Will the food delivery market landscape change?
On February 7, it was reported that Douyin will launch a national takeaway service on March 1, and has been conducting internal testing in Beijing, Shanghai and Guangzhou. In response, the relevant person in charge of Douyin life service responded that the "group purchase and delivery" project is still being piloted in Beijing, Shanghai and Chengdu, and merchants in the three cities have recently been opened to self-service settlement. In the future, depending on the pilot situation, the gradual expansion of pilot cities will be considered, and there is no specific timetable at present.
This matter attracted widespread attention and once appeared on the Weibo hot search list.
Douyin responded: There is currently no specific timetable
On February 7, in response to Douyin's launch of a national takeaway service on March 1, the person in charge of Douyin Life Service responded that the "group purchase and delivery" project is still being piloted in Beijing, Shanghai and Chengdu, and merchants in the three cities have recently been opened to self-service settlement. In the future, depending on the pilot situation, the gradual expansion of pilot cities will be considered, and there is no specific timetable at present.
It is reported that the official website of ByteDance has listed senior operation manager of takeaway goods, senior manager of takeaway industry solution operation, senior manager of catering live broadcast master operation and other related positions.
Will the "2+N" situation in the takeaway market be rewritten?
With the continuous development and integration of the mainland food delivery industry, the industry competition pattern has gradually stabilized, forming a "2+N" situation, and Meituan and Ele.me together occupy more than 90% of the food delivery market share.
According to data from China Research Network, Meituan food delivery accounted for 69% of China's food delivery market share in 2020, and Ele.me accounted for 26% in the same period. According to the "2022 Meituan and its Industry Chain Research Report", by 2022, Meituan's market share in the food delivery field may approach 70%, and its revenue will be three times that of Ele.me.
It can be said that Meituan is currently a leader in the food delivery industry. As Meituan's most important business, in 2021, food delivery brought Meituan 96.3 billion yuan in revenue and 6.17 billion yuan in profit, accounting for 53.8% of the total revenue for the year.
As for the user outlook, as of the end of the third quarter of 2022, Meituan's annual transaction users in the past 12 months were 687 million. According to Guohai Securities, the number of Meituan transaction users in 2022Q4 reached 690 million, an increase of about 2.9 million from the previous quarter, and the number of active merchants in 2022Q4 is expected to reach 9.5 million, an increase of about 200,000 over the previous quarter, mainly due to: 1) innovative businesses such as Meituan Youxuan continue to promote new sales in the sinking region; 2) the increase in instant retail demand, and the number of users on the Meituan grocery / Meituan flash sale platform is expected to continue to increase; 3) The number of active merchants benefited from the liberalization of epidemic control and steadily recovered and grew. In the long run, Meituan is still optimistic that with the company's core business, the proportion of high-quality users and the number of active merchants will continue to increase steadily.
In terms of stock price performance, since the end of October 2022, Meituan's share price has rebounded by more than 30%, closing at HK$163.7 per share as of February 7, with a total market value of about HK$1.01 trillion.
How much impact does Douyin have on the takeaway market? On December 5, 2022, the official account "Douyin Life Service Business Observation" affiliated with Douyin announced that merchants can display products in short videos or live broadcasts on Douyin in the form of packages, and after users purchase on Douyin, merchants can deliver through Douyin's three-party aggregation delivery (including SF City, Flash Delivery, Dada Express), or choose to deliver by themselves.
At that time, Zheshang Securities released a research report, and two points are worth noting:
First, Douyin's share in the takeaway market may be higher than expected. First of all, Douyin has adopted a third-party aggregation model among the distributors, which helps save costs. Second, some market views believe that takeaway is planned consumption and is not suitable for Douyin push (more suitable for impulse consumption), but in fact, this view ignores the market for late-night snacks and afternoon tea, which account for about 14% of GMV and are growing faster, according to Meituan Research Institute.
Second, Douyin takeaway faces the problem of high cost in the short term. According to media reports, the current unit price of Douyin takeaway is high, generally higher than Meituan, which is also in line with observation. We judge that this is because the cost of merchants choosing Douyin takeaway is higher, so they can only make up for it by making products with high unit prices. The higher cost of Douyin takeout than Meituan takeaway is due to the lack of scale effect on the delivery side.
Douyin sets a small goal of 150 billion? The competition for local life continues
In fact, in addition to the takeaway business, Douyin has continuously increased its local life services in recent years, extending from catering group buying to a full range of life services. Since 2020, Douyin has launched a group buying business, launched a "local direct business center", launched an independent merchant-operated APP "Douyin Visitor", launched a "group purchase delivery" function, and reached cooperation with Ele.me. 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.
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.
Regarding competition in local life, Guosen Securities pointed out that Meituan and Douyin, dislocation competition and frontal competition coexist, and the overall growth space of the market is abundant. Boosted by the epidemic, Douyin's local life business accelerated in 2022, and Douyin's layout of local life business has the dual consideration of balancing ecology and improving long-term monetization efficiency. Douyin's local life business focuses on a combination of low-priced explosive models and shallow discounts, and the accelerated growth of Douyin's local life business in 2022 conforms to the trend of merchant inventory clearance and strong user discount demand under the pressure of the macro environment, and we estimate that the GTV of Douyin's local life will reach 700+ billion in 2022. The current monetization efficiency of Douyin's local life business is not as good as that of other businesses such as e-commerce and advertising, and it is estimated that the single VV revenue with group buying page is 1/2.1 of the single VV revenue of the short video e-commerce business, but the local life is the user's favorite pendant, which can achieve the effect of balancing the overall commercialization ecology. Douyin short video e-commerce monetization efficiency is lower than live streaming e-commerce, local life business undertakes this part of e-commerce traffic, in the long run, with the cultivation of Douyin's local life users' mentality and conversion rate improvement, its monetization efficiency is expected to continue to improve. From the perspective of business progress, Douyin's local life business is still in the early stage of development.
From the perspective of merchant value, China Merchants Securities Research Report said that Meituan's long-term growth rate of stores is fast and barriers are strong. The research report categorizes the value of merchants into two categories: new sales and drainage sales: the new dimension of Pingxuanla, Douyin users have strong exposure ability, and can indeed provide new value compared to Meituan; Drainage sales dimension, Douyin coupons to find impulse consumption + single group purchase drainage mode, suitable for a small number of low decision-making cost + high supply elasticity categories such as tea; Meituan people's purposeful consumption + CPC/group buying drainage combination matches most of the high decision-making cost + low supply elasticity categories in the store, and in general, the sales value of Meituan drainage is significantly higher than that of Douyin. The research report believes that group buying is only one of the ways for merchants to attract traffic, excessive sales may damage the stock profits of merchants, Meituan's current construction of CPC advertising + group buying drainage combination is a better drainage method, such as the actual impact of the transaction GTV calculation, even though Douyin hundreds of billions, Meituan is still far ahead.