Content uploaded by Md Saikat Hosen
Author content
All content in this area was uploaded by Md Saikat Hosen on Aug 21, 2020
Content may be subject to copyright.
Global Disclosure of Economics and Business, Volume 8, No 2/2019 ISSN 2305-9168(print); 2307-9592(online)
This work is licensed under CC-BY-NC
, i-Proclaim |
GDEB
Page 49
O2O Business Model of Meituan in China
Md Saikat Hosen
College of Management, Capital Normal University, Haidian District, Beijing, CHINA
Corresponding Contact:
Email: 4192928030@cnu.edu.cn
ABSTRACT
The research applies performance evaluation of O2O Business Model of China. It
means evaluate how well the company performance. The focus aim is achieved
through the O2O Business Model and Meituan, Ratio analysis of Meituan (2017-
2019), share price movement we have use average moving Meituan Dianping
(3690.HK), price to sales ratio among E-commerce firms. It is most important factor
for performance evaluation. The graphical analysis and comparison are applying
analysis and company’s measurement of all type of financial ratio. Share price
movement indicate the trend of company’s present performance, as well as price
to sales ration comparison among other tech companies. That Meituan is waiting,
the company will grow strongly by its core market the food delivery business.
Key Words: Business Model, E-Commerce, Meituan, China, Financial Ratio
INTRODUCTION
O2O (Online to Offline) Business model of Meituan evaluation of a company is usually related
to how well a company do distribution, customer satisfaction, revenue, expenses, share price
movement and the core business of food delivery business. In order to determine the
distribution of the E-commerce company and to make a judgment of how well the O2O
business model customer satisfaction. Its operation and management and how well the
company has been able to utilize its revenue and expenses. I have used ratio analysis for easily
measurement of activity position, liquidity position, profitability and leverage for the
performance evaluation. It analysis the company use of its assets and control of its expenses.
I have used share price movement for easily measurement of daily, weekly and monthly share
price moving trade. As well as I used the E-commerce industry price-to-sales ratio that
compare between other tech companies. O2O refers to companies with an online store as well
as physical retail locations. Consumers can choose and buy, pay online, and then go offline
store. The O2O has formed stable development pattern, and the O2O development in China
is now stable and matured. Meituan and Alibaba group holding limited network is one the
firster O2O website in mainland China, the Meituan launched 2010 March 4 by the founder
Wang Xing.
Scope of the Research
In master program is building up to the theoretical and practical knowledge about business
administration which is help us the corporate knowledge. The course E-commerce research is
Hosen: O2O Business Model of Meituan in China (49-66)
Page 50
Volume 8, No 2/2019 |
GDEB
an attempt to provide business students an orientation to a real-life business situation in
which we can observe and evaluate the use and applicability of the theoretical concepts,
which were taught in the classroom. As a student of e-commerce course, I preferred to
complete my research in E-commerce Sector like O2O business model. Then I got a chance to
complete the research of tech company Meituan in China.
Research Questions
What is the performance of the company related to distribution and customer satisfaction?
What is the performance of the company related to activity position?
What is the performance of the company related to liquidity position?
What is the performance of the company related to profitability position?
What is the performance of the company related to debt management position?
What is the performance of share price movement?
What is the performance among other companies’ price to sales position?
Objective of the research
General Objective of this study is to analysis O2O Business Model of Meituan in China. The
specific objectives are to give a brief overview on Meituan-Dianping (美团网), to assess how
distribution with customer satisfaction, to evaluate Activity, Liquidity, Profitability,
Leverage, to do analysis of moving average, and to do assess price to sales ratio among e-
commerce firms.
Data Sources
This research was conducted mainly based on secondary information, annual report of
Meituan-Dianping (美团网) from 2017-2019, brochures of O2O business model, different
written document of Meituan-Dianping (美团网), newspapers, websites, and journals.
LITERATURE REVIEW
In China combination between e-commerce and industrial internet very popular resent year.
Internet finance, like Ctrip (Lu & Liu, 2016). An initial understanding of consumer behavior
in O2O commerce context and contributes to trust transfer theory and commitment. In long
term is harmful to O2O platform because consumers can easily switch among platforms
online, trust theory can be transferred between entities associated with each other (Xiao, et
al., 2017). The impact of fairness on ordering decision and coordination in a dual- channel
supply chain system consisting of one manufacturer and one retailer under the O2O model
(Yu et al., 2019). As the effective integration of real economy and virtual economy and virtual
economy, the O2O model has a broader development space in the fourth communications
era, based on the wechat platform technology (Aiying, et al., 2015). Customer become loyal
and behave loyally because of psychological change processes. Emotion and cognition are
critical phyhological states that influence consumer, and they are key elements of the
consumption experience (Hsich, 2017). Online shopping model could integrate the online
service experience properly, meals delivery websites and application App platform for mobile
phone (Xu et al., 2018).
