Meituan Bids Farewell to E-commerce: A Major Strategic Retreat After Five Years of Trial and Error
Source: Dongge's E-commerce Analysis
Author: Jin Shan
On the same day, Meituan shut down two businesses.
Recently, Meituan's Tuangouhao business issued an internal email stating that after research by the grocery retail management team, it was decided to suspend the Tuangouhao business to focus on exploring new retail formats. At the same time, Meituan Youxuan, which was still operating in key regions like Guangdong and Zhejiang, also announced its shutdown, marking the complete exit of Meituan Youxuan from the market.
Both JD.com and Alibaba are using food delivery to drive traffic. Why hasn't Meituan's high-frequency traffic been directed to e-commerce and community group buying? What will Meituan do next after this retreat?
Ambitious Beginnings, Dual Failures
The birth of these two businesses was due to Meituan's "All in Retail" strategy at the time. Meituan's food delivery market share exceeded 60%, making it the dominant player. However, business growth inevitably slowed. Meituan Youxuan and Tuangouhao were both attempts by Meituan to fully transition into a retail platform, seeking a second growth curve.
In 2020, after the outbreak of the pandemic, wet markets closed, making it difficult for residents to buy groceries. Community group buying became popular, with users placing orders the day before, platforms consolidating purchases and delivering to community leaders, and users picking up their orders the next day.
In July, Meituan Youxuan officially launched and was listed as a strategic project for Meituan. Meituan Youxuan's goals also included expanding into third- and fourth-tier cities and towns.
Community group buying then entered a period of rapid expansion, with multiple players like Duoduo Maicai, Chengxin Youxuan, Hema Market, and Jingxi Pinpin igniting a "hundred-group battle." Meituan Youxuan also launched activities like "one-cent flash sales" and "free eggs," leading to a rapid increase in daily orders.
In August 2020, Meituan entered the e-commerce space with "Tuangouhao," focusing on a direct-from-origin + group buying model, mainly selling fresh produce and daily necessities, offering free shipping nationwide, and allowing merchants to join at zero cost.
At the same time, the reckless spending on community group buying attracted regulatory intervention. In December, the State Administration for Market Regulation summoned several platforms and explicitly prohibited low-price dumping and abuse of market dominance. Some companies were later fined for price wars.
As community group buying cooled, Meituan began to favor e-commerce more. Also in December, Tuangouhao gained a top-level entry on the app's homepage, significantly elevating its status, and was later renamed Meituan E-commerce. Data shows that in 2021, Tuangouhao's total annual orders reached 36 million, with a GMV of approximately 630 million yuan.
After 2021, a turning point emerged, as both businesses faced difficulties.
First, with the easing of the pandemic and reduced subsidies, much of the consumption returned to offline channels. Community group buying was inherently a difficult business to profit from, with high losses in the fresh produce category, heavy investment in cold chain storage, and high fulfillment costs, leading to severe losses per order.
On the e-commerce front, in 2021, former NetEase Yanxuan CEO Liu Xiaogang took over, shifting from a low-price advantage to a curated e-commerce model. Consumers primarily saw Meituan as a food delivery platform, with little awareness of Tuangouhao. It couldn't compete with Pinduoduo on price or with JD.com and Tmall on quality, making it hard for Tuangouhao to find its niche.
Despite traffic from food delivery, user purchase intent was low. Third-party data shows that by the end of 2022, Tuangouhao's daily orders plummeted to 48,000, less than half of its peak, with over 70% of orders relying on subsidies.
In June of this year, Meituan Youxuan announced its withdrawal from 19 provinces, retaining only a few sites in Guangdong and Zhejiang. Six months later, even these few cities were not spared, shutting down again. Meituan Youxuan came to a complete end. Meituan announced the suspension of the "Tuangouhao" business via internal email.
The disappearance of Meituan Youxuan and Tuangouhao also marked the shattering of Meituan's distant e-commerce dream.
The Truth Behind the Retreat: Financial Pressure and Strategic Focus
Why did Meituan completely abandon community group buying and e-commerce?
First, there was immense financial pressure. The latest financial report shows that in Q3 2025, Meituan's total revenue was 95.5 billion yuan, a slight year-on-year increase of 2%; however, it shifted from a profit of 12.9 billion yuan in the same period last year to a loss of 18.6 billion yuan. This was also considered Meituan's worst financial performance since its IPO.
With tight cash flow, marginal businesses that continued to "burn money" with no hope of profitability were inevitably cut. Shutting down both on the same day was also a way to release all the negative news at once, reducing long-term bleeding. This also meant Meituan abandoned its "All in" strategy and began focusing on its core strengths.
Meituan gave up on the distant e-commerce model it wasn't good at and concentrated all its resources on the moat of instant retail.
The latest report from the Ministry of Commerce shows that China's instant retail market surged to 781 billion yuan in 2024, a year-on-year increase of 20.15%, and is expected to exceed the trillion-yuan mark by 2026, reaching 2 trillion yuan by 2030.
Instant retail also became the growth engine for this year's Double 11. Data from Syntun shows that instant retail sales in 2025 reached 67 billion yuan, a staggering year-on-year increase of 138.4%.
From October 31 to November 11, Meituan's flash sales platform set new records in transaction volume, number of orders, and average spending per user, with nearly 400 categories, including mobile phones, liquor, sportswear, action cameras, and toners, seeing sales growth of over 100% year-on-year.
For Meituan, instant retail is a war it cannot afford to lose, a business that combines offense and defense. By delivering everything through food delivery, Meituan can penetrate the strongholds of Alibaba and JD.com.
Compared to the original Tuangouhao, instant retail is clearly a better consumption scenario, capable of increasing average order value and capturing the hearts of the younger generation. At the same time, this is also an area coveted by JD.com and Alibaba, and Meituan must defend its mindshare.
The curtain call for Meituan Youxuan and Tuangouhao is not a failure but an expensive yet necessary trial. It made Meituan realize that the real moat isn't in distant shelves but in the 30-minute life circle around us.
References:
1. Paidai: Another e-commerce platform has closed
2. Tech Ukiyo-e: Two projects shut down in one day, Meituan's traditional e-commerce dream shattered
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