Meituan and Douyin: Who Will Become the Winner in Local Life? - Huxiu#
#Omnivore
Highlights#
Meituan is suitable for long-term operations, while Douyin is suitable for brand marketing and customer acquisition ⤴️ ^5a0e559f
Advertising and e-commerce seem to be the same; is this an inherent attribute of the video category represented by Douyin?
Local life businesses are not suitable for live streaming. ⤴️ ^3359c867
The reason these two types of products can do live streaming is that their e-commerce attributes are higher than local life attributes. ⤴️ ^0aab286e
However, local life has a large number of mid-tail and long-tail merchants. Apart from tourism-related products, how many brands in China serve users through stores with more than 1000 locations? Most are still mid-tail and long-tail merchants. For example, a single hot pot restaurant can only serve users within a 2-3 kilometer radius; how difficult is it to attract users from that radius to a live stream? Meituan's moat is precisely these merchants. ⤴️ ^7f379401
Yes. First, Meituan has temporarily given up on group buying; second, merchants have found that promoting through Douyin's short videos covers a larger user radius, attracting more new customers. For restaurant merchants, they hope to attract more purchasing users to the store, as this is incremental for the store. Therefore, the package prices posted by merchants on Douyin's POI are often lower than those on review platforms. This has led to a complete defeat of Meituan's POI supply by Douyin in 2021 and 2022, and over time, users have developed the habit of opening Douyin to search before consuming in-store, a habit that initially belonged only to Meituan Dianping. ⤴️ ^1e7f57fb
If a live stream at the business district level is launched, such as a West Lake business district live stream led by Meituan or Douyin, and offline live scan points are set up, allowing tourists to scan to watch the live stream directly upon entering the business district, this scan point could even be made into a trendy check-in spot. This would solve the problem of coverage and video distribution accuracy. If it were a community-level live stream, it would be even better, incorporating reviews from local residents on Meituan and Dianping, and even adding social attributes. This idea is quite impressive; I truly admire myself.
Meituan's management capabilities far surpass many companies. ⤴️ ^dafc4030
Meituan and Douyin: Who Will Become the Winner in Local Life?#
This article explores the competition between Meituan and Douyin in the local life sector and analyzes their differences in supply and models. The article points out that ==Meituan is suitable for long-term operations, while Douyin is suitable for brand marketing and customer acquisition==. Additionally, the article discusses the opportunities and challenges in the local life market and introduces the development potential of video accounts and Amap in the local life field.
• Meituan should strictly guard its supply, while Douyin is suitable for brand marketing and customer acquisition.
• Douyin's life services attract merchants and users through explosive orders, while Meituan moves supply online through a ground promotion army.
• Douyin's life service advantages lie in traffic and user tags, while Meituan's advantages are in sales capabilities and resource provision.
In the era of cost-effective consumption, competition around price is not only in e-commerce but also in local life.
In fact, local life, especially local life centered around dining, as a mass consumption, the most significant factor influencing consumption decisions is price.
From the group buying war to today, where Douyin's life services have overtaken in group buying, and Meituan's counterattack, a crucial strategy is to provide lower-priced group buying supplies.
However, due to the different platform genes, including the paths for merchants to acquire and reach consumers, and the core attractiveness to merchants, they differ; company culture, organizational strength, and the way to unite ecological partners also vary; the position and role of local life in the company's overall structure are inconsistent, leading to significant differences in the advantages of different platforms in low-price supply.
For example, Meituan is more suitable for long-term operations, while Douyin is suitable for brand marketing and customer acquisition. Therefore, when a merchant needs to enhance its brand presence or expand its consumer base, they are willing to offer Douyin a lower discount.
At the same time, when we zoom out, we see that the local life market is not only Douyin life services and Meituan but also Kuaishou, Xiaohongshu, video accounts, and even Amap and private domains. The local life market is vast, but its online penetration rate is not high enough, and the progress of online transformation is very slow. Therefore, existing quality supplies are fiercely competed for, especially in the most mature dining sector.
Regarding the current competitive state of local life, especially the characteristics of Meituan and Douyin life services, and the impact of competition on service providers and brands, how merchants should choose in the upcoming opportunities and challenges, we spoke with Long Peng, co-founder of the leading local life service provider, Enjoy Inventory.