The shopper visits the store’s website frequently using a private profile. Mobile commerce
allows the shopper to perform many of the activities as online commerce using a smartphone
or tablet instead of a desktop computer (Moon & Armstong, 2019). Time risk- consuming
Global Disclosure of Economics and Business, Volume 8, No 2/2019 ISSN 2305-9168(print); 2307-9592(online)
This work is licensed under CC-BY-NC
, i-Proclaim |
GDEB
Page 51
waste caused by the need to adjust, repair or refund the purchased product. Functional risk-
the product does not have the risk that people expect the performance on product
performance is worse that the competitor’s product. Psychological risk- the risk of harming
the customer’s self-emotion due to mistake in the purchase decision (Tong & Zhun, 2019).
The demand volume is enormous and is increasing quickly. The first attempt to propose an
optimization model for determining the optimal capacity for mixed work force, viz in-house,
full time crowdsourced, and part time crowd sourced drivers (Dai & Liu, 2019). Korean O2O
platforms is yanolja, one of rental accommodation services in Korea. This firm has succeeded
in matching joint services. Accommodation + activities= product combination (Ho & Kitchen,
2020).
O2O business model of Meituan in China, we focus on the operational style- Meituan has
offline many client shop, very well reputed supper App, as well as faster AI system.
Discussion, firstly qualitative- supper App, AI system, offline operation. Secondly
quantitative- Financial ratio analysis used 3 years’ data, moving average- 100 days and
compare between tech companies price to sales ratio. We have discussion about O2O model
with China and introduce to Meituan is upcoming tech giant in China as well as top E
commerce company.
OVERVIEW OF MEITUAN-DIANPING (美团网)
In Chinese “Mei” means Beautiful and “Tuan” means together. Meituan Dianping is china’s
leading e-commerce platform for services. It’s a platform that uses technology to connect
consumers and merchants meet people’s daily needs for food and event extend to broaden
lifestyle and travel services (Kosinus, 2019). The mission of Meituan is “We help people eat
better, live better”. As China's leading e-commerce platform for services, Meituan operates
well-known mobile apps in China, including Meituan, Dianping, Meituan Waimai, Mobike
and others. Meituan offers over 200 service categories including catering, on-demand
delivery, car-hailing, bike-sharing, hotel and travel booking, movie ticketing, and other
entertainment and lifestyle services, and covers 2800 cities and countries across China.
The total transaction amount of Meituan reached RMB 515.6 billion in 2018, with an increase
of 44.3% over the same period of last year. The total annual numbers of transaction users and
active online merchants of Meituan reached 400 million and 5.8 million in 2018, respectively.
Meituan Dianping (stock code: 3690.HK) was officially listed on the Main Board of the Stock
Exchange of Hong Kong Limited (HKEX) on September 20, 2018 (Dianping, 2018).
Characteristics of O2O Business Model
The O2O concept introduced in china for the very first time in November 2011. O2O business
run into U.S by Yelp, in Australia- productreviw.com, in Hong Kong openrice.com, and Main
land China Meitual-Dianping. O2O is an e-commerce platform that provides us with a one
stop business solution. It acts as business partner and consultant. Online-to-offline commerce,
or O2O, is a business model that searches customer online and brings them between the real
worlds to make purchases in physical stores. One aspect of the newer O2O initiatives is the
ability to pay online and then receive a product in an offline business entity.
In August 2010, the concept of O2O is introduced by Alex Rampell when he analyzed
Groupon, Open Table, Restaurant and SpaFinder, Alex Rampell discovers that their common
points are as follow: they are all promote online business to offline business (Wan et al., 2016).
The business model O2O arises with the combination into online virtual world and offline
Hosen: O2O Business Model of Meituan in China (49-66)
Page 52
Volume 8, No 2/2019 |
GDEB
real world in the technology age. O2O refers to companies with an online store as well as
offline business entity. Consumers can choose and buy, pay online, and then go physical store.
COMBINATION WITH O2O MODEL AND MEITUAN
In China the Meituan- O2O business model is a fast-growing and stable business. The
Meituan- O2O business model based on 6 major frameworks as follows: Customer, telecom
operator, supper app, offline business entity, payment platform, delivery.
Graph 1: Combination with O2O and Meituan
Customer: The more people in China go in cash less, they will use more these online
services. We use our phone most of the instead of a browser it just saves time for the
consumer, the company which is providing service has more engagement and users are
remaining longer inside the app (The investment ABC., 2020, March 05).
Telecom Operator: China’s three major mobile operators- China Mobile, China Unicom
and China Telecom launched their 5G service in China. Subscribers have been using able
to enjoy connection way faster than 4G and less expensive. 5G technology have provide
key infrastructure for the development of China’s digital economy and bring great
convenience to people’s life.
