From booming and expanding to the whole country to falling silent and being ejected, Douyin takeaway took only about half a year.
At the end of December last year, Douyin revived its takeaway business with a high profile, and launched a group purchase delivery service with Dada Group, FlashDelivery, SF, and UU Errands. In the first quarter of this year, Douyin takeaway was still in the stage of rapid expansion, and it was reported that it would be launched nationwide. It is worth mentioning that on February 8 this year, when Douyin takeaway was rumored to be launched nationwide, Meituan's stock price jumped by nearly 7%, and the takeaway rivers and lakes were quite a situation of mountain rain about to come.
Who knew that the situation would turn around in just a few months, and rumors of Douyin abandoning takeout were rife. Although Douyin came out to deny the above rumors, and stressed that the business of each pilot city is still operating normally, the second batch of pilot cities is also about to go online. But with reference to these past experiences, it is really difficult for Douyin to gnaw the hard bone of takeaway.
Where does TikTok fall? Why can't Douyin give up takeaway?
In the face of these problems, Douyin itself, competitors such as Meituan, Ele.me and even ordinary consumers believe that they have their own understanding.
(Photo taken by Outside Finance)
Repeatedly defeated, Douyin takeaway is difficult to solve the difficulties of transportation capacity and merchants
Combing through the timeline can find that the second quarter of this year is a turning point for Douyin takeaway from attack to defense.
At the end of April, Douyin completed the internal organizational restructuring and promoted takeaway to an independent department alongside catering, wine and tourism, and comprehensive business, and the outside world is convinced of its expansion. But Douyin quickly denied the news, repeatedly stressing that there were no "plans for an overall launch in June."
It is reported that before Douyin stood up to refute the rumors, Changsha, Chongqing, Wuhan and other new first-tier cities were widely rumored to be launching takeaway business, and even suspected insiders posted pre-heated advertisements on social platforms. It is undoubtedly surprising that everything is ready and the active brakes are undoubted, but the large number of recruitment demand released by ByteDance's official recruitment website seems to indicate the support for the takeaway business.
However, in early June, the news that Douyin Takeaway had abandoned its 100 billion GMV target and made running through its business model the top priority of the year, and the outside world realized that its problem may be more serious than expected. Soon after, Douyin adjusted its direction again to specialize in business packages with a price of more than 60 yuan, until the end of August, it was rumored that it would abandon the takeaway business, and the attitude towards strategic contraction was very clear.
Douyin has lost two things in the end: the upstream merchant resources are not enough Meituan, Ele.me is rich, and the downstream lacks terminal delivery capacity. It is said that takeaway is not a business with high barriers to competition, but Douyin has used practical actions to tell the world how ridiculous this idea is.
So far, Douyin has not disclosed the number of catering businesses settled in, but the increase in the past year is worth affirming. According to the official "2023 Douyin Life Service Catering Special Report", the number of catering sales merchants in 2022 increased by 297% year-on-year, and as of February this year, there were more than 430,000 live broadcast rooms of catering merchants on the station.
How many of these 430,000 merchants have access to the intra-city delivery service, Douyin has not given an answer. But what is certain is that this number is not at the same level as Meituan's million-level merchant scale. Moreover, in the second quarter of this year, the number of new merchants settled in Meituan also doubled, and the number of brand merchants and individual small merchants increased simultaneously, resisting the impact and poaching of Douyin.
As for capacity, Douyin's insistence on not establishing a self-operated team has always been the focus of controversy.
In order to cooperate with the launch of the takeaway business, Douyin has successively allied with third-party delivery platforms such as Ele.me, SF City, Dada Group, FlashDelivery, and UU Errands to do its best to strengthen the capacity gap. But when compared with Meituan, you can also find a gap.
Data shows that by the end of the first quarter of this year, the total number of Meituan riders exceeded 7 million, and Ele.me ranked second about 3 million, which is a big gap between the scale and other delivery platforms. SF's intra-city financial report shows that by the end of last year, the total number of full-time and crowdsourced riders was 780,000, and the annual average active riders of Dada Group were about 1 million, and the flash delivery was about 2 million, adding up to about half of Meituan.
What's more, these platforms don't just serve TikTok. Dada Group and JD.com are deeply bound to undertake a large number of JD.com home delivery orders; FlashDelivery, UU errands and major chain supermarkets have cooperated, and SF has old customers such as Luckin, McDonald's, and Yum China in addition to its own ready-to-match orders.
In addition to insufficient capacity, there are too many third-party platforms connected to it, and the systems are not interoperable, which also limits the efficiency of fulfillment.
Until now, the two systems of catering takeaway merchants in pilot cities such as Beijing, Shanghai and Guangzhou are separated, and users need to jump to the system ordering and settlement of third-party delivery platforms after clicking on the take-out option to view the delivery process. In this way, the consumption chain becomes more complicated, which does not meet the requirements for time-sensitive users and platforms that pursue a closed-loop transaction.
In the second quarter, Meituan's strong recovery and Douyin's takeaway actively contracted in sharp contrast. If you want to subvert the takeaway rivers and lakes, Douyin still has a long way to go.
The second batch of pilot cities is about to land, and Douyin continues to smash takeaways
It cannot solve the dual problems of merchants and transportation capacity, limiting the pace of expansion of Douyin takeaway, but it cannot limit Douyin's ambitions. While the rumors were again debunked and the rumors were abandoned, a second round of pilot programs gradually surfaced. Among them, the most concerned is undoubtedly the newly introduced regional proxy model.
It is reported that Douyin has introduced more than 30 agents in Beijing, Shanghai, Chengdu, Changsha, Guangzhou and Linyi, which will replace the platform's BD in charge of pushing, merchant expansion and maintenance. Under this new model, Douyin will invest less manpower and funds, which is equivalent to sharing risks with agents and changing to asset-light and low-cost expansion routes.
