Douyin deepens, Meituan stabilizes: what is the new logic of local life wars?

Author | Xiao Zhuo

Because of Douyin, the local life service track is fighting again.

This industry has experienced "hundred regiment wars", fights and mergers, and "takeaway three country killings". In the smoke of gunfire, Meituan broke out of the siege, crowned the king, and dominated the industry with a market share of more than 60%, but just when everything was going to solid, new variables appeared.

In the past three years, as a new variable, Douyin life service has continuously stirred the industry pattern with "content", and extended from catering group buying to all categories of life services. According to 36Kr, Douyin Life Service's target for 2023 is 150 billion, which is about double the GMV of the previous year and more than one-third of Meituan's one-year in-store wine and hotel transactions.

The huge market, the changeable environment, and the local life service industry are about to come, but the logic this time is different from the previous O2O war. A torrent called "content" is impacting the local life service industry, blurring the boundaries between online and offline, "planting grass" and "pulling grass", and complicating the factors of industry competition. Traffic, content, capacity, and B-end ecology, these capabilities can not only be the "spear" for new players to break through, but also the "soft underbelly" when the old platform is guarding.

It is precisely because of this that there are more players in the industry, but no one can eat the super cake of local life services alone. A new war about logical iteration and about local life is being fought.

Challenger and Champion

One fact is that when talking about the life service track today, the focus of the industry has become Douyin and Meituan.

As a challenger, Douyin's layout in the field of life services can be traced back to 2018, when Douyin formed a POI team to launch LBS-based life service functions. Since 2020, Douyin's life services have accelerated significantly - the launch of group buying business, the launch of Douyin Star Map online expert exploration stores, the establishment of a "local direct business center", the launch of an independent merchant-operated APP "Douyin Laike", the launch of the "group purchase delivery" function, and the cooperation with Ele.me have all occurred in the past three years.

Outbreaks are important environmental variables. According to the Red Meal Brand Research Institute's "2022 Survey of Catering Enterprises under the Background of the Epidemic", 46.2% of enterprises opened up new channels during the epidemic. In the face of operational difficulties, about 28% of the surveyed restaurant companies said that they have adopted digital operation methods to open private domain traffic operations. Douyin Life Services has revealed that from April 2021 to March 2022, the average growth rate of users related to catering transactions on the Douyin platform was more than 50%.

In addition to environmental factors, Douyin itself also needs a new growth engine. Traffic and content are Douyin's strengths, and with this as a spear, Douyin e-commerce has achieved rapid growth. But to replicate similar growth in the field of life services, Douyin life services need to do a lot.

The field of life services covers a large number of offline merchants, involving the deep integration of online and offline. The main things that Douyin life services need to break through: penetration and capacity.

Penetration refers to the work of "opening the city", promoting the online of merchants, and improving the operational capabilities of merchants. In the early era of O2O wars, the speed of platform penetration depended on the strength of the ground push. However, building a strong ground promotion team takes time and cost, especially for content platforms that are more difficult to operate, and if you only rely on your own manpower to develop and maintain merchants, efficiency and cost are not cost-effective.

Douyin life service strives to find a balance - for KA merchants, the direct sales team is responsible for development and maintenance, and for small and medium-sized businesses with a larger proportion, a service provider system is built to introduce the merchants, talent resources and operation experience of service providers. At the same time, the official has also launched the merchant operation platform "Douyin Visitors" and the marketing platform "Huge Local Push", infiltrating the life service market with a more economical combination.

Source: "Douyin Laike" official website

Transportation is easy to understand. Local life business includes two categories: "home-to-home" and "in-store", the former needs to have capacity as performance support, and the latter is naturally suitable for content as a carrier. Douyin Life Service's current business is mainly "to the store", but the platform's layout in the field of "home" is also deepening.

In the second half of 2022, news of Douyin life service promoting "group buying and delivery" came out from time to time. In December of the same year, third-party instant delivery platforms Dada, FlashDelivery, and SF Tongcheng announced that they had officially reached a cooperation with Douyin Life Services. With the help of external forces, Douyin life service has made up for the "capacity" puzzle.

