Group coupons, store visits, and cancellations have become a daily routine for contemporary young people, just like buying clothes or mobile phones online. Behind such daily consumption, the long-stable life service industry is once again filled with smoke. What stirred up the spring water was Douyin and other latecomers to the Internet.
According to media reports, the GMV of Douyin’s life services will increase 7 times in 2022, and its GMV will reach 100 billion yuan in the first half of 2023. Life services have become another major business after Douyin’s e-commerce.
Recently, Douyin’s life service has been “reorganized” again and upgraded its operating model. On September 1, Douyin Life Service held a regional service provider business launch conference, marking the official launch of its regional service provider business. In addition to directly operating cities, it upgraded its operating model to a new city-specific marketing model of "one city, one policy" .
Zhu Shiyu, president of Douyin Life Services, said that since June this year, the platform has successively removed thousands of service providers that did not meet the requirements. "In the future, we will provide richer policy support for high-quality service providers who deeply explore the local market, serve customers with heart, and focus on long-term value. The value of the Douyin Life Service Provider license will be ten or a hundred times higher than today."
What is the purpose of this upgrade of the operating model? What changes will this operating model bring to the turbulent life service market?
Attack the sinking market
In the past two years, Douyin has continued to make efforts in the field of life services and gradually penetrated all levels of the market. Now it is time to accelerate its entry into the sinking market.
In August 2023, in order to help businesses in sinking cities further improve their operating results, Douyin Life Services established a regional service provider business. On September 1, Douyin Life Services held a regional service provider business conference to interpret new possibilities for regional service provider cooperation and explore new business operating ecology.
According to the plan, after the regional service provider business is officially launched, Douyin Life Services will gradually promote the "commercial service cooperation" marketing model to hundreds of cities across the country, through the "few but fine" service provider access mechanism, "one city" With the operation mode of "one policy" and greater resource allocation, we aim to target the sinking market mainly in third- and fourth-tier cities and strive to create a number of life service cities that integrate new business formats.
Service providers have always been key partners of Douyin’s life services. As the business continues to advance, the cooperation model between the two parties has been upgraded through several iterations, and has gradually moved from extensive to refined. This change in the way the city operates and the opening of regional service provider business is one of the manifestations of refinement.
The upgrade of this model is ultimately to sink the "starry sea" of market life services.
On the one hand, China’s life service industry has vast space, especially the online market.
On August 15, the National Bureau of Statistics released service retail sales data for the first time. Judging from the data on per capita consumption expenditure of Chinese residents, service consumption accounts for more than 40%.
According to iResearch Consulting data, China's local life service market size was 19.5 trillion yuan in 2020 and is expected to grow to 35.3 trillion yuan by 2025, with online penetration increasing to 30.8%.
On the other hand, due to its own growth and industry competition needs, Douyin Life Services has to accelerate its penetration into lower markets.
Two years have passed and Douyin’s life service business has achieved certain results. Data shows that the GMV of Douyin Life Services will increase sevenfold in 2022. Currently, Douyin Life Services has covered more than 370 cities and has more than 2 million cooperative stores.
In order to further develop, the sinking market has become a battleground. Data shows that there are about 500 million people in the consumer market in China's first- and second-tier cities, while the number of consumers in lower-tier cities is about 1 billion, accounting for two-thirds of the entire domestic consumer market. According to rough statistics, there are nearly 300 prefecture-level cities, 2,000 county towns, 40,000 towns, and 660,000 villages in the sinking market.
At the same time, since the "Thousand Regiments War" in 2010, the market structure of China's life service industry has stabilized after a series of competitions. With the entry of new platforms such as Douyin, the life service industry has become turbulent again. Compared with first- and second-tier markets, the e-commerce penetration rate in sinking markets is lower and the business prospects are greater.
Taking catering services as an example, data from QuestMobile shows that in April 2023, the penetration rate of food delivery services across the entire network was 15.6%. The users were mainly young groups in first-tier and new first-tier developed cities, and the penetration rate among sinking markets and people over 40 years old lower.
