Can Meituan Go From Delivering Groceries to Delivering Luxury Products?

What happened: While Alibaba retains a 1.48% stake in Meituan, a Chinese group buying website for locally found food delivery services, consumer products, and retail services, the relationship between the two giants have soured after the Beijing-based app joined Tencent. Furthermore, since Ant Financial announced its intent to grow beyond financial services and create a digital ecosystem, the competition between the two major players has intensified.

According to KrAsia, Meituan blocked payments via Alipay as founder and chairman Wang Xing called out Alibaba in a social media post on Fanfou, the first Twitter clone in China, over the fact Taobao users can no longer pay with WeChat. Currently, Meituan accepts WeChat Pay, Meituan Pay, Apple Pay and payment services provided by Chinese banks.

Jing Take: Meituan might be famous for delivering groceries, but considering that the app serves more than 3.6 million merchants and reaches 400 million customers nationwide in 2,800 cities, it has become a highly attractive target for foreign brands. Furthermore, the launch of the global delivery platform “Meituan Delivery” is opening the company to new industries and sectors. And premium and high-end global brands are noting this opportunity.

Taking into account that Alipay is considered a mainstream electronic payment method and the vast majority of global and premium brands trust its payments infrastructure, Meituan risks losing partnerships with foreign sellers if it bans the Alibaba-owned online mobile payment platform. In other words, a crackdown on the use of Alipay can have serious implications on Meituan’s expansion strategy in new industries and segments.

Considering that until recently, Meituan was associated with group buying, the app needs to build a trusted partnership with a vetted veteran like Alipay, for example, if it wants to win over premium brands and international retailers that are still skeptical about a possible collaboration.

The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.