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The local service model is heavy and not easy to chew, why is Douyin willing to jump into the game?

Author | Zhao Dongshan Edited by | Li Wei

In addition to the normalization of e-commerce business, Douyin is accelerating the promotion of local life services.

At the beginning of 2022, taking advantage of the Spring Festival boom at the movie box office, Douyin took the lead in laying out the layout in the purchase of movie tickets, playing the slogan of "buying movie tickets on Douyin" and taking out large user subsidies. Whether in the content product information stream or the Douyin live broadcast, the promotion poster of the Douyin movie ticket can be seen.

At present, Douyin's movie ticket business is mainly carried and implemented through the platform of "Shadow Tuobang" and mini programs. Before the Spring Festival in 2022, ByteDance has just completed the acquisition of "Shadow Tuobang".

According to industrial and commercial information, Shadow Tuobang mainly provides enterprise customers with film welfare, gift services, film entertainment marketing and other services; provides entertainment services such as movies and performances for individuals, and the platform covers more than 8,000 theaters across the country, supports online seat selection, and supports a variety of online payment and exchange methods.

In fact, since 2018, Douyin has begun to form a POI (Point Of Interest) team, through LBS (Location Based Services, a location-based service) positioning technology, so that the videos released by users can be hung on the STORE POI, thus taking the first step of online and offline access.

Before getting involved in the movie ticket business, ByteDance has also been accelerating its layout in local life such as catering group purchases, hotel accommodation, and scenic spot tickets in the past few years. According to Xindui data, the cumulative number of "visiting the store" related videos on Douyin in the past three months has exceeded 519 million. Nowadays, in the local column of Douyin APP, it has provided preferential group purchases and popular lists in five major sections of food, leisure and entertainment, play, accommodation and beauty, and the prototype of a METUan has emerged in the Douyin ecology.

In fact, Douyin also tested the takeaway service Heartbeat Takeaway in Grayscale, but at the end of last year, the Heartbeat Takeaway business was cut and the Heartbeat Takeaway Mini Program was removed. However, Douyin is strengthening its delivery capacity. In January 2022, ByteDance's Xingchen Yue Supply Chain and Yunda Yuncang reached a cooperation to lay out their own production warehouses.

In addition to its own business layout, in the past period of time, ByteDance has also invested intensively in local life-related consumer businesses and supply chain service providers. Up to now, ByteDance has invested in consumer brands such as Manner Coffee, Shark Fit, Houxue Liquor, Lazy Bear Hot Pot, and service providers of consumer brands such as Lemon Season, Shadow Toban, and Oriental Honghu.

An employee from byteDance's commercialization center told us that after the New Year in 2022, the task of his commercialization center has undergone transformation, "the original main focus was on local scene marketing, the purpose is to promote the main activity based on the Vibrato APP, with the new; after the year, it mainly turned to local group buying, such as wine tourism, catering, etc., each local station is promoted according to different local advantages." ”

Previously, Photon Planet reported that as of the end of November last year, the GMV of Douyin's local business was 10 billion yuan, and it was said that the 2021 target set by Douyin at the beginning of the year was 20 billion yuan, and in 2022, the target set by Douyin for the local business was doubled, reaching 40 billion yuan.

There is no doubt that Douyin has become byteDance's number one killer, with more than 630 million daily active users. Under the background of the peak of the Internet demographic dividend and the increasing cost of customer acquisition, the advantages of traffic are more prominent. Based on the huge traffic pool, Douyin has been able to carry out business attempts and boundary expansion.

Especially at a time when the Internet advertising business is generally frustrated, local life has become an important way to promote new activities, expand business scope and increase monetization channels after the interest in e-commerce.

1

Pressure on internal revenue growth

One of the important factors in Douyin's active layout of local life is the pressure of revenue growth.

On January 20, 2022, there were media reports that ByteDance's annual revenue in 2021 was about $58 billion, an increase of 70% year-on-year, equivalent to ByteDance's daily revenue of 1.007 billion yuan. However, compared with the triple-digit growth in 2020, ByteDance's revenue growth rate in 2021 has slowed down significantly.

Looking back at 2021, because of policy supervision and other factors, games and online education have encountered no small difficulties, and these two industries have previously been rare and sufficient budget industries in ByteDance's advertising system, and the shrinking budget of advertisers has led to an important impact on ByteDance's Internet advertising business. Immediately after that, Wei Ya, Sydney and other live streaming head anchors were fined hugely due to tax problems, and the store was also banned, and then in the live e-commerce platform including Douyin, a tax supplement action was also started.

