Summary of Key Points
Meituan once again emphasized its strategic focus at this year's CIP conference: "We won't be operating physical pharmacies; instead, we will serve as a facilitator for the digital transformation and AI adoption of pharmaceutical businesses." In response to the current challenges faced by the pharmaceutical industry, such as the end of the scale-based growth era, difficulties in growth, and the challenges of implementing AI (especially due to lagging organizational changes), Meituan has introduced AI-based business management experts, the CatPaw AI Agent platform, and a methodology for streamlining work processes. These tools aim to help chain pharmacies and pharmaceutical companies overcome the "impossible triangle" of scale, efficiency, and cost, and to promote an AI-driven transformation at both the business and organizational levels. Multiple pilot projects have already verified the effectiveness of these initiatives.
Industry Challenges: Growth Stagnation and Hurdles in AI Adoption
The pharmaceutical industry is facing significant growth obstacles. In the past, growth was achieved by opening more stores and selling more products; however, with the disappearance of scale-based benefits, companies are struggling to find new ways to expand. Despite AI having been around for nearly four years, only 6% of companies in the industry are actually making money from its use (global data). The problem lies not in the technology itself but in the fact that business processes and organizational structures are still stuck in the 'old era'. For example, in chain pharmacies, the process of replenishing inventory involves lengthy steps involving store managers, procurement departments, headquarters, and pharmaceutical companies, which can result in missed sales opportunities when urgent orders are needed. Pharmaceutical companies also struggle to manage their O2O and B2C operations effectively, failing to meet the fast and accurate requirements of the instant retail market. AI is not just a simple addition to existing processes; it requires a complete overhaul of both the business and organizational structures, which is a major source of concern for the industry.
Meituan's AI Toolkit: From Providing Data to Delivering Direct Results
Meituan's new AI solutions differ from previous digital tools. Instead of merely providing data for analysis, they act more like "intelligent decision-making assistants":
1. AI Business Experts: These are combinations of multiple AI agents that, based on Meituan's large pharmaceutical model and platform data, provide direct business recommendations, such as whether a pharmacy should adjust prices or replenish inventory. Frontline sales staff in pharmaceutical companies can receive alerts about inventory discrepancies without having to go through multiple reporting layers.
2. CatPaw Platform: This platform acts as an "AI operating system" that allows companies to customize AI agents to meet their specific needs, such as addressing the unique requirements of their own stores.
3. Workflow Transformation Methodology: This approach involves breaking down existing processes to identify areas where AI can replace human tasks and reorganizing them into new processes that combine human and AI efforts. For instance, Meituan reduced the time required to develop category strategies from five people working for two weeks to just two days through internal experimentation.
Overcoming the "Impossible Triangle": AI Enables a Balance of Efficiency, Scale, and Cost
The pharmaceutical retail industry faces a so-called "impossible triangle": trying to expand scale leads to inefficiency, trying to improve efficiency requires additional resources (increasing costs), and higher costs result in reduced profits. Meituan's AI solutions address this issue:
- Case Study: During the allergy season, pharmacies often ran out of products due to passive demand forecasting. This year, Meituan used data to predict the demand for nasal medications in the north in March and skin allergy medications in the south in April, enabling them to stock up in advance and allocate products across regions. As a result, sales of core products increased significantly, and the out-of-stock rate at Yifeng Pharmacy decreased significantly.
- Pilot Results: Lao Bai Xing Da Pharmacy saw a 150% increase in monthly sales after using AI to identify the demand for Huoxiang Zhengqi during the hot season. Shuyu Pingmin reduced data analysis time from two hours to just five minutes for automatic updates, and the efficiency of its operations increased by 30%, with inventory replenishment times speeding up by 70%.
The Importance of Organizational Change for AI Benefits
Many companies fail to see the full impact of AI because they only modify business processes without changing their organizations. Meituan believes that AI applications (whether for consumers or businesses) are ultimately about transforming organizations. This is similar to the transition from steam engines to electric motors in manufacturing: using electric motors without reorganizing the factory layout did not improve efficiency; it was only when the machines were arranged according to specific processes that assembly times were reduced from 12 hours to 90 minutes. Meituan itself has already reorganized 25 work processes within half a year, covering areas such as category strategy development and inventory forecasting. It has also proposed the "AI Builder Triangle" (a collaboration among business, HR, and technical leaders to diagnose and improve processes). Chain pharmacies, which often have many stores across various categories and face high operational pressures, can greatly benefit from such organizational changes. Even regional chains without dedicated instant retail teams can significantly improve efficiency with AI tools and organizational reforms.
Why Meituan's Approach Is Recognized by the Industry
Meituan's commitment to not operating physical pharmacies for five years has been crucial in gaining industry recognition. It positions itself as a partner to pharmaceutical companies, using its platform data (covering 250,000 pharmacies and nearly 500 pharmaceutical companies) and AI capabilities to help them solve problems that they cannot solve on their own. For example, pharmacies can use Meituan's tools without having to build their own AI teams, and pharmaceutical companies can benefit from AI improvements without investing in new systems. This "empowering without competing for business" approach has built trust in Meituan, allowing it to continue to drive deep AI transformation in the pharmaceutical industry.
In summary, Meituan's efforts have transformed AI from a supplementary tool into a core driver of industry change, focusing on helping companies achieve a comprehensive upgrade from their business operations to their organizational structures. This could be the key to the pharmaceutical industry breaking through its current challenges.