Long Peng graduated from university and began working at Meituan Dianping, serving as a regional supervisor, thus being familiar with the entire development process of local life, understanding merchant needs, and having practical experience in connecting with various platforms.
We previously had a conversation with Long Peng, focusing more on the basic situation of various platforms in local life. This time, building on that, we discussed the latest variables in local life—Meituan doing live streaming, video accounts being able to link group buying, etc.; we also discussed the differences in underlying capabilities and basic models of some platforms.
To a large extent, service providers find it challenging to escape the fate of being "used and discarded" by platforms. They must grasp the timing, rhythm, and methods of entering platforms and find what core value they can provide to merchants in this era.
Here are excerpts from this episode's podcast dialogue:
- Meituan should strictly guard its supply
Narrowcast: Many practitioners, including yourself, say that local life is not suitable for live streaming. How do you understand Meituan's investment in live streaming?
Long Peng: I see that Meituan has two types of live streaming: the first is through WeChat video accounts, and the second is through its own app. I believe Meituan should do live streaming for some large brands through video accounts and should try live streaming through the app, but it shouldn't go all in.
Because ==local life businesses are not suitable for live streaming.==
In Douyin's life service live streams, we usually see two types of live streams: one is for large brands like Luckin Coffee, KFC, and McDonald's, which have thousands of stores; the second type is tourism-related live streams, like Disney, Huangshan, or some well-known hotels.
==The reason these two types of products can do live streaming is that== ==their e-commerce attributes are higher than local life attributes.== In the first case, users who buy vouchers through the live stream know there is a store nearby within 500 meters that they can redeem at. In the second case, its coverage radius is large enough, like Disney, which can cover users nationwide. Therefore, for these types of products, if they were in Taobao, Tmall, or JD's live streams, I believe they could also sell a lot.
==However, local life has a large number of mid-tail and long-tail merchants.== ==Apart from tourism-related products, how many brands in China serve users through stores with more than 1000 locations? Most are still mid-tail and long-tail merchants. For example, a single hot pot restaurant can only serve users within a 2-3 kilometer radius; how difficult is it to attract users from that radius to a live stream? ====Meituan's moat is precisely these merchants.==
Narrowcast: The live streams I see on Meituan are more of the two types you just mentioned. Can't they succeed?
Long Peng: But when these big brands, like Luckin, need to do activities or launch new products through live streaming, will they choose to do it on Meituan? No. The essence of live streaming is competing for traffic and the ability to distribute that traffic, which Meituan can never compete with Douyin.
Narrowcast: So why does Meituan do live streaming?
Long Peng: I personally think it's a way to create momentum; secondly, it's something that can yield results.
Narrowcast: Meituan says their live streaming aims to capture users within a 3-5 kilometer radius during dining hours or afternoon tea. Is this feasible? Can it differentiate itself from Douyin's life service live streaming?
Long Peng: I have researched some friends, and they indeed enter Meituan when ordering takeout and sometimes buy when they see live streaming. So Meituan should try live streaming, but I believe it shouldn't go all in; at this stage, it should focus more on strictly guarding its POI and competing with Douyin for quality supply on POI.
When Douyin life services first emerged, the most correct thing they did was ensure that the group buying prices for merchants on Douyin were always lower than those on Meituan. Now, many Douyin users see group buying packages recommended in short videos and then go to Meituan and Dianping to compare prices. Meituan should ensure that its POI supply at least aligns with Douyin in this scenario; it must not have the same package priced at 198 yuan on Douyin and 298 yuan on Meituan.
Narrowcast: There was a time when Meituan lost its grip on POI supply. The reasons for this loss were that it reduced its efforts in group buying and that Douyin life services invested heavily, attracting many merchants to Douyin, thus providing Douyin with better supply.
Long Peng: ==Yes. First, Meituan temporarily gave up on group buying; second, merchants found that promoting through Douyin's short videos covered a larger user radius, attracting more new customers. For restaurant merchants, they hope to attract more purchasing users to the store, as this is incremental for the store. Therefore, the package prices posted by merchants on Douyin's POI are often lower than those on review platforms. This has led to a complete defeat of Meituan's POI supply by Douyin in 2021 and 2022, and over time, users have developed the habit of opening Douyin to search before consuming in-store, a habit that initially belonged only to Meituan Dianping.==
In fact, since March of this year, there has been a noticeable feeling that Meituan Dianping is trying to realign its supply from top to bottom. They have used many methods, initially through sales ground promotion and later through reducing fees, which are all very correct. However, starting in August, there has been a noticeable decrease in this effort, and instead, they are heavily focusing on live streaming.
