Image source @ Visual China
Text | Value Institute
On January 18, Starbucks China announced that it and Meituan have reached an innovative cooperation on digital space, which will use the latter's online platform to deliver Starbucks's "coffee space" to consumers. The upgraded Starbucks "Special Star Delivery" is also fully connected to the Meituan takeaway delivery service, and the Meituan will book the service "1971 Living Room" on the APP side, allowing consumers to book Starbucks exclusive business meetings and theme gathering spaces through online channels.
Starbucks and the US group held hands, invisibly pushing Hungry Mo to the center of public opinion. Previously, the media broke the news that because the last "special star delivery" delivery service contract between Starbucks and Ele.me expired on December 31 last year, Starbucks intends to take this opportunity to adjust the cooperation model and introduce a new partner of Meituan to open up more service areas.
Although Ele.me officially said that the joining of Meituan will not affect its cooperation with Starbucks, the two sides will continue to provide customers with quality products and services. However, with meituan's intervention in Starbucks' distribution system, it is an indisputable fact that the competition between the two giants in the local life service market has further intensified.
What cannot be ignored is that in addition to Ele.me and the Ali behind it, JD.com, Pinduoduo and even Suning, a number of e-commerce giants seem to be interested in expanding the layout of the local life service market.
In the new year, they will launch a fierce attack on the throne of the US group.
Entering the local life service market, "more cats and dogs" have their own plans
First of all, we must make it clear that the reason why e-commerce giants collectively attack the local life service market has its own two considerations.
First, the potential of the domestic local life service market has not yet been fully released, and there is still a lot of room for development in the next few years, and now it is a critical period for giants to card slots and seize market share. According to iResearch's report, the penetration rate of the domestic local life service market is only 12.7%, and consumers are mainly concentrated in the field of catering and takeaway. Segments such as hotel to store, home service and other segments still have a lot of room for growth.
iResearch expects the local life services market to reach 35.3 trillion yuan by the end of 2025, more than double the 15.6 trillion yuan when the track exploded in 2018. Analysys Qianfan's data also shows that as of the first half of 2021, the transaction scale of the local life-to-store business market has increased fivefold from the same period in 2015 to 528.76 billion, and has maintained a year-on-year growth rate of more than 20% in the past few years.
All in all, there is still a lot of room for development in this big gold mine for local life services.
(Image from Analysys Qianfan)
Secondly, affected by many factors such as the depletion of traffic dividends and anti-monopoly policies, the main business of e-commerce giants such as Ali, JD.com, and Pinduoduo is exhausted.
According to the statistics of the Prospective Industry Research Institute, the year-on-year growth rates of mainland e-commerce transactions and online retail sales in the past two years fell to below 5% and 10%, respectively, which are the lowest levels in the past 10 years. In the past year, the stock prices of giants such as Alibaba and Pinduoduo have plunged sharply, which also reflects the dissatisfaction of the capital market with its development status.
In view of this, the local life service market, which has great growth potential and high relevance to its own business, has become a growth breakthrough that "many cats and dogs" cannot miss.
Alibaba's local life service market layout is the most perfect among the three giants of e-commerce. In July last year, Alibaba announced a large-scale organizational restructuring to integrate the three major sectors based on geographical location services - AutoNavi, Ele.me and Fliggy - to form a new life service business segment, and removed Wang Lei, the former CEO of Ali's local life service company, and replaced it with Yu Yongfu.
After the adjustment, Ali has gathered all local life service businesses such as catering to the store, takeaway delivery, travel, and wine tourism, and consciously integrated almost all internal business resources, reflecting its determination to compete with Meituan.
In the view of the Value Research Institute, after the integration of the three major business sectors of AutoNavi, Ele.me and Fliggy, Ali has indeed achieved full coverage of the local life service market, and the degree of service perfection has not lost to meituan.
