How Meituan’s T‑Shape Strategy Redefined China’s O2O Market

On November 25, 2014, Meituan CEO Wang Xing became the youngest ever cover figure of *China Entrepreneur* magazine; the extensive article that follows explores Meituan’s development, the story behind Cat Eye movies, and Wang’s perspective on the O2O market.

Lead

At a critical juncture, Wang Xing warned that the biggest threat was not BAT but an invisible new force, predicting that local‑service e‑commerce would create a trillion‑yuan market and questioning whether this opportunity would become Meituan’s advantage.

In 2014 Meituan’s transaction volume surged from ¥160 billion to ¥450 billion, its workforce approached 10 000 employees, and it captured roughly 60 % of China’s group‑buying market. Wang set a target of ¥1 trillion in 2015 and ¥10 trillion by 2020.

After a Series‑C round in May 2014, Meituan was hailed as the most anticipated pre‑IPO internet company in China, alongside Xiaomi, with a valuation expected to surpass Groupon’s.

From E‑Commerce 1.0 to 2.0

Wang and his investors describe Meituan not as a group‑buying story but as a “local life‑service e‑commerce” platform. While Amazon defined the U.S. e‑commerce era, Taobao and JD.com led China’s “physical‑goods” era (e‑commerce 1.0). Meituan positions itself as the representative of e‑commerce 2.0, focusing on services rather than goods.

Alibaba’s COO Zhang Yong explained that e‑commerce 1.0 emphasized user connection and demand aggregation, whereas e‑commerce 2.0 upgrades the supply side to better match aggregated demand. JD.com’s founder Liu Qiangdong admitted he wishes he had invested more aggressively in group‑buying and local services earlier.

Competitive Landscape and Strategic Challenges

Meituan faces intense competition: Dazhong Dianping and Baidu Nuomi challenge its dominance in third‑ and fourth‑tier cities; Ctrip, Qunar, and Ele.me contest its hotel and food‑delivery verticals; and niche players such as AyiBang and e‑Daijia rapidly emerge in underserved segments.

Wang likens Meituan’s T‑shaped strategy to a large nail: its effectiveness depends on the size of the head (market reach) and the sharpness of the tip (vertical depth). The company must continuously adapt to fast‑changing consumer demands.

The Cat Eye Transformation

Meituan’s movie‑ticket platform, Cat Eye, achieved a record by selling over 1 million tickets for *Love is Not Blind* within a week, generating roughly ¥40 million in revenue. Although Wang stresses that traditional distribution channels remain necessary, Cat Eye’s success has turned it into a major variable in the Chinese film industry, accounting for about one ticket out of every five sold nationwide.

Industry insiders note that Cat Eye’s influence could eventually reshape profit‑sharing across the entire distribution chain. The platform’s rapid growth has attracted numerous film producers seeking direct collaboration, signaling a shift from simple ticket‑price subsidies to multi‑million‑yuan partnership deals.

From Big Stick to Wolf‑Fang

Meituan’s T‑shaped strategy treats the original group‑buying model as a horizontal base, with vertical lines such as movies, hotels, and food‑delivery extending upward. Cat Eye’s spin‑off marked the first vertical expansion, followed by the launch of Meituan Hotels, which quickly became the second‑largest online hotel distributor after Ctrip.

Hotel growth was driven by targeting low‑end, same‑city accommodation (average order value below ¥200) in second‑ and third‑tier cities—segments overlooked by traditional players.

The company acknowledges that the T‑shape has limits; it cannot cover every vertical. Wang emphasizes focusing on high‑frequency categories like dining and entertainment while considering partnerships for other niches.

High‑Intensity Competition

Rapid scaling has led to a workforce of several thousand, prompting Wang to question how to manage such a large team. A visit to retailer RT‑Mart’s chairman highlighted that managing a 10 000‑person organization is a temporary challenge, comparable to the scale of Walmart or IBM.

Meituan’s expansion into new verticals, such as food‑delivery, encounters smarter competitors. Ele.me’s founder likens the current rivalry to the early group‑buying battles, noting Meituan’s tendency to rely on past success formulas.

Critics argue that Meituan’s breadth may dilute expertise across verticals, reducing cross‑category conversion rates. Wang counters that the goal is to advance the entire local‑service e‑commerce ecosystem, improving both price‑performance and convenience for users.

Since launching food‑delivery at the end of the previous year, Meituan has become a market leader, processing over 1 million orders per day and shifting the e‑commerce focus from pure information‑flow, capital‑flow, and logistics (1.0) to include “people‑flow” as the decisive variable in e‑commerce 2.0.