Faced with the strong challenge of Douyin in the field of local life, Meituan seems to be ready to face it head-on.
Recently, Meituan has been making frequent moves. At the beginning, Meituan launched the slogan of "limited-time subsidies, low prices on the whole network" under the "special group purchase" under the food page of the Meituan app. In this regard, an industry insider analyzed, "Meituan had a flash sale package before, but this time the special group purchase is guessed to be some kind of operational integration."
On April 17, Meituan launched a group-buying delivery business in more than 20 cities across the country, integrating the two businesses of takeaway and in-store for the first time; The takeaway live broadcast has penetrated into the hinterland of Douyin.
These moves are seen by the outside world as Meituan's "counterattack" in the face of Douyin's competition in local life.
1. Douyin enters the market strongly, and Meituan fights back
Starting in 2021, in order to further tap user needs and commercial value, Douyin has increased investment in and promotion of local life businesses.
Before the epidemic, Douyin's testing of the local life service field was basically in a tepid state. However, since Douyin launched the group buying business, the "lowest price on the whole network" has gradually become popular, and Douyin group buying has become a new option for young people to choose discounts for dining in stores.
The model of combining low-priced hot items and shallow discounts to attract users to place orders has greatly increased the growth momentum of life services on the Douyin platform. According to 36 Krypton, in October 2022, the GMV of Douyin life services has exceeded 10 billion.
The rapid rise of Douyin in the local life field obviously impacted the market of Meituan. According to "Latepost" report, the real turnover target of Douyin Local Life in 2022 is close to 400 billion yuan. Among them, the target of in-store and hotel travel business is 290 billion yuan, which is similar to the level of Meituan-related businesses in 2021. At the same time, according to the estimates of many analysts, Douyin’s in-store catering sales in 2022 will already be close to half of Meituan’s.
In order to cope with the competition of Douyin, Meituan, which is calm on the surface, is actually ready for battle. On October 30, 2022, Meituan announced a new round of organizational upgrading through an internal letter. In terms of organizational structure, Meituan upgraded the in-store business group to the in-store business department, and merged the three business lines of in-store hotel and travel, in-store catering, and in-store integration into one business line. At the same time, Meituan has also added a short video business line and placed it alongside the e-commerce business line. These adjustments reflect Meituan's emphasis on in-store business and short video business.
In terms of marketing strategy, Meituan's in-store business group also set the strategic focus for 2023 as "more merchants and better products, lower prices, and a more efficient operating system." In 2023, Meituan does not have too many requirements for revenue and profit. The goal of the in-store business department is to achieve a 60% increase in GTV. The main task is to retain and increase merchants and increase transaction volume. In order to achieve this goal, Meituan has also increased its incentive plan for merchants. For example, if you reach the GTV target, you can get rebates.
Most importantly, for C-end users, Meituan launched the slogan of "limited time subsidies, low prices on the whole network", and competed with Douyin for the label of "best price on the whole network".
The low price is the secret to Douyin’s speeding up the local life track. When Meituan once again wields a big knife to "cut" prices, a new round of subsidy wars seems inevitable.
2. Price war or break, differentiated competition
Meituan's determination to try to win back users' minds with a low-price strategy is already evident.
After updating the Meituan APP, the Hong Kong Stock Research Institute found that the "E-Commerce" tab at the bottom of the home page has been replaced with the "Video Earning" tab in the middle. After clicking on the video, you will receive cash that will be directly credited to your Meituan or WeChat account. Red envelope incentives.
With the launch of the short video portal, Meituan has undoubtedly entered the hinterland of Douyin, and learning Pinduoduo to fight the subsidy war is a signal for it to challenge Douyin.
However, Douyin may not meet this round of challenges. In 2023, the proportion of Douyin's service fee return to merchants is already decreasing. This may be because with the optimization of epidemic prevention and control, the offline passenger flow has gradually recovered, and the attractiveness of online discount orders and "commission rebates" to merchants has been minimized.
In fact, the discount rate between Douyin and Meituan has gradually approached. According to data from Zheshang Securities Research Institute, from September 2022 to February 2023, the Douyin/Meituan discount rate ratio will narrow from 8.3/8.9 to 8.7/8.8.
This also means that the competition between the two parties is entering a brand new stage: differentiated competition - as players in the local life field, there are still big differences between Douyin and Meituan.
On the one hand, Douyin takes content as the core driving force, and a large number of shop explorers, food bloggers, travel guides, etc. have emerged on the platform, providing users with real, interesting and valuable consumption references; on the other hand, it is based on service providers. An important part is the introduction of a service provider system to help merchants enter the platform, shoot videos, mount links, and deliver traffic.
The advantage of Meituan lies in its strong offline distribution and operation capabilities, as well as a larger base of merchants and users in the local life field.
In the future, the competition between Douyin and Meituan in the field of local life can be analyzed from two aspects:
One is the differentiated competition of traffic sources and distribution methods.
The traffic of Douyin mainly comes from the recommendation of short video content. When users watch the video, they may see a shop-exploring video with a group buying link, which will generate consumption desire. This method relies on the accuracy of the algorithm and the attractiveness of the content, and is more suitable for random consumption and low-frequency consumption scenarios.
Meituan’s traffic mainly comes from users’ active searches. Users can search for desired products and services in various categories on Meituan according to their own needs and preferences. This method relies on the efficiency of search and the perfection of classification, and is more suitable for purposeful consumption and high-frequency consumption scenarios.
The second is the differentiated competition of merchant services.
Douyin mainly relies on the service provider system in terms of merchant services. Service providers are responsible for helping merchants settle on the platform, shoot videos, upload links, and deliver traffic. This method allows Douyin to quickly expand its business coverage and categories.
In terms of merchant services, Meituan mainly relies on its own local promotion team, which is responsible for expanding merchant resources, providing technical support, and supervising merchant behavior. This approach allows Meituan to maintain control over merchants and service quality.
On the whole, Meituan will continue to give full play to the advantages of search traffic, provide users with more information and choices by optimizing search engines, improving the classification system, and improving the comment system. Assessment to improve the ability to expand and maintain business resources. Douyin keeps catching up in the field of local life, continues to give play to the advantages of content traffic, and provides businesses with more exposure and conversion opportunities through video, live broadcast, SMS and other methods, and at the same time strengthens the management and incentives for service providers , Improve merchant service quality and user satisfaction.
In any case, in the local life track, when the subsidies are exhausted, "internal strength" is the key to the players' victory.
Source: Hong Kong Stock Research Institute