This approach will undoubtedly reduce the pressure on the food delivery business, after all, ByteDance's cost reduction and efficiency improvement continues, and food delivery as a non-core business must not occupy too many resources. After agents join, they can contact more local resources and improve the lack of Douyin in the number and type of merchants. However, the problem of transportation capacity, Douyin has not yet found a good solution, and it remains to be seen whether it will offer new tricks in the future.
To be sure, Douyin is reluctant to give up takeout — because the motivation to do takeout is just as strong as the resistance to Douyin's takeaway.
Food delivery is the most important part of the trillion-dollar local life industry, and its unique position is determined by its ultra-high consumption frequency, repurchase rate and user penetration rate. Takeaway is the most active segment of the huge local life service market, which has a great impact on the business of wine hotels and in-store. Only by revitalizing the takeaway business can we ensure the user activity of Douyin's local life.
There is definitely no shortage of traffic in Douyin, and the trouble is how to direct users to the local life interface and develop trading habits. The scene with the highest frequency of takeaway transactions will undoubtedly shoulder the heavy responsibility of educating users and acting as a hub in the big chess game of local life on Douyin.
Another important role of takeaway is to ensure merchants' revenue - that is, to improve the problem of Douyin arrival and low write-off rate of wine and tourism business.
According to the latest news, Douyin's GMV target for local life this year is 150 billion yuan, but in the first half of the year, GMV has exceeded 100 billion, exceeding the target to complete the task, which also further inflated Douyin's ambitions. In the first half of the year, of the more than 100 billion GMV, the in-store (including catering, comprehensive management) and wine tourism business accounted for most of the share, and the GMV of takeaway was less than 5 billion.
However, the transaction amount went up, but the write-off rate of food and beverage coupons never went up. According to data from Guojin Securities, as of the end of the first quarter of this year, the average write-off rate of local life in Douyin was only 11%. Although the write-off of long-term packages and coupons is better (for example, the 30-day cancellation rate exceeds 50%), there is still a significant gap with Meituan (the 30-day cancellation rate exceeds 85%).
Compared with in-store and wine tours, takeaway is an instant retail scenario, and there is no problem of write-off rate. For Douyin, which is eager to build a closed loop of transactions and improve transaction activity and merchant income, doing a good job of takeaway can solve most of the problems, which also determines that Douyin can only continue to fight with Meituan.
Meituan Douyin catches and kills, consumers profit?
Objectively speaking, the seemingly competitive takeaway market is not as saturated as imagined, especially the vast sinking market still has a lot of room for expansion.
Data show that by the end of last year, there were 521 million domestic active takeaway consumers, with a penetration of about 48.8%. Another noteworthy sign is that the growth rate of takeaway users in the past two years has been lower than the growth rate of market size, indicating that market expansion mainly depends on the increase in the repurchase rate of old users, and major platforms have not leveraged too many new increments.
In this case, Douyin's traffic advantage is amplified. Relying on short videos, live broadcasts and other venues, Douyin can reach more users and divert traffic for takeaways. Meituan's tools have strong attributes, the advantages are high user stickiness and stable repurchase rate, and the disadvantages are short user stay time and difficulty in attracting new ones. As a competitor of Douyin takeaway, although Meituan is not very anxious, it is impossible to be without waves in its heart.
Meituan's response was also swift: in turn, learn the strengths of Douyin, test the water live broadcast business, and provide more high-quality content; On the other hand, increase subsidies and give profits to takeaway businesses and users.
In terms of specific subsidy methods, the perception of the merchant side is stronger than that of consumers. At the beginning of July this year, it was reported that Meituan signed preferential agreements with some invited merchants, and the deduction rate was reduced to 4%, which was directly halved from before. In contrast, Douyin's deduction rate for catering businesses is between 3% and 8%, which is lower than that of travel, shopping and other merchants, and more preferential than Meituan. But after Meituan took the initiative to give benefits, Douyin's advantage was also weakened.
Data doesn't lie. According to the second quarter financial report, Meituan's marketing and sales expenses reached 14.6 billion yuan, an increase of 40% month-on-month, and a year-on-year increase of 62%, accounting for 21.4% of revenue. You know, the last time Meituan's marketing expense rate exceeded 20%, it was already in 2021 - it was in the community group buying war, and it was also the time when Meituan, Pinduoduo, and Didi fought at its most intense.
Of course, Douyin has no intention of backing down, and the subsidies to merchants and users are just as large. Looking at the Douyin takeaway homepage, you can find that a large number of stores have launched preferential packages as low as 2.0%, and the discount strength of small and medium-sized businesses is generally higher than that of brands and chain merchants. Even merchants like Starbucks, which are notoriously not wanting to issue coupons, have multiple 7% off and 8.5% off packages that are only available for takeaway.
For the two giants of Meituan and Douyin, increasing preferential treatment and marketing investment will definitely push up costs in the short term and affect profits. For example, Meituan's operating profit in the local commercial sector fell slightly by 0.2% in the second quarter. But Meituan's basic plate is very solid, and Douyin has no better way to catch up with the former, so it can only keep up.
And for the other two important players, catering businesses and consumers, the subsidy war is certainly not a bad thing. In addition to getting real deduction discounts, merchants are also happy to see the rise of new platforms pose a long-term challenge to Meituan and provide them with more choices. Not to mention that takeaway is expensive and delivery fees have risen more than once this year, and it is naturally best for the platform to take the initiative to beat the price.
Now I only hope that this struggle will not go astray and become a complete money-burning game like the "Thousand Regiments War" of that year, and not at the expense of the riders. Maintaining healthy competition is good for all.
Risk Warning:
This article does not constitute any investment advice, the market is risky, investment needs to be cautious.