Super App: Meituan-Dianping with a super app for kinds of services. Meituan-Dianping
is not a slam start-up as we never might think only because we have never heard of it. It
currently has roughly 450 million users on its platform and fast growing.
Offline Business entity: Mr. Liu a small business owner, he can use the app in a different
way confirming an early morning delivery and taking inventory at his restaurant. Now
he can host his e-menu and add today’s special before any customer arrive. Lunch time
is rush hour for Meituan offline business owner. Ms. Luag have order for an office lunch,
her order is sent to Mr. Liu where he accepts and gets started cooking the meal.
Payment platform: In China mainly we have two payment platforms one is Alipay
another one is WeChat pay. When we open bank account basically we can link that bank
Global Disclosure of Economics and Business, Volume 8, No 2/2019 ISSN 2305-9168(print); 2307-9592(online)
This work is licensed under CC-BY-NC
, i-Proclaim |
GDEB
Page 53
account to Alipay and WeChat pay. Alipay and WeChat is amazing it’s like a one and all
app, we can use chatting services, as translator, and payment platform.
Delivery services: Delivery is a major aspect of Meituan-Dianping services. Mr. Zang wu
is a delivery driver. Meituan A.I powered intelligent dispatch system pre-selects the most
suitable delivery rider to each customer ensuring the food is delivered in the shorts time
possible.
DISTRIBUTION SERVICES WITH CUSTOMER SATISFACTION
There are tens of millions of these orders placed and completed through Meituan delivery
every single day. Meituan’s AI powered intelligent dispatch system can determine the
optimum delivery route within millisecond. Meituan-Dianping is exploring new horizons
with AI driving technology and cloud hub, then can accurately navigation between city
scopes to deliver meals.
Now let’s see how Meituan-Dianping can bring us the local experience in a new city with
Feng and Mao at they plan a trip to Shanghai for Feng’s birthday. First things first, Mao books
their flight through Meituan app. He can use the app to browse and pick out a high rated five-
star hotel for their stay as well. Feng and Mao check into their hotel with a deposit paid
through the hotel booking feature. The drop their luggage off in the room which they find is
even more spacious than in the photographs. Mao can book their tickets to Disney and then
hire a cab to take them there too all through Meituan’s different features on the phone. With
everything set up and ready to go they are off to enjoy the magic kingdom. In the car ride
back the app suggests a black pearl rated restaurant for dinner one of dingping’s highest rated
establishment an ultimate list of quality restaurants- each selected from a unique Chinese
perspective. Mao can even use the app to put in on order, so the meal will be ready a soon as
they arrive. Mao opens the Meituan app and the next destination is already suggested
“Karaoke”- He finds a local deal and books their room at a discount the couple arrives and
Mao shows the receipt to open their room. Then they call some friends Mao orders a last
minute birthday gift to be delivered to the Karaoke- adding the perfect touch to the birthday
girl’s big bash (Kosinus, 2019).
RATIO ANALYSIS
Ratio analysis is a quantitative method of gaining insight into a company's activity, liquidity,
operational efficiency, and profitability by studying its financial statements such as the balance
sheet and income statement. Ratio analysis is a cornerstone of fundamental equity analysis.
Activity ratio
The activity ratio analysis is being applied for the measurement of the company's working
capital, fixed asset, and total asset usages efficiency.
Working asset turnover: Working capital is the money available to fund a company’s day to
day operations.
Working capital turnover = Sales/Working Capital (times)
Year
2019
2018
2017
Average
Meituan
2.141
1.578
1.000
1.573
Hosen: O2O Business Model of Meituan in China (49-66)
Page 54
Volume 8, No 2/2019 |
GDEB
Comments: According to the findings of Working capital turnover ratio shows that, 2019 were
better performing in the year. Where year average is 1.573 times and 2019 is 2.141 times, that
means Working capital amount of operating capital needed to maintain a given level of sales
over year 2.141 times.
Fixed asset turnover (FAT): It determines the effectiveness in generating net sales revenue
from investments in net property, plant, and equipment back into the company evaluates only
the investments. Fixed asset turnover ratio=Sales/fixed assets (times).
Comments: According to the findings of fixed asset turnover ratio shows that, 2018 Ware is
better performing in the year. Where year average is 23.862 times and 2018 is 16.394 times,
that means fixed asset turnover ratios measure the efficiency investment to generate sales a
given level of sales over year 16.394 times.
Total asset turnover (TAT): Total asset turnover is a financial ratio that measures the
efficiency of a company's use of its assets in generating sales revenue or sales income to the
company. Total assets Turnover=Sales/Total assets (times).