But the problem is that all three belong to catch-ups in their respective tracks: Ele.me's takeaway delivery business is pressed under the weight of Meituan, and autoNavi's shared travel business and Fliggy's wine, tourism and transportation business do not have a high market share. In other words, Ali's layout in the local life service market inevitably gives people a feeling of too much and not refined.
(Image from Hungry's official Weibo)
Contrary to Ali, the layout of JD.com and Pinduoduo in the local life service market has obvious focus.
JD.com mainly attacked the instant delivery market, and with the help of Dada and the US group, it rose up in the "logistics last kilometer battle". Last year's hourly purchase before the double eleven, it earned enough traffic for JD.com and Dada. But JD.com's problem is that in addition to instant delivery, its local life service business does not have many bright spots.
In addition to instant delivery, although Jingdong also has a layout of cultural tourism, auctions, flowers and horticulture and other scenario-based local life service businesses, and also launched a campus local life service APP pear vortex in 2020, but most of the thunder and rain are small, it is difficult to become a climate.
Pinduoduo is a group purchase of the community, through the fast group and duoduo to buy vegetables two fist business to stumble the US group preferred.
Expanding its business to 300 cities across the country in half a year, Pinduoduo did achieve a remarkable growth myth at one point. But the subsequent story, I believe everyone is very clear: the policy is strictly controlled and the rate of burning money is too amazing, and the community group purchase entered a period of strategic contraction in the second half of last year.
The data shows that in the first quarter of last year, Duoduoduo's loss was as high as 2 billion, and the net loss of Pinduoduo in the same period was "only" 1.89 billion. Judging from this data, if there is no community group purchase business, Pinduoduo can even barely achieve breakeven. At a time when the market is growing barbarically, Pinduoduo may also hope that the model of burning money for share will win its future. But after the track is cold, the possibility of a huge investment in the early stage is probably greater.
Perhaps the only thing that can make Pinduoduo happy is that Meituan Preferred and Duoduoduo have fallen into a low tide together, and no one has been able to win anyone.
All in all, although the three giants of "cats and dogs" are intended to compete with the US group in the local life service market, they have not posed a threat to the hegemony of the latter so far.
The hegemony of the US group is solid, but the challenges are getting bigger and bigger
The foundation of Meituan is in the takeaway delivery market. The good news is that foreign media distribution happens to be the largest and most highest segment in the entire local life service market.
According to the statistics of the Prospective Industry Research Institute, Meituan accounts for more than 70% of the takeaway market, and other players such as Ele.me account for less than 30% of the total. In the first quarter of 2020, Ele.me and Ele.me Star Selection also collectively occupied 31% of the market share, and at that time, meituan accounted for less than 70%. Who expected that two years had passed, and the huge Ali had been pulled apart by the US group.
In addition, according to the statistics of the data agency Trustdate, as of the second quarter of last year, the average daily use frequency and retention rate of Meituan APP users have also opened up a big gap with Ele.me. Especially in lower-tier cities, the number of repeated transactions of Meituan takeaway users is about 2.7 times that of Ele.me. Even in the data such as merchant occupancy rate and merchant DAU, the gap between the two is constantly widening.
(Photo from Guosheng Securities Research Institute)
In addition to the basic plate of catering and takeaway, Meituan has also made good progress in the fields of wine and tourism and in-store service, which it is not good at.
In the first quarter of last year, Meituan's in-store and wine and tourism business revenue recorded a substantial increase of 112.7% year-on-year to 6.6 billion yuan. In the wine and tourism business, whether it is commissions or online marketing, Meituan has achieved sustained growth, bringing 304% year-on-year profit growth to the business line.
In fact, Ctrip and Qunar also monopolize half of the wine and travel booking market, and their market share is far ahead of competitors such as Meituan. But Meituan also has its own secret of success - sinking the market. Wang Xing and Guo Qingdu, vice president of Meituan, have said that there is still a lot of room for development in the hotel-to-store business in lower-tier cities, and it is also the main direction of Meituan. In the first quarter of last year, the number of hotel room nights on the Meituan platform reached 101 million, a year-on-year surge of 135.8%, which depended on the sinking market and low-star hotel bookings to break out under the impetus of the Spring Festival homecoming tide.