Compared with the ferocity of Douyin's life service, Meituan's actions have more "defensive" meanings. "True Detective" has mentioned in previous observations ("Meituan Takeaway "Anti-Shake" New Action) that the Meituan APP launched the "Meituan Takeaway Second Floor", and the display logic of "the second floor" is similar to that of Douyin, and the platform tries to extend the upstream of the user consumption link.

Source: Meituan takeaway "second floor"

This is just one of Meituan's content-based actions. In addition to frequent actions in the field of live broadcast and short video, Meituan's contentization attempts have also extended to the outside, such as cooperating with Kuaishou and launching the "Meituan Circle Exploration Shop" WeChat mini program. While opening up external content platforms and attracting transactions, "True Detective" also found in the experience that the Meituan APP is also guiding users to participate in "mini games" to receive "Tiantian God Coupons", which is a common means to increase user activity in the Internet industry.

According to 36Kr's previous reports, some agents in the Meituan sinking market last year have told merchants to let the latter do "one of the two" cooperation. Challengers want to win territory, defenders strive to retain users and retain merchants, and a new war in local life has begun, and the battle involves much more than Douyin and Meituan.

The new normal

"Traffic alone is not enough, he has to be willing to work hard." In 2014, when the O2O war was in full swing, Wang Xing made such an assessment of the giant in an interview, which was widely spread, and "the giant can't do hard work" became the creed of many entrepreneurs, giving them the courage and confidence to grow.

But today, even giants who are willing to work hard cannot monopolize the market.

The market is bigger. According to iResearch, the size of China's local life service market was 19.5 trillion yuan in 2020, and this number will grow to 35.3 trillion yuan by 2025. The online penetration rate of local lifestyle services will also increase from 24.3% in 2020 to 30.8% in 2025.

The market is also more complex. The original O2O form was more "shelf", and the emergence of short videos and live broadcasts changed everything. The e-commerce industry has learned the energy of "content", under the sweep of "content", new players can open up the trading field through content, traditional players have accelerated the construction of content, "planting grass" and "pulling grass" are no longer separated, and "planting and pulling one" has become the ability that everyone is pursuing. Now, a similar trend is emerging in the local lifestyle services circuit.

Traffic, content, capacity, B-end ecology, the platform needs more capabilities. It's hard to have a platform that leads in every competency, but it also means that players who have a clear advantage in one ability can get a ticket to this new battle of local life.

Douyin and Kuaishou have previously tried to enter the local life business alone, Douyin directly faced Meituan, and Kuaishou adopted a relatively roundabout tactic, targeting areas such as automobiles, real estate, law, and fitness that Meituan has not yet deepened in. But now, Jikuai has chosen allies, the former joining hands with Ele.me and bringing in more partners through the open platform, and the latter standing with Meituan earlier.

Both collaborations are "each according to its needs": Douyin and Kuaishou have traffic advantages and content supply, while Meituan and Ele.me have abundant B-end resources and efficient delivery capacity.

If you zoom in, you will find that Alipay also underwent a major transformation in 2020, with life service modules such as Ele.me, word-of-mouth group buying, and movie performances on the top page of the platform, and developing in the direction of "decentralization". Today, merchants can use content to market and convert through Alipay. This platform has C-end traffic and B-end ecology, and its openness and the cooperation brought by openness will make it an important force in the field of life services.

Above the water, going it alone is a thing of the past, and the new normal is the norm. Below the surface, "content" will shape the new form of the life service industry, and the boundary between online and offline will be further blurred. Each player must build a wider moat and join hands with allies in the new normal to find the optimal solution in the new logic.

"It is often not your opponent who defeats you." This proverb of the business world has many examples that match it. Gome and Suning have been fighting for many years, but they both lost to the latecomer JD.com in the e-commerce era. German and Japanese car companies have been competing for hegemony for a long time, but in the era of electric vehicles, Tesla in the United States and new forces in China's car manufacturing have become their new worries.

It is too early to make any judgment on whether the local life service field will also "new kings suppress old kings". Douyin has strong potential online, but it takes time to deeply engage in offline merchant operations, and it also requires more refined and sustainable operations; Meituan has a deep offline accumulation, and merchants have also formed long-term business habits on the platform. In the future, the confrontation between the two sides will only become more frequent and direct.

The only thing that is certain is that the trend has become a trend, and when the storm is coming, the industry reshuffle has quietly begun.