Meituan Slashes Commissions Post Regulatory Order; Alibaba Could Be Next

  • Chinese food delivery firm Meituan MPNGY looks to lower commissions for merchants on its platform, Reuters reports.
  • Other major food delivery platforms in China include Alibaba Group Holding Ltd BABA-owned Ele.me.
  • Meituan currently charges ~12% in commissions for its food delivery business, a unit accounting for more than 50% of its total revenue, according to analysts' estimates.
  • Meituan also aims to cap the fees at 5% this year for around a million small and medium-sized merchants facing operational difficulties.
  • Meituan would also cut half of the commissions, capping at one yuan per order, for catering vendors in pandemic-hit areas and aimed to achieve full nationwide transparency in charging commissions this year.
  • Chinese regulators recently issued guidance for online food delivery platforms to reduce service fees to help lower catering businesses' operating costs, wiping off $26 billion in Meituan's market cap.
  • Price Action: BABA shares traded higher by 2.44% at $107.76 on the last check Tuesday.
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