2019 2018 2017
Year 2.141 1.578 1.000
Average 1.573
2.141 1.578 1.000
1.573
0.000
0.500
1.000
1.500
2.000
2.500
Working capit al trun over
2019 2018 2017
Year 0.739 0.541 0.406
Average 0.562
0.739 0.541 0.406
0.562
0.000
0.200
0.400
0.600
0.800
Total asset t run over
Global Disclosure of Economics and Business, Volume 8, No 2/2019 ISSN 2305-9168(print); 2307-9592(online)
This work is licensed under CC-BY-NC
, i-Proclaim |
GDEB
Page 55
Comments: According to the findings of total assets turnover ratio shows that 2019 are is
better performing in the year. Where year average is 0.562 times and 2019 is 0.739 times, that
means total assets turnover indicates the efficiency with which the firm uses its assets to
generate sales a given level of sales over year 0.739 times.
Liquidity ratio
Liquidity ratios are a class of financial metrics used to determine a debtor's ability to pay off
current debt obligations without raising external capital. Liquidity ratios are measure the
ability of a company to measure its current ratio, quick ratio, cash ratio obligations.
Current ratio (CR): The current ratio is a liquidity ratio that measures a company's ability to
pay short-term obligations or those due within one year.
Current Ratio=Current assets/current Liabilities.
Year
2019
2018
2017
Average
Meituan
2.245
2.298
2.653
2.399
Comments: According to the findings of Current Ratio shows that, 2017 ware is better
performing in the year where year average is 2.399 and 2017 is 2.653 that means the firm’s
ability to meet its short term obligation over year 2.653.
Quick ratio (QR): The quick ratio or acid test is a calculation that measures a company's
ability to meet its short-term obligations with its most liquid assets within three months.
Quick Ratio= (current assets – inventories) /current liabilities.
2019 2018 2017
Year 2.245 2.298 2.653
Average 2.399
2.245 2.298
2.653
2.399
2.000
2.100
2.200
2.300
2.400
2.500
2.600
2.700
Current rat io
2019 2018 2017
Year 2.237 2.286 2.649
Average 2.391
2.237 2.286
2.649
2.391
2.000
2.200
2.400
2.600
2.800
Quick r atio
Hosen: O2O Business Model of Meituan in China (49-66)
Page 56
Volume 8, No 2/2019 |
GDEB
Comments: According to the findings of Quick Ratio shows that, 2019 were is better
performing in the year. Where year average is 2.391 and 2019 is 2.237. It actually measure the
immediate short-term debt paying ability over year 2.237.
Cash ratio (CR): The cash ratio is a measurement of a company's liquidity, specifically
the ratio of a company's total cash and cash equivalents to its current liabilities.
Cash Ratio=cash + mar. Sec/current liabilities
Comments: According to the findings of Cash Ratio shows that, 2017 ware is better
performing in the year. Where year average is 0.251 and 2017 is 0.357. Its measure actual cash
and securities easily convertible to cash are used to measure cash ability over year 0.357.
Profitability Ratio (PR)
Profitability ratio evaluates the company's ability to generate income against expenses and
other cost associated with the generation of income.
Gross margin (GM): Gross margin is calculated as the selling price of an item, less the cost
of goods sold. Gross Margin is often used interchangeably with Gross Profit, but the terms
are different. Gross Margin=Gross Profit/sales {%}
Comments: According to the findings of Gross ratio shows that, 2017 ware is better
performing in the year. Where year average is 31% it shows the relationship between the sales
and manufacturing or merchandising cost 2017 has 36%.
Operating profit margin: The ratio of operating income to net sales, usually presented in
percent. Operating Profit Margin= Operating Income/Sales {%}
2019 2018 2017
Year 0.163 0.233 0.357
Average 0.251
0.163 0.233
0.357
0.251
0.000
0.100
0.200
0.300
0.400
Cash ratio
2019 2018 2017
Year 33% 23% 36%
Average 31%
33%
23%
36%
31%
0%
10%
20%
30%
40%
Gross margin
Global Disclosure of Economics and Business, Volume 8, No 2/2019 ISSN 2305-9168(print); 2307-9592(online)
This work is licensed under CC-BY-NC
, i-Proclaim |
GDEB
Page 57
Comments: According to the findings of Operating Margin ratio shows that, 2019 ware is
better performing in the year. Average is -9% It shows the firms profitability from the
operations of its core business excluding the effect of initial startup cost of high finally
recovery year 2019 has 3%.
Pretax margin ratio: This ratio is calculated after financing cost (interest expense) but prior to
income taxes. Pretax Margin=EBT/Sales {%}.
Comments: According to the findings of Pretax Margin ratio shows that, 2019 is better
performing in the year. Where year average is -77% this ratio is calculated after financing cost
but prior to income taxes, excluding the effect of initial startup cost of high finally recovery
year 2019 has 3%.
Margin before interest and tax: EBIT margin is a measure of a company's operating profit as
a percentage of its revenue. The acronym stands for earnings before interest, taxes,
depreciation, and amortization. Margin Before interest & Tax=EBIT/Sales {%}.