Before ByteDance's revenue was exposed by the media, on November 2, 2021, ByteDance announced an important adjustment: reorganizing its business into six business segments: Douyin, Vigorous Education, Feishu, Volcano Engine, Sunrise Lightyear and TikTok. The heads of relevant business segments all reported to Liang Rubo, the new helmsman of ByteDance.

In this adjustment, the most noteworthy adjustment is the change of related plates with vibrato as the core. Today's headlines, watermelon, search, encyclopedia and domestic vertical service businesses are all merged into Douyin. In Liang Rubo's vision, this section is mainly responsible for the overall development of ByteDance's domestic information and service business, providing users with better content and services.

Just one day before Liang Rubo announced the adjustment of ByteDance's organizational structure, on November 1, 2021, according to 36Kr, the Douyin team also completed a round of organizational structure adjustments. Zhi Ying, the head of marketing, took over the operation department, and the head of live broadcasting, Han Shangyou, was also in charge of the local life business.

Before this adjustment, Douyin's products, operations and local life business were all responsible for The person in charge of Douyin, Seven. After the adjustment, the current head of operations, Yoyo, reported to Zhiying, and the head of local life, Li Ran, reported to Han Shangyou, and the business that Seven was actually responsible for was only products.

According to 36Kr, the direct reason for Douyin's internal adjustment is the dissatisfaction of senior executives with Douyin's work performance, which is reflected in the fact that Douyin's growth and the progress of local life business are not up to expectations. After the adjustment, the importance of the local life business within Douyin and even in the whole of ByteDance is constantly increasing.

In October 2021, ByteDance's commercial direct sales center had carried out a relocation and layoff in Luoyang, Wenzhou and other places due to the adjustment of douyin commercialization, and those local commercialization centers that had not been withdrawn from the city have now shifted to increase investment in local services.

After Han Shangyou, who is in charge of the live broadcast business, is in charge of the local life business, a visible change is that the local life business and the live broadcast business are high-frequency linkage, and many local life businesses such as movie tickets and hotel group buying can be found in the live broadcast room.

2

Pressure from external peers to compete

Another important factor in Douyin's accelerated layout of local life is the pressure from peer competition.

On December 27, 2021, Zhang Chuan, senior vice president of Meituan and president of the Store Business Group, went to Haikou, Hainan Province to attend the Kuaishou Ecological Conference, at which Kuaishou announced that it and Meituan announced that they had reached a strategic cooperation on connectivity. Based on the Kuaishou open platform, the two sides will open up content scene marketing, online transactions and offline performance service capabilities, and jointly create a "one-stop" complete consumption link for users.

Regarding the details of cooperation between the two sides and the main realization path, the main performance is that Meituan launched the Meituan Mini Program on the Kuaishou Open Platform, providing Meituan merchants with complete service capabilities such as packages, vouchers, reservations and other commodity displays, online transactions and after-sales service, and Kuaishou users can directly access through the Meituan Mini Program.

At present, the Meituan Mini Program has taken the lead in completing the pilot launch of the catering category, and will continue to launch a number of life service categories such as hotels, homestays, scenic spots, leisure and play, beauty salons, and script killing in the future. In addition, a number of popular chain restaurant brands in China, such as Xiang Tang and Unigroup, have become the first batch of merchants to enter the Kuaishou Meituan Mini Program.

The logic of cooperation between Kuaishou and Meituan is similar to the logic of Douyin to accelerate the local life business: Douyin and Kuaishou, as two major head short video applications, have hundreds of millions of users, and these users will release many rich contents, and these contents will inevitably involve the content of commercial elements, coupled with the interest recommendation mechanism of Douyin and Kuaishou and the recommendation based on geographical location, making it easier for users to discover the food and beauty hidden around them.

Different from the cooperation between Kuaishou and Meituan, in the past few years, in order to open up this logical chain, Douyin's localization business on the one hand through the push to let merchants enter the Douyin system, release gourmet content and group purchase discounts, on the other hand, Douyin encourages shop experts to shoot on the spot, Douyin gives a certain traffic recommendation, which is more conducive to the creator's content to get better exposure and fans.

"Douyin and Kuaishou have chosen two different paths." An Internet product manager told us, "Douyin chooses to independently develop local life business, the autonomy is stronger, and the call and cooperation of various functional plates in its own ecology will certainly be more convenient, but the difficulty will also be greater, such as the reserves of local merchants, the ability to push offline, the logistics foundation of the same city, etc., Douyin as a short video platform can certainly not be compared with the US group." ”

In addition to its competitor Kuaishou in the field of short video, Douyin also has to face the US group in the field of local life.

