9a05bab84.png"/>
Meituan APP &#34;Find Brand&#34; Interface

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- Jinbo Bio and Meituan Health announced a partnership, signaling a reconciliation after public disputes last September.  
- This collaboration reflects changes in the medical beauty supply chain, with more upstream suppliers like Huaxi Bio increasing ties with Meituan, enhancing their market presence.  
- Despite the advantages, challenges remain as intense competition forces downstream institutions to attract customers through low prices, impacting upstream suppliers' profit margins.

Dissecting Meituan's Medical Aesthetic Supply Chain