2019 2018 2017
Year 3% -17% -11%
Average -9%
3%
-17% -11%
-9%
-20%
-15%
-10%
-5%
0%
5%
Operating ma rgin
2019 2018 2017
Year 3% -177% -56%
Average -77%
3%
-177%
-56%
-77%
-200%
-150%
-100%
-50%
0%
50%
Pretax margin
2019 2018 2017
Year 2% -17% -11%
Average -9%
2%
-17% -11%
-9%
-20%
-15%
-10%
-5%
0%
5%
Margin befor e in terest a nd ta x
Hosen: O2O Business Model of Meituan in China (49-66)
Page 58
Volume 8, No 2/2019 |
GDEB
Comments: According to the findings of Margin Before interest & Tax ratio shows that, 2019
is better performing in the year. Where year average is -9%. It shows that the firm is
independent of both the financing and tax positions, excluding the effect of initial startup cost
of high finally recovery year 2019 has 2%.
Net profit margin: Net profit margin is the percentage of revenue remaining after all
operating expenses, interest, taxes and preferred stock dividends (but not common stock
dividends) have been deducted from a company's total revenue. Net Profit margin=Net
income /Sales {%}.
Comments: According to the findings of Net Profit margin ratio shows that, 2019 is better
performing in the year. Where year average is -77% this ratio measures that percentage of
each RMB remaining after all costs and expenses, including interest, taxes, and preferred
dividends, have been deducted and excluding’s the effect of initial startup cost of high finally
recovery year 2019 has 2%.
Return on asset ratio: (ROA) is an indicator of how profitable a company is relative to its
total assets. ROA gives a manager, investor, or analyst an idea as to how efficient a
company's management is using its assets generate earnings. ROA=Net Income/Average
total Assets {%}.
Comments: According to the finding of ROA ratio shows that, 2019 is better performing in
the year. Where year average is -39% ROA compares income with total assets, excluding’s the
effect of initial startup cost of high finally recovery year 2019 has 2%.
2019 2018 2017
Year 2% -177% -56%
Average -77%
2%
-…
-56%
-77%
-200%
-150%
-100%
-50%
0%
50%
Net pr ofit margin
2019 2018 2017
Year 2% -96% -23%
Average -39%
2%
-96%
-23%
-39%
-120%
-100%
-80%
-60%
-40%
-20%
0%
20%
Return on as set
Global Disclosure of Economics and Business, Volume 8, No 2/2019 ISSN 2305-9168(print); 2307-9592(online)
This work is licensed under CC-BY-NC
, i-Proclaim |
GDEB
Page 59
Leverage ratio (LR)
A leverage ratio is any one of several financial measurements that look at how
much capital comes in the form of debt (loans) or assesses the ability of a company to meet its
financial obligations.
Financial leverage effect: the financial leverage ratios measure the overall debt load of a
company and compare it with the assets or equity. (FLE) = Operating income/ Net income.
Comments: According to the findings of financial leverage effect shows that, 2019 is better
performing in the year. Where year average is 0.499 and 2019 has 1.198.
Operating leverage effect: Operating leverage is a measure of how revenue growth translates
into growth in operating income. It is a measure of leverage, and of how risky, or volatile, a
company's operating income is. (OLE): Gross profit /operating income.
Comments: According to the findings of Operating leverage effect shows that, 2019 is better
performing in the year. Where year average is 2.501 and 2019 has 12.060.
Total leverage effect: It is also called degree of combined leverage, a measure which
incorporates the effect of both operating leverage and financial leverage.
Total Leverage Effect (TLE): OLE*FLE
Year
2019
2018
2017
Average
Meituan
14.453
-0.131
-0.644
4.560
2019 2018 2017
Year 1.198 0.096 0.202
Average 0.499
1.198
0.096 0.202
0.499
0.000
0.200
0.400
0.600
0.800
1.000
1.200
1.400
Financial leve rage ef fect
2019 2018 2017
Year 12.060 -1.363 -3.194
Average 2.501
12.060
-1.363 -3.194
2.501
-5.000
0.000
5.000
10.000
15.000
Operating leve rage ef fect
Hosen: O2O Business Model of Meituan in China (49-66)
Page 60
Volume 8, No 2/2019 |
GDEB
Comments: According to the findings of Total Leverage Effect shows that, 2019 is better
performing in the year. Where average is 4.560 and 2019 has 14.453.
Moving average analysis
The moving average (MA) is a simple technical analysis tool that smooths out price data by
creating a constantly updated average price. In This average we taken 100 days’ stock price
of Meituan in Hong Kong period of time, we test here daily, weekly and monthly advantages
to using a moving average. It basically popular to be tailored any time frame, suiting both
long-term investors and short-term traders.
Sample period: 100 days (2020, March 04 to 2020, June 12) Meituan Dianping (3690.HK)
(Dianping, 2020, June 13).