In fact, those who want to grab business with meituan are not only hungry. Just the catering takeaway track, the US group has ushered in Baidu, Didi and other spoilers, and Douyin is now also menacing, but most of them have ended dismal.
In 2018, Didi's high-profile online takeaway business was fully rolled out in Wuxi, Nanjing, Changsha and other regions, calling the Us group. In the case of the big subsidy war, the preferential policy of eating fried chicken for 1 cent and drinking milk tea for 2 yuan has indeed grabbed a certain share for Didi. On April 10, 2018, Cheng Wei said on social media that Didi's share in the Wuxi takeaway market has steadily occupied the first place, leaving Meituan behind.
However, under the impact of various negative news such as the scandal of brushing single impulses and the fact that merchants complain about increasing revenue and not increasing profits, Didi is under the pressure of daily losses of millions. In addition, in the recruitment stage, Didi has opened conditions such as guaranteed income to attract experienced takeaway riders, which has led to a sharp rise in labor costs, and the burning money model is simply unsustainable.
Didi's failure proves a fact: unlike the "Thousand Regiments War" era, in the period when the market pattern tends to be stable, if you want to snatch the market from the bosses like meituan, you can only rely on high-cost subsidy wars. But this model of burning money for growth is tantamount to drinking and quenching thirst, killing eight hundred enemies and losing one thousand.
What's more, in the view of the Institute of Value, it is much more difficult to grab business from the HANDS of the US group now than in the era of the "Thousand Regiments War".
The reason is simple: the user's consumption habits have long been cultivated by Meituan. For most consumers, their biggest demand for local life services is convenience and speed. So once they get used to using Meituan to order takeaways and book tickets, there is no need to change to other apps - unless there is an offer that people can't refuse.
In November last year, after the news of Didi's internal testing and intention to return to the takeaway market came out, many industry insiders and first-line consumers expressed their disapproval.
In Zhihu," how do you think Didi launched a sobbing meal, regaining takeaway and fighting the US group? Below the question, Gao Zan's answer all mentioned a common view: the name of the "unknown so" of eating, coupled with distrust of the past service level of the Didi platform, "there is no appetite at a glance."
Many respondents also turned over the experience of Didi's first online takeaway service in 2018, expressing their dissatisfaction with Didi:
"I've ordered once before, and the only time I've had a Didi takeaway, and it's ridiculous to seriously time out and contact the delivery man and say he didn't send me to contact another person."
(Image from Zhihu)
Of course, Didi is unreliable, which does not mean that the US group is sitting back and relaxing: in addition to more and more and more powerful opponents, the bottleneck of its own development model is becoming more and more obvious.
On the one hand, as mentioned above, the financial strength is stronger than Didi, and the e-commerce giants with a more perfect layout are attacking on a large scale, and even have the signs of re-setting off a subsidy war. According to the report of Sanxiang Metropolis Daily, when Jingdong Tongcheng purchased in Changsha", it sacrificed 9.9 to eat 100 skewers, and new users 0.01 yuan to enjoy preferential activities for local brand signature products such as lemon season and Wu Shusheng, which had a remarkable effect.
On the other hand, meituan's own operating pressure is also rising. According to the third quarter of last year's financial report, Meituan's revenue was 48.829 billion yuan and a net loss of 9.994 billion yuan - which translates to a daily loss of more than 100 million, which is the worst quarterly data of Meituan since 2018.
In addition, meituan's user growth rate is also slowing down. According to the statistics of Analysys Qianfan, the number of active users of the two APP apps of Meituan and Dianping in the third quarter of 2021 has hardly increased, but the upward trend of active users on the word-of-mouth APP terminal is very obvious.