Narrowcast: Before heavily focusing on live streaming, had Meituan already aligned its POI supply with Douyin?
Long Peng: I believe they have aligned a significant portion, and the results after alignment are very evident. As a service provider for Douyin, we can clearly feel that when the supply of the same merchant on Douyin aligns with Meituan, its transaction volume on Douyin may drop significantly.
Narrowcast: In other words, in the local life sector, whether it's the purchasing mentality for group buying vouchers or takeout, Meituan is more mature and robust.
Long Peng: Yes.
- Model Differences
Narrowcast: Regarding the supply of POI on local life platforms, is having more POIs more important, or is the richness and low-price capability of packages on POIs more important?
Long Peng: First, there must be a sufficiently rich number of POIs, meaning cooperative merchants. You need to ensure that there are enough different types of stores and group buying packages within a 3-kilometer radius for users to use your platform; this is a prerequisite. After that, users will compare which platform offers better deals for the same POI because our switching costs are very low; they will buy from whichever is cheaper.
Narrowcast: So Douyin is now comparable to Meituan in terms of the number of POIs, which allows it to enter the next stage of competition, comparing the richness and low prices of packages on POIs.
Long Peng: It's about the same. But there's a difference: Douyin initially did not say it wanted to deploy a certain number of POIs; it gradually attracted a batch of merchants and users through explosive orders and then developed more merchants through these merchants and users. In other words, Meituan follows a ground promotion logic, relying on a ground promotion army to move offline supply online; Douyin relies on single product explosive cases to attract more people.
Narrowcast: How can Meituan regain its supply advantage based on POIs? In other words, why would merchants be willing to provide better POI supply to Meituan than to Douyin? Is it platform subsidies?
Long Peng: Platform subsidies are short-term. I believe more importantly, first, it relies on sales capabilities; second, it depends on what resources the company provides. For example, when Meituan Dianping's sales communicate with merchants, they might say, "If you put quality supply on Meituan, I will take 2% less commission than now," this is hypothetical. Overall, there are many ways to do this.
Narrowcast: This was the approach Meituan took when it was catching up to Douyin life services.
Long Peng: Yes.
Narrowcast: Has Douyin followed up on these methods?
Long Peng: No.
Narrowcast: Why not?
Long Peng: Life services are just one part of Douyin Group's business; it doesn't need to go all in on this. Secondly, Douyin's local life business relies more on service providers; it is difficult for it to operate like Meituan Dianping, where the entire company can direct its efforts to a specific task, and thousands of sales can act in unison. Meituan has a strong ability to concentrate resources to tackle major tasks.
Douyin is an open ecosystem, and its mindset is also very open. Even if it wants to follow up, it must do so through an open ecosystem, establishing rules and regulations to see who can perform better.
Narrowcast: Why are merchants willing to offer lower group buying prices to Douyin life services? Is it because of larger transaction volumes?
Long Peng: There are several reasons. First, the packages merchants offer to Douyin can promote their brands and stores through short videos, which Meituan cannot do; second, in terms of short-term sales volume, Douyin indeed has an advantage. Third, there is a difference in BD capabilities; the BD of Douyin life service providers must rely on this work to increase their income, so they are very strict about product control, whereas Meituan's sales motivation and willingness in this regard are not as strong.
Narrowcast: Merchants have different needs for the two platforms; Douyin focuses on customer acquisition, while Meituan focuses on long-term operations.
Long Peng: Yes.
Narrowcast: Is it possible for Douyin to extend from pre-purchase to post-purchase? And is Meituan now trying to extend from post-purchase to pre-purchase through live streaming?
Long Peng: Extending from post-purchase to pre-purchase requires creating a large traffic pool, which is equivalent to creating another Douyin, and that is unlikely.
Narrowcast: However, extending from pre-purchase to post-purchase is possible, similar to Douyin's current e-commerce, although its mindset may not be as refined, just like the difference in consumer perception between Tmall flagship stores and Douyin e-commerce flagship stores.