"The advantage of Meituan is that the user scenarios and user needs are very certain, and the high frequency is just needed, but the user may not shop like brushing vibrato; the advantage of vibrato is that users will consume more time on short videos, and complete online to offline consumption according to interest recommendations, but the challenge lies in the completeness of merchants and the completeness of related supporting services." The above-mentioned product manager told us.

However, in view of the advantages of Douyin in short videos and live broadcast content, Meituan products are also strengthening their content advantages.

In 2017, Dianping, a subsidiary of Meituan, launched a video function, where merchants can publish and present store and menu information through videos, and users can also comment on merchants with 30-second short videos. In April 2018, Dianping was updated again, imitating the Little Red Book, not only adding a short video function, but also inviting celebrities to enter to strengthen interaction. In December 2020, Zhang Chuan revealed that Dianping is changing from an "online exploration platform for life information" to a "sharing platform for life consumption methods".

The phased purpose of Douyin and Meituan is to make full use of the conversion advantages between content and business, so that content can attract users to convert to local businesses, and commercial consumption reproduces content to obtain traffic. At present, Meituan is making up for its own content capabilities, while Douyin is making up for its ability in commercial transformation.

In fact, as early as 2021, Douyin's localization business is cooperating with byteDance's commercialization team. In the internal cooperation, Douyin is responsible for product and operation, and the commercialization team is responsible for pushing sales. In 2021, the Douyin localization team moved to Shanghai, which was interpreted as a way to more conveniently poach people from Dianping.

3

Attractiveness of local services

At present, the local life business based on Douyin is emerging in the Douyin ecology with a number of new groups of people and new companies such as shop explorers, local marketing agents, and MCN agencies.

"Special Wu Lala" is the head of the shop on Douyin, whose Douyin platform has more than 11.88 million fans, and the feature of video and live broadcast is to explore the delicious and inexpensive specialties across the country. According to Xinjid data, the live broadcast sales of "Special Wulala" in December 2021 alone exceeded 13.56 million yuan, of which the highest proportion of goods was food and beverage.

Local life services are different from e-commerce business, because of the geographical factors involved, local attributes are strong, so there are many local characteristics of the store on Douyin, and only need more than 1,000 ecological fans on Douyin to become group buying masters. They do not necessarily have a high reputation in the country or the whole network, but they are well known in the local area and have become an important basis for local decision-making reference. To this end, Douyin officials have also set up a Douyin store exploration group, regularly publishing the list rankings and carrying out refined operation of vertical field traffic.

If tandians provide content services for C-end consumers, companies like "Foodism" provide linking capabilities for the Douyin platform and merchants.

Founded in 2020, its core executives come from meituan, Uber, daily excellent fresh, orangutan convenience and other well-known local life e-commerce companies, only more than a year after its establishment, foodism has obtained 3 rounds of tens of millions of dollars in financing, and its investors include Sequoia China Seed Fund, Haina Asia Venture Capital Fund, Gaorong Capital and other well-known investment institutions.

Up to now, Foodism has opened local life services in 103 major cities such as Beijing, Shanghai, Hangzhou, Xi'an, Chengdu, Guangzhou, Shenzhen, Tianjin, Nanjing, Wuhan and Changsha, developed 100,000 local life businesses, and cooperated with more than 6,000 local life Internet celebrities.

In addition to foodism, there are many third-party local service providers in the Douyin ecosystem, such as Enjoy Cool, Qianqian Hui, Peripheral Tours, and Mi Province Group.

Compared with Internet advertising, the local service model is heavy and difficult to chew, but why is Douyin willing to jump into the game?

"Meituan's 2021 Q3 financial report has explained everything, Meituan's three parts of revenue totaled 48.8 billion yuan, catering takeaway revenue of 26.5 billion yuan, but the profit margin was only 3.3%; although the revenue of the hotel was only 8.6 billion yuan, the profit margin was as high as 43.9%, such a fat piece of cake, ByteDance will certainly not ignore, in the past Byte also just cut off the heartbeat takeaway business that had grayscale test." A secondary market analyst told us.

According to iResearch data, the size of China's local life service market will be 19.5 trillion yuan in 2020 and is expected to grow to 35.3 trillion yuan by 2025. However, at present, the penetration rate of the Internet in local life services is only 12.7% (about 1 trillion yuan of plates), and it can still maintain a growth rate of more than 20% in the next three to four years.

Zhang Nan, CEO of ByteDance China, said in a speech in 2021, "Douyin has gradually changed from an entertainment method to a social way, and may become a way of life in the future." "In those lifestyles that cover the masses, Douyin is eager to find new passwords for data monetization.

*This article is a work of China Entrepreneur Magazine (ID: iceo-com-cn), reprinted with permission from All Weather Technology, if you need to reprint, please contact the original author.