In the face of increasing competitive pressure, stronger as the US group may also need to make changes in time.
Where will the competition for local life services be in 2022?
The market is always changing and evolving, and local life services are no exception. In the face of the change of consumer groups and the evolution of the market environment, the Value Institute believes that in the next few years, the competition in the local life service market will revolve around three keywords: Generation Z, interconnection and digital intelligence.
- The rise of Gen Z brings new demands
According to the data released by the think tank, among the new local life service users in the past two years, the post-95s and post-00s account for the highest proportion, and Generation Z has become the dominant player in the local life service market. Unlike the post-80s and post-90s generations who pay attention to cost-effectiveness, efficiency and speed, the service needs of Generation Z have undergone some new changes.
The first is that the demand has become more extensive - taking the delivery service as an example, in addition to three meals a day, daily necessities, pet supplies, etc. have become the just needs of the Z generation, and the "everything to home" concept of Meituan and Hungry Mo is a response to this change. According to the data provided by Ele.me, the number of pet supplies takeaway orders in 2019 and 2020 has increased by more than 2 times, and although the data for 2021 has not yet been released, it is estimated that it will not disappoint.
For the local life service platform, in addition to ensuring the delivery capacity, enriching the types of merchants stationed as much as possible and enriching the number of merchants is the basis for ensuring the quality of service.
Secondly, Generation Z has put forward higher requirements for after-sales, customer service and other links. In the past two years, issues such as the restriction of bad reviews by Dianping and the poor customer service attitude of Meituan and Fliggy Hotels have been repeatedly criticized by consumers, which is the best evidence. In order to solve the corresponding problems, the Value Research Institute believes that it is necessary for major platforms to improve service transparency and strengthen the construction of customer service after-sales guarantee system.
Third, with Gen Z becoming the main consumer force and the rise of the "lazy economy", another subdivision of local life services, door-to-door service, has also shown good potential.
During this year's New Year's Festival, another e-commerce giant, Suning, launched a new cleaning package, including home appliances, laundry cleaning, whole house cleaning and other door-to-door services. According to suning's official data, after the opening of the New Year Goods Festival, its cleaning service orders increased by 31% month-on-month, soaring by 180% year-on-year, and young people aged 25-34 were the main consumers.
Suning's successful experiment has undoubtedly opened up new ideas for other local life service platforms.
However, it should be noted that Meituan and Ele.me entered the door-to-door service market in 2015, accessing services such as nail art, housekeeping, and car washing, but the results were not satisfactory. If we want to regain the door-to-door service business this time, Meituan and Ele.me need to learn lessons and solve several core problems: for example, to ensure the quality of businesses and personnel providing services, to ensure that on-site service will not affect the safety and privacy of users.
To solve these problems, we need a more perfect supervision and after-sales guarantee system as a basis, which cannot be achieved overnight.
- Digital and intelligent transformation is expected to achieve cost reduction and efficiency increase
The so-called digital intelligence upgrade, simply put, is to empower local life services through unmanned distribution, as well as the digital transformation of the sinking market and small and medium-sized businesses, which is an irreversible trend.
In December last year, the China Hotel Association and Ele.me announced a strategic cooperation on jointly improving the digital capabilities of small and medium-sized businesses, and Ele.me will provide digital transformation services for small and medium-sized catering businesses through its "rocket plan". According to the Beiqing Daily, during the trial operation in Harbin, Ele.me's "rocket plan" has achieved at least three times the orders of more than 5,000 small and medium-sized businesses, and the average growth rate of month-on-month turnover is nearly 10%.
As for the track of unmanned delivery, the competition between Meituan, Ali and JD.com has entered a white-hot stage. In the field of hot unmanned delivery vehicles, meituan's magic bag 20, Jingdong's unmanned delivery vehicles and Ali's small wild donkeys have entered the practical application stage, and they also have their own advantages in performance.