For Douyin Life Services, the combination of "sinking market + service provider" is likely to be an opportunity for it to overtake in the life service track.
An inevitability about increment
Why is "+ service provider" necessary?
It is inevitable for Douyin Life Services to launch regional service provider business. In addition to the growth needs of Douyin Life Services itself, merchants in the sinking market and service providers with market sinking plans also have their own incremental needs.
On the one hand, for businesses, as Douyin occupies more and more users and takes up more and more of users’ usage time, it has become inevitable to enter Douyin. Data shows that as of June 2021, Douyin has more than 600 million daily users and has become an important gathering place for users.
But unlike other platforms, Douyin’s life services are unique. It is not only an e-commerce platform, but also a content platform. Content is the root of e-commerce. This means that in order to provide good life services on Douyin, merchants must not only know how to do e-commerce, but also know how to create content.
Most merchants do not have experience in content planning and communication, and the investment and trial and error costs prohibit many merchants. For example, some do not know how to package products and services into online hits, and some do not have enough time and money to build their own. Short video and live broadcast teams, some don’t know how to cooperate with experts...
"Many businesses in third, fourth and fifth tier cities have a high level of recognition for Douyin and they are very interested in doing business on Douyin, but most people want to do it but don't know how to do it," Zhu Shiyu also mentioned at the event. arrive. The launch of the regional service provider business is to allow service providers to be stationed in most sinking cities to better serve local grassroots businesses.
On the other hand, as the business boundaries of the platform expand, many service providers are also expanding their business boundaries and trying to follow Douyin's footsteps into the sinking market. However, the unfamiliar and fragmented market makes them unable to grasp the key points. I don’t know where to develop, and I don’t know how to seek business cooperation.
With the power of the platform, Douyin Life Service can quickly identify key points and opportunities and build a bridge of cooperation between merchants and service providers. "Service providers are very important to the development of the entire life ecology. At present, the penetration rate of service providers into the market is more than 50%, and it will be higher in some areas." Tang Xueshu, vice president of Douyin's life service provider business, said.
He mentioned that for sinking markets, Douyin Life Services encourages regional service providers to set up professional teams to independently complete the entire chain of market education, customer development, and customer service in the city where they are located. "The platform will provide comprehensive empowerment and support in terms of product functions, policy preferences, resource docking and authorization."
In recent months, Douyin Life Service has worked with regional service providers through platform grassroots lists, service provider videos and other advantageous resources to create 30 sites related to the characteristics of sinking cities, including good summer places, urban niche check-in spots, and food guides. hot activities, such as cooperating with local governments to create the "Reluctant Lijiang" IP, promoting Lijiang city promotion, providing a rich and diverse supply of products and routes for destination travel, and boosting new consumption in Lijiang's cultural tourism.
In the second half of 2023, Douyin Life Services will launch urban investment fairs for service providers in dozens of cities across the country, using the event to build momentum to quickly “match” service providers and merchants, creating more cooperation possibilities. Find the right merchants through high-quality leads, association linkage, government-enterprise cooperation, etc., and obtain merchant resources in each city through platform integration capabilities.
A more suitable "business-service cooperation" model will not only allow Douyin's life services to penetrate more smoothly into lower-tier markets, but also allow its business ecosystem to pay more attention to long-term value.
A win-win cooperation
This upgrade of the cooperation model and the construction of the "commercial service cooperation" model have enabled Douyin Life Services, merchants, and service providers to jointly launch a three-party joint effort to tackle the sinking market.
In this battle, Douyin Life Service, as a platform, links consumers, merchants, service providers, etc. to help consumption in lower market areas.
As planned, Douyin Life Services will continue to carry out a wide range of service providers and merchant empowerment. For example, special marketing activities have been carried out in 100 cities including Shaoxing, Jiaxing, and Luoyang, and the government and high-quality merchants have been linked to issue consumer vouchers and coupons to users, promoting merchants to complete their understanding of and cooperation with regional service providers, and assisting in revitalizing regional consumption. vitality.