Comments: According to the findings of moving average shows that, the beginning of period
daily close was 99.2 then ending of period daily close is 165. The beginning of weekly average
was 99.98 then ending of period is 158.49. The beginning of monthly average was 90.14 then
ending period is 130.98. All indicator is uptrend.
2019 2018 2017
Year 14.453 -0.131 -0.644
Average 4.560
14.453
-…
-0.644
4.560
-5.000
0.000
5.000
10.000
15.000
20.000
Total le v erage ef fect
0
20
40
60
80
100
120
140
160
180
Moving Average
Close Weekly Average Monthly Average
Global Disclosure of Economics and Business, Volume 8, No 2/2019 ISSN 2305-9168(print); 2307-9592(online)
This work is licensed under CC-BY-NC
, i-Proclaim |
GDEB
Page 61
Price to sales ratio of tech companies
The price-to-sales (P/S) ratio is a valuation ratio that compares a company’s stock price to its
revenues. It is an indicator of the value placed on each RMB of a company’s sales or revenues.
The P/S ratio is an analysis and valuation tool that shows how much investors are willing to
pay per RMB of sales for a stock.
Sample collection: 2020, June 13.
Meituan
Tencents
Alibaba
Facebook
Microsoft
Netflix
8.6
9.4
8.1
8.8
10.7
9.0
Comments: According to the findings of price to sales ratio shows that, the price to sales ratio
is priced similar to other tech companies. That Meituan is waiting, the company will grow
strongly by its core market the food delivery business.
FINDINGS OF THE RESEARCH
Name of Ratio
Interpretation
Activity Analysis
A-1. Working Capital ratio.
According to the findings of Working capital turnover
ratio shows that, 2019 Ware better performing in the year.
Where year average is 1.573 times and 2019 is 5.633 times,
That means Working capital amount of operating capital
needed to maintain a given level of sales over year 2.141
times.
A-2. Fixed assets turnover
ratio.
According to the findings of fixed asset turnover ratio
shows that, 2018 Ware is better performing in the year.
Where year average is 23.862 times and 2018 is 16.394
times, That means Fixed asset turnover ratios measure the
efficiency investment to generate sales a given level of
sales over year 16.394 times.
Meituan Tencents Alibaba Facebook Microsoft Netflix
Tech Companies 8.6 9.4 8.1 8.8 10.7 9.0
8.6 9.4
8.1 8.8
10.7
9.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Price to sales ratio of tech companies
Hosen: O2O Business Model of Meituan in China (49-66)
Page 62
Volume 8, No 2/2019 |
GDEB
A-3. Total assets turnover.
According to the findings of total assets turnover ratio
shows that 2019 are is better performing in the year. Where
year average is 0.562 times and 2019 is 0.739 times, that
means total assets turnover indicates the efficiency with
which the firm uses its assets to generate sales a given level
of sales over year 0.739 times.
Liquidity Analysis
B-1. Current ratio.
According to the findings of Current Ratio shows that,
2017 ware is better performing in the year where year
average is 2.399 and 2017 is 2.653, That means the firm’s
ability to meet its short term obligation over year 2.653.
B-2. Quick Ratio.
According to the findings of Quick Ratio shows that, 2019
Ware is better performing un the year. Where year average
is 2.391 and 2019 is 2.237 It actually measure the immediate
short-term debt paying ability over year 2.237.
B-3. Cash Ratio.
According to the findings of Cash Ratio shows that, 2017
ware is better performing in the year. Where year average
is 0.251 and 2017 is 0.357. Its measure actual cash and
securities easily convertible to cash are used to measure
cash ability over year 0.357.
Profitability Analysis
C-1. Gross margin ratio.
According to the findings of Gross ratio shows that, 2017
ware is better performing in the year. Where year average
is 31% it shows the relationship between the sales and
manufacturing or merchandising cost 2017 has 36%.
C-2. Operating profit margin.
According to the findings of Operating Margin ratio shows
that, 2019 ware is better performing in the year. Average is
-9% It shows the firms profitability from the operations of
its core business excluding the effect of initial startup cost
of high finally recovery year 2019 has 3%.
C-3. Pretax margin.
According to the findings of Pretax Margin ratio shows
that, 2019 is better performing in the year. Where year
average is -77% this ratio is calculated after financing cost
but prior to income taxes, excluding the effect of initial
startup cost of high finally recovery year 2019 has 3%.
C-4. Margin before interest
and tax.
According to the findings of Margin Before interest & Tax
ratio shows that, 2019 is better performing in the year.
Where year average is -9% It shows that the firm is
independent of both the financing and tax positions,
excluding the effect of initial startup cost of high finally
recovery year 2019 has 2%
C-5. Net profit margin.
