In the presence of a market, competition inevitably arises. It is no longer news that TikTok is aggressively entering the local lifestyle market with the intention of replacing Meituan.
As the internet industry enters the era of stock competition, the local lifestyle market is one of the few tracks with significant room for growth. Data from iMedia Consulting shows that the online food delivery market is expected to reach 1.7469 trillion yuan by 2025, the fresh e-commerce market is expected to reach 540.3 billion yuan, and the internet community service market is expected to reach 345.5 billion yuan, with the local lifestyle service scale surpassing 2.5 trillion yuan by 2025.
Around this large "gold mine" of local lifestyle, internet companies such as Meituan, Ele.me, and Ctrip have engaged in multiple rounds of competition, with Meituan almost winning outright. Currently, TikTok's aggressive move into the local lifestyle market has reignited the battle.
TikTok is encroaching on Meituan's "pocketed treasure."
As is well known, Meituan is the "big brother" of local lifestyle services, with its business covering various fields such as food delivery, catering, hotels, tourism, and movie ticketing, contributing to impressive annual performance.According to financial report data, Meituan's core local commerce revenue in 2023 was 206.9 billion yuan, a 29% increase from the 160.759 billion yuan in the same period of the previous year. Operating profit was 38.7 billion yuan, a 31.2% increase from the 29.5 billion yuan in the same period of the previous year; the operating profit margin increased from 18.4% in 2022 to 18.7%.
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Meituan has a very strong accumulation of experience and strength in the field of local life services, which can be said to be a comfort zone. However, this status has been disrupted by Douyin.
In 2018, Douyin first tried local life, linking to direct traffic to offline stores; in 2021, Douyin established the takeout business "Xin Dong Takeout" and officially entered the market; three years later, Douyin's life services have delivered a dazzling report card.
Douyin Life Services released the "2023 Annual Data Report", which shows that in 2023, the total transaction volume of the Douyin Life Services platform increased by 256%, with stores covering more than 370 cities. Compared to last year, the transaction volume of short videos on the platform increased by 83%, and the transaction volume of live broadcasts increased by 5.7 times.
Some core data of Douyin's local life services are also dazzling. In 2023, the number of service providers settled in Douyin increased by 1.79 times, the number of merchants cooperating with service providers increased by nearly 2 times, and the total transaction volume of service providers increased by nearly 8 times. The number of group buying talents settled increased by 2.89 times, with more than 580,000 talents obtaining stable income here, and the total transaction volume of talents increased by more than 2 times.TikTok's surprise attack has put Meituan under unprecedented pressure.
TikTok on the offensive, Meituan on the defensive, each with their own strategies.
With TikTok at the gates, Meituan is staunchly defending its stronghold, each employing their own tactics for attack and defense.
TikTok's offensive is characterized by leveraging its vast user base and strong content promotion capabilities to attract more merchants to join, offering a wider range of local lifestyle services, and enticing user consumption through promotional activities.
In facing merchants, TikTok offers exposure to hundreds of millions of users, helping businesses manage their traffic and effectively increase foot traffic in stores. For consumers, TikTok uses its unique social features to continuously roll out various discounts and promotional activities to attract users to participate in consumption. For example, TikTok's lifestyle services have launched a "Off-Peak Specials" section within the group buying channel, offering group buying packages and services that can only be used during specific time slots, with a low-price strategy that has proven to be very effective.Meituan's defense is reflected in the adjustment of its organizational structure to integrate resources, improve internal efficiency, and make long-term plans for "warding off enemies". At the same time, it has reactivated the "low-price strategy" and made a high-profile layout in the content field to precisely guard against short-term raids.
In the first half of this year, Meituan carried out four organizational adjustments. The main content was to clarify the reporting structure and functions of relevant staff, and to integrate Meituan's platform, in-store business group, home delivery business group, and basic research and development platform into a "core local business", advocating for collaborative development.
At the same time, Meituan launched a "special group buying" section to compete with TikTok on low prices to win back merchants and users, and increased its "live broadcasting" efforts to make up for the shortcomings in content, providing better services and creating more value for merchants and users. According to publicly available online information, insiders at Meituan have revealed that the company has allocated billions of budget to support live broadcasting.
The defensive effects are also very obvious. According to financial report data, in the first quarter of 2024, Meituan's core local business achieved an operating income of 54.626 billion yuan, a year-on-year increase of 27.4%.
To this day, the local life battle between TikTok and Meituan is still spreading.Competition knows no bounds, both sides want to win.
The battle for local life services appears to be an offensive by Douyin and a defensive stance by Meituan, but in reality, both have aspects of offense and defense. The significance of this war lies in the fact that it is not easy for Douyin to catch up, but the lucrative profits are ahead, and Douyin must fight. As local life services are the foundation of Meituan, Meituan must win.
In this context, Douyin and Meituan are actively expanding their service boundaries.
Douyin's advantage lies in its vast user base and highly sticky content ecosystem, which can be used to build a complete local life service system around these users' local service needs as a competitive barrier. However, local life services require a strong supply chain and offline service system, which is where Douyin falls short.
As is well known, a strong supply chain can ensure the high quality and timeliness of products and services. Douyin, as a short video social entertainment platform, has been striving to improve the local delivery, service delivery, and order fulfillment service links, actively working to close the loop of its local services. However, compared to Meituan, it still appears "immature".Meituan's advantage lies in its deep cultivation of local life for many years, accumulating a strong core resources such as merchants and instant delivery, forming a powerful merchant system and delivery network. At the same time, Meituan actively carries out content layout to fill the content gap.
On the merchant side, Meituan has accumulated a large number of local merchant resources through years of operation and development. These merchants have obtained good exposure and order volume on the Meituan platform, and have high activity and loyalty. On the consumer side, Meituan actively builds a content ecosystem of live broadcast, short drama, short video, etc., to attract users to stay, browse and participate in interaction on the platform, thereby increasing user stickiness and retention rate.
Douyin is entering the local life service, and Meituan is also laying out in the field of video content. Both sides are increasing investment and directly hitting each other's core areas, further intensifying the battle of local life.
While Douyin successfully expands into the local life service field, short video platforms such as Kuaishou and Video Account also start to be restless, and they are also increasing investment and layout in the field of local life service.Kuaishou's Senior Vice President and head of the local life business division, Xiao Gu, stated: "In 2024, Kuaishou will introduce a platform subsidy of one billion and a traffic flow of one hundred billion, aiming to create a new frontier and additional quantity for