Long Peng: I believe that currently, in a city like Shanghai, there are still about 30% of merchants whose supply on Douyin's POI is superior to that of Meituan Dianping. When a day comes that merchants want to do a brand promotion, they will still go to Douyin.
In fact, Douyin has managed to establish its life services without spending money; it could be said that it has built local life without spending a dime, while other companies had to invest hundreds of billions during the group buying war to establish local life. Douyin has done it through service providers without heavily engaging itself.
Narrowcast: Why has Douyin reduced the weight of takeout?
Long Peng: I think it may have discovered that takeout and group buying are very different. From a user habit perspective, takeout is a certain demand; in terms of fulfillment capability, I don't know if you've ordered takeout on Douyin, but most users' feedback is that when they order takeout on Douyin at meal times, it is slow because it doesn't have self-delivery. However, there are some types of takeout that sell very well on Douyin, such as hot pot, cakes, and flowers.
Narrowcast: We have also heard similar cases; during summer, a local merchant selling durians only serves users within a 3-5 kilometer radius, and by doing live streaming on Douyin life services, it can achieve daily sales on Douyin that far exceed those on Meituan. Its fulfillment method is Douyin takeout, which may be third-party delivery or self-delivery. Moreover, from a category perspective, it is not one of the big brands or tourism-related products that are suitable for live streaming.
Long Peng: The core point here is: first, the takeout coverage of these products is broad, possibly covering 10 kilometers or even the entire city; second, users do not have such immediate requirements for these products; if they are delivered late, it is acceptable, but if I order takeout and have to wait more than half an hour, I will be very impatient.
Additionally, there is a difference between takeout and in-store dining. Consumers have a low fulfillment threshold for takeout; they may just pay a few extra yuan for delivery, and the product is delivered to them. But for in-store dining, no matter how close it is, they still have to go there. This helps Douyin's home delivery break through some category boundaries.
Narrowcast: Can such cases occur on Meituan?
Long Peng: It's relatively difficult. First, Meituan does not have that much traffic; second, users on Meituan are more likely to know exactly what they want to buy, like ordering a cup of milk tea or coffee, while on Douyin, they might see something appealing while scrolling and decide to order it directly.
Narrowcast: Is it true that the efficiency of screening and matching quality products differs between the two platforms? For example, Douyin may quickly filter out some quality explosive products, like the durians, watermelons, crayfish, and hot pot we mentioned earlier, due to better data dimensions or content presentation. However, Meituan's logic for screening quality supply is still more geographically oriented.
Long Peng: Yes. Meituan's ability to push a product to users is relatively weak; it is better at presenting a merchant to many users because it has invested heavily in promotions. If it can accurately push a specific dish from a merchant's store to many consumers, it would overturn its underlying logic.
Narrowcast: I now understand a bit why you said earlier that Douyin life services are not concerned about Meituan's counterattacks. One reason may be that Douyin internally believes that e-commerce has proven their model victory, and price wars cannot hinder the victory of the model. The so-called victory of the model includes the logic we just mentioned, such as Douyin's logic of products finding people, while Meituan's logic is more about people finding products and stores. Price wars can only temporarily affect market share fluctuations, but in the long run, it will still differentiate according to the underlying logic, just like in e-commerce.
Long Peng: Yes.
- Upcoming Local Opportunities
Narrowcast: Has there been any change in the business proportions of various platforms in your company over the past few months, especially after some competition between platforms?
Long Peng: Previously, Douyin life services were dominant, and they still are because, after all, Douyin is currently the platform that can help merchants sell a lot of group buying vouchers in a short time. However, starting in August, video accounts can link group buying, creating a closed transaction loop, so in August, our entire business team invested about 20-30% of our time and effort into video accounts.
Narrowcast: What were your thoughts as a service provider when Meituan counterattacked?
Long Peng: Banding together for warmth, working hard together.
Narrowcast: Have you found new directions?
Long Peng: We are expanding to more merchants, and we are doing that. But the main business still focuses on some quality merchants, which everyone is closely watching.
Narrowcast: Because the core consumption logic of group buying is also about finding quality merchants and quality supply, this type of supply is limited and is something everyone is competing for.
Long Peng: Yes.
Narrowcast: No wonder Meituan's killer move is price wars.
Long Peng: Local life is all about price. Whether it's local life or products, as long as it's aimed at the masses, it's all about price. Especially since local life is related to food, with three meals a day, the most common consumption, the platform with the better price will be the one people buy from.