According to the findings of Net Profit margin ratio shows
that, 2019 is better performing in the year. Where year
Global Disclosure of Economics and Business, Volume 8, No 2/2019 ISSN 2305-9168(print); 2307-9592(online)
This work is licensed under CC-BY-NC
, i-Proclaim |
GDEB
Page 63
average is -77% this ratio measures that percentage of each
RMB remaining after all costs and expenses, including
interest, taxes, and preferred dividends, have been
deducted and excluding the effect of initial startup cost of
high finally recovery year 2019 has 2%.
C-6. ROA
According to the finding of ROA ratio shows that, 2019 is
better performing in the year. Where year average is -39%
ROA compares income with total assets, excluding the
effect of initial startup cost of high finally recovery year
2019 has 2%.
Operating and Financial Leverage
D-1. Operating Leverage
effect.
According to the findings of Operating leverage effect
shows that, 2019 is better performing in the year. Where
year average is 2.501 and 2019 has 3.551.
D-2. Financial leverage Effect
(FLE).
According to the findings of financial leverage effect
shows that, 2019 is better performing in the year. Where
year average is 0.499 and 2019 has 1.198.
D-3. Total Leverage Effect.
According to the findings of Total Leverage Effect shows
that, 2019 is better performing in the year. Where average
is 4.560 and 2019 has 14.453.
Moving average analysis
E-1. Moving average.
According to the findings of moving average shows that,
the beginning of period daily close was 99.2 then ending of
period daily close is 165. The beginning of weekly average
was 99.98 then ending of period is 158.49. The beginning
of monthly average was 90.14 then ending period is 130.98.
All indicator is uptrend.
Price to sales ratio of tech companies
F-1. Price to sales ratio.
According to the findings of price to sales ratio shows that,
the price to sales ratio is priced similar to other tech
companies. That Meituan is waiting, the company will
grow strongly by its core market the food delivery
business.
CONCLUSION
The conclusion chapter is directly connected to the purpose. The research will be
summarized in order to answer the research questions and fulfill the purpose of the
research. Our research is based on seven main research questions. First, I have been
analyzed the combination O2O model with Meituan. The Meituan- O2O business model
based on 6 major frameworks as follows- customer, mobile operators, supper app, offline
business entity, payment platform, delivery. Customer can save time for cash less and
online services, China’s three major mobile operators have lunched their 5G services with
faster and less expensive than 4G, Meituan -Dianping has a supper app is currently
Hosen: O2O Business Model of Meituan in China (49-66)
Page 64
Volume 8, No 2/2019 |
GDEB
reached 450 million users, SME’s business owner run a business with offline business
entity, Amazing payment platforms without service charge, Short time delivery with A.I
powered intelligent dispatch system. Second, I have analyzed efficiency measure of
working capital turnover, fixed asset turnover, total asset turnover. In year 2019 the
company is significant increase in working capital turnover and total asset turnover, then
fixed asset turnover 2018 best was very close to 2019. So I have notice the year 2019 is
standard position. Third, I have analyzed liquidity measure of current ratio, quick ratio
and cash ratio. In year 2017 the company better performer in current ratio as well as cash
ratio and year 2019 quick ratio position was better. I have notice that in this measures are
very close year to year position. Forth, I have analyzed profitability measures. In year
2019 the company belong standard position, operating margin, pretax margin, margin
before interest and tax, net profit margin and return on asset. As well as year 2017 gross
margin was best and very close to 2019. I have notice that- the company initial startup
cost high for the reason 2017 and 2018 was minus percentage position. Fifth, I have
analyzed leverage measures. In year 2019 is far better financial leverage effect, operating
leverage effect, total leverage effect than before year. Sixth, I have analyzed moving
average (MA). The sample period was 100 days Meituan Dianping (3690.HK). I notice
that- daily closing price, weekly average as well as monthly average are shows that
uptrend indicator. Seventh, I have analyzed price to sales ratio to other tech companies,
the sample collection was 2020, June 13. The Meituan Dianping P/S is 8.6. I notice that-
the price to sales ratio is priced similar to other tech companies . At the final
representation, I have view that the year 2019 is the best performance among 2017 and
2018. That Meituan is waiting, the company will grow strongly by its core market the food
delivery business.
Recommendation
The Meituan working capital turnover 2019 was above two. 1.5 to 2 is interpreted sound
solid financial ground. So continuously above 2 is not necessarily considered to be better.
The Meituan fixed asset turnover is high its means business does this efficiently. In the
meantime, balance sheet shows less money for fixed asset- for sustainable growth
company should improve fixed assets.
The Meituan total asset turnover is growing, at present it’s below 1. 1-1.5 is interpreted
sound solid financial ground. So company need to near future above one.
The Meituan cash ratio is decreasing, cash ratio standard position is .5 to 1 usually prefect.
And 2019 was lowest 0.163, so company should increase cash ratio.
The Meituan operating margin ratio is recovery position. In the meantime, recovery
position is not sound healthy. So the company should increase operating margin.