In addition, Meituan is also increasing the research and development of unmanned delivery machines. On November 26 last year, Meituan announced that it will build a 15-minute distribution circle at the end of the city in Shanghai, officially launch the country's first urban low-altitude logistics operation demonstration center, and it is expected that the first normalized trial operation distribution route for real user scenarios will land in Jinshan District, Shanghai in the first half of next year.
The Value Institute believes that through digitalization and intelligent upgrading, the local life service platform is expected to achieve the ultimate goal of cost reduction and efficiency increase: especially to reduce the cost of labor expenditure, which is of great significance for its long-term development. Of course, this technology race continues, and it is difficult to predict which victory or defeat, although we will wait and see.
- Interconnect provides new variables
Finally, of course, we must talk about the opportunities and challenges brought by interconnection to local life service platforms. The Value Institute believes that in the context of interconnection, the head Internet platform may become a new trend, which will bring new variables to the local life service market.
The landmark event is naturally the cooperation between Meituan and Kuaishou.
Through this cooperation, Meituan has obtained the high-quality traffic pool of Kuaishou, and the grass planting attributes of Kuaishou short video ecology can also complement meituan's dianping, achieving the effect of 1+1>2. From the perspective of Kuaishou, accessing Meituan's local life services can cultivate its users' ordering and consumption habits, stabilize the closed loop of transactions, and in turn provide assistance for Kuaishou's e-commerce and other businesses.
On January 18, Kuaishou E-commerce announced the launch of 15 local life service entrances such as food, wine and tourism, and medical and health services. After accessing the Kuaishou platform, relevant merchants can realize online grass planting transactions, and Kuaishou Xiaodian also provides new merchants with 50,000 traffic exposures, nearly 1,000 yuan traffic incentives and other support policies.
It is foreseeable that after reaching cooperation with Meituan, Kuaishou's role in the local life service market will continue to increase.
In the view of the Value Research Institute, in addition to Kuaishou, there is a larger variable in the local life service market - ByteDance.
Unlike Meituan and Ele.me, which focus on local life services, relying on the huge traffic pool of Douyin, Byte pays more attention to the integration of different scenarios such as short videos, planting grass and same-city services. In the same city column of Douyin, a large number of short video bloggers in the categories of catering to the store, leisure and entertainment, and cultural tourism provide supporting services for visiting stores and planting grass to attract merchants and consumers.
According to a report released by Byte Giant Engine in December last year, 93,000 new Douyin catering blue V accounts will be added in West China in 2021, of which more than seven will become restaurant operating accounts. Sharing and planting grass online and guiding consumers to pull grass offline is becoming an emerging form of local life service.
(Image from Massive Engine)
The Value Institute believes that for Ali Hungry, as well as e-commerce giants such as JD.com and Pinduoduo, Douyin is both a terrible potential opponent and a partner that can be used - just like Meituan and Kuaishou.
It's just that whether the catch-up of these US groups will be win-win cooperation or all-round war in the future is still uncertain, and we can only let time give us the answer.
Write at the end
In mid-2018, Alibaba acquired Ele.me, and Meituan also launched a acquisition plan for Mobike, a shared bicycle unicorn, the two giants are ambitious, dividing their own territory, and the pattern of dual dominance of local life services seems to have gradually taken shape. But after that, the direction of the story development deviated from Ali's plan, and in the past few years, he could only watch the US group lead the way, leaving itself far behind.
Wang Lei, who personally led the team to the front line to deliver takeaways and shouted the slogan of "dividing the world equally" with the US group, has abdicated, Ali's local life service business has reached a new stage, and the market environment has already undergone earth-shaking changes. But one thing has not changed: Meituan is still the king, and Ali, as a catcher, of course, and the later JD.com, Pinduoduo, Byte, and Suning, have not given up catching up.
Local life services are a trillion-dollar gold mine, and no one can give up. In the new year, the war will continue.