The power of Douyin Life Services to leverage the sinking market comes from its existing advantages in users, marketing, and service provider resources:
1. User and marketing advantages. Douyin has a broader traffic base in lower-tier markets. Coupled with its unique personalized push mechanism, Douyin’s marketing is more targeted and efficient. For merchants, it is not only online Management is also brand management;
2. The resource advantages of service providers and the development of content, e-commerce, etc. have allowed Douyin to cultivate a group of service providers with content production and marketing capabilities and understanding of users and marketing. By selecting the best from the best, the future service provider system will be more Professional and mature.
In this way, Douyin Life Service has created two ecosystems, one is the consumption ecology of users-Douyin-merchant, and the other is the industrial ecology of merchants-Douyin-service providers. The two ecologies interact with each other to realize merchants, platforms, and services. A win-win situation for business.
On the one hand, business increment and brand win-win based on user growth and marketing.
The survey shows that opening a store on Douyin has now become a priority for many merchants, and "looking at the coupons on Douyin first before entering the store" has become a habitual action for consumers. According to Zhu Shiyu, this year, more and more catering, wine and travel, and comprehensive businesses have reached the business scale of traditional life service platforms and OTA platforms in 3 to 6 months after launching Douyin Life Services.
Especially with the help of service providers, merchants are growing rapidly. For example, with the help of Douyin regional service provider "Jiaxing Sanhei Culture Media Co., Ltd.", the brand "Langlang High Freshness" product sales exceeded 1 million yuan in just 25 hours after it went online, becoming Jiaxing POI (full name Point Of Interest, that is, points of interest, videos can be directly linked to the store's POI) is the most popular, and subsequent traffic continues to grow.
Douyin’s content can be converted into orders and sales growth, as well as brand effects. "The content on Douyin will increase users' awareness of the brand, but only a part of it will be directly converted into write-off orders, and a very large proportion will be spilled over. The average spillover ratio can reach 1:1." Zhu Shiyu once said at the event express.
On the other hand, it is a win-win situation for service providers based on merchant growth.
Service providers have become an important part of Douyin’s life service ecosystem. At the Douyin Life Service Ecological Partner Conference in April this year, Li Wei, vice president of Douyin Life Service Business, introduced that its service provider business is booming: in terms of quantity, service providers are developing rapidly at a month-on-month growth rate of more than 20%; scale On the Internet, the transaction scale undertaken by service providers has grown by more than 30% every month.
With the opening of regional service provider business, Douyin Life Service will help service providers sink their market.
Tang Xueshu, vice president of Douyin’s life service provider business, said: “This is not a short-term business this year, but a business for next year, the year after, or even longer term. We hope to work with service providers to make the country’s life service ecology in Douyin built on.”
According to reports, Douyin Life Services will focus on supporting service providers’ business systems in the region, conduct localized management, provide exclusive marketing plans for local merchants, make up for the deficiencies in store information dissemination, and make business and service cooperation in lower-tier markets present a 1+ The effect of 1>2 allows merchants to focus on operations and service providers to focus on operations, achieving a win-win situation for consumers, merchants, service providers and platforms.
Conclusion
The life service market, which has been stable for more than ten years, is ushering in some new changes.
Different from the last pure "networking", this time the situation is more complicated: on the one hand, the competition in the first- and second-tier markets and the third- and fourth-tier markets are parallel, and the two have different degrees of digitalization; on the other hand, the short video and live broadcast The rise has enriched the breadth of competition and made competition more difficult, both for merchants and platforms.
The development of Douyin's life service regional service provider business is an intensive cultivation in the sinking market, and it is also an ecological reorganization in the life service market, which makes the relationship between merchants, service providers and platforms closer and strengthens the foundation of symbiosis and win-win. The competition between platform enterprises is also a competition between the platform’s internal and external capabilities and advantages. It remains to be seen what the outcome will be.