The Meituan pretax margin ratio position is not good. In the last year the company back
in positive trade, so the company need to continue and add more pretax margin.
The Meituan’s other profitability ratio also quite bad position. But last year was recovery
and achieve positive trend, now the company insure to continue and rapidly increase.
The Meituan’s financial leverage effect is very lower and last financial year sound
increase. Too much financial leverage effect can be dangerous. But quite low also not
good, so the company insure to increase financial leverage effect.
Global Disclosure of Economics and Business, Volume 8, No 2/2019 ISSN 2305-9168(print); 2307-9592(online)
This work is licensed under CC-BY-NC
, i-Proclaim |
GDEB
Page 65
The Meituan’s operating leverage effect is not stable, as well as last financial is high
operating leverage that is greater the potential danger. And it’s a cause small error in
forecasting sales. So the company insure stable operating leverage effect.
The Meituan must to increase the inventory for standardization inventory turnover.
The Meituan should to increase the receivable for standardization receivable turnover.
ACKNOWLEDGEMENT
Thanks to Professor Ms. Cheng, Capital Normal University for her continuous supervision
on this study.
REFERENCE
Aiying, M., Yuanyuan, S., & Jinxia, Y. (2015). The Realization of the O2O Model in Mobile E- Commerce
Based on the Technology of the Wechat Platform. Applied Mechanics and Materials Vol. 743 (2015)
pp 641-645. https://doi:10.4028/www.scientific.net/AMM.743.641
Dai, H., & Liu, P. (2019). Workforce planning for O2O delivery systems with crowdsourced drivers.
Annals of Operations Research. https://doi.org/10.1007/s10479-019-03135-z
Dianping, M. (2018). About Us Eat Better, Live Better. https://about.meituan.com/en/about
Dianping, M. (2020). https://en.wikipedia.org/wiki/Meituan-Dianping
Ho, H, Y., & Kitchen, P, J. (2020). Positive crossover loyalty shifts or negative temporal changes? The
evolution of shopping mechanism in the O2O era. European Journal of Marketing Vol. 54 No. 6,
2020 pp. 1383-1405. https://www.emerald.com/insight/0309-0566.htm
Hsich, J, K. (2017). The role of customers in co-creating m-services in the O2O model. Journal of Service
Management. https://doi.org/10.1108/JOSM-03-2016-0062
Kosinus, K. [Ying Wu]. (2019, January 16). Meituan Dinping Introduction [video]. YouTube.
https://youtu.be/5wxgQVjDviQ
Lu, C., & Liu, S. (2016). Cultural tourism O2O business model innovation- A case study of Ctrip. Journal
of electronic commerce in organization, volume, (14) issue, (2).
https://DOI:/10.4018/JECO.2016040102
Moon, Y., & Armstong, D, J. (2019). Service quality factors affecting customer attitudes
in online-to-offline commerce. Information Systems and e-Business Management.
https://doi.org/10.1007/s10257-019-00459-y
The investment ABC. (2020, March 05). Meituan Dianping bigger than Alibaba and Tencent stock soon?
| stock analysis 2020 [video]. You tube. https://youtu.be/o9eFhueUuSU
Tong, M., & Zhun, J. (2019). Research of O2O website based consumer purchase decision-making model.
Journal of Industrial and Production Engineering. https://doi:10.1080/21681015.2019.1655490
Wan, J., Jiang, Q., & Zhu, Y. (2016). Research on Core Essential Elements for O2O
Business Model with ANP. Wuhan International Conference on e-Business.
http://aisel.aisnet.org/whiceb2016/55
Xiao, L., Mi, C., Zhang, Y., & Ma, J. (2017). Examining Consumers’ Behavioral Intention in O2O
Commerce from a Relational Perspective: an Exploratory Study. Information Systems Frontiers
https://doi.org/10.1007/s10796-017-9815-6
Xu, Q., Wang, W, J., Liu, W., & Tong, P. (2018). The Influence of Online Subsidies Service
on Online-to-Offline Supply Chain. Asia-Pacific Journal of Operational Research
Vol. 35, No. 2 (2018) 1840007 (18 pages). https://doi:10.1142/S0217595918400079
Hosen: O2O Business Model of Meituan in China (49-66)
Page 66
Volume 8, No 2/2019 |
GDEB
Yu, X., Wang, S., & Zhang, X. (2019). Ordering Decision and Coordination of a Dual-Channel Supply
Chain with Fairness Concerns under an Online-to-Offline Model. Asia-Pacific Journal of
Operational Research Vol. 36, No. 2 (2019) 1940004 (26 pages).
https:/DOI:10.1142/S0217595919400049
--0--
How to Cite this Article
Hosen, M. S. (2020). O2O Business Model of Meituan in China. Global Disclosure of
Economics and Business, 9(1), 49-66. https://doi.org/10.18034/gdeb.v9i1.508