Narrowcast: How are you currently doing with video accounts?
Long Peng: It's very difficult to gain followers on video accounts, and the requirements for service providers are high. Because it relies on mini-programs for sales, this requires service providers to have a mini-program and a complete technical development team; at the same time, doing local life requires a certain amount of time and performance results; moreover, the commission deposit for video account service providers is much higher than that for Douyin life services. With all these conditions combined, there are not many companies in the country.
Narrowcast: These requirements are very similar to those for Douyin life services in the early days, filtering for large service providers.
Long Peng: Yes, I believe that currently, video accounts in local life have not attracted widespread attention, mainly because the transaction performance generated by influencers is still not enough.
Narrowcast: If you were to judge, do you think the development path of video accounts in local life will be similar to that of Douyin life services?
Long Peng: WeChat's working style is different from Douyin's. I believe video accounts will not cultivate an offline BD team; they may be more open than Douyin, which is the first point. The second point is that compared to other platforms, its obvious advantage is that it has a larger traffic pool and a portion of fixed users who only scroll through video accounts and do not use Douyin. If it can meet the needs of this user group, performance will see a significant increase.
Another point is that video accounts do not distribute traffic based on POIs; they distribute based on user tags, which may be more precise.
Narrowcast: Why can video accounts start distributing through tags instead of POIs?
Long Peng: It's not difficult for video accounts to do POIs; they have Tencent Maps, but they just haven't done it yet. At the same time, WeChat has very precise tags for each user.
Narrowcast: However, the traffic distribution based on social attributes may indeed be more precise. Huang Zheng's statement is interesting: God does not know what you need, but your friends do.
Long Peng: Yes. However, video accounts may also eventually distribute based on POIs because local life is based on locality, based on store POIs. Even platforms like Kuaishou, Xiaohongshu, and Amap all do local life based on POIs.
Narrowcast: How are you currently doing on Xiaohongshu?
Long Peng: Xiaohongshu is growing, but slowly.
Our understanding of Xiaohongshu's local life has gone through an adjustment process. Initially, we thought Xiaohongshu users would like different things. Later, we found that there are no specific users for local life; local life is just the 1 billion users or 20 million users in a certain city. Doing local life requires a clear understanding that it is about the general public's eating, drinking, and entertainment. Once the price is high, it won't sell anywhere.
Narrowcast: What opportunities do you think are worth seizing in local life moving forward?
Long Peng: In fact, Amap is also one of our platforms with relatively high transaction volumes. I believe Amap can find differentiation in local life because car owners use Amap quite frequently. If Amap takes a boutique route, capturing quality supply in cities and doing good distribution, I think there are still certain opportunities.
Additionally, I believe there is another opportunity in local life: a company should integrate platform resources in the context of so many platforms doing local life to help merchants with cross-platform marketing and promotion.
In fact, it is very difficult for a local life merchant to connect with so many platforms because it involves details like verification, training, and financial reconciliation for each platform.
Narrowcast: It seems that for service providers, entering a platform at the right time and node is crucial. You also emphasize a term: openness. A platform's degree of openness provides greater opportunities for service providers; otherwise, they have no chance.
Long Peng: Yes, openness is very important to us. Service providers are free-growing individuals; as long as the platform tells us the rules and processes, we will find opportunities to make money and profit, and we will work hard.
Narrowcast: In this process, managing service providers is a high-skill requirement for the platform.
Long Peng: I believe this is caused by the platform's product, not management. For example, Douyin has never managed us since we started cooperating; Douyin just focuses on making the product good, attracting service providers, and letting us think about what to plant in this soil, what to plant this month, and it is entirely our own business.
Narrowcast: You previously predicted that the market share of various platforms in local life would be Douyin 40%, Meituan 40%, Xiaohongshu 10%, and others 10%. Do you still think so?
Long Peng: I don't think so anymore. I believe that no matter how resourceful a company is, to do well in local life, it needs to have the right timing, location, and people; all three are essential. Moreover, the local life market is vast, and players will not miss out, so the final outcome is still uncertain.
Narrowcast: One last question: after so many years at Meituan, what skill have you learned the most?
Long Peng: Management ability, in my view, ==Meituan's management capabilities far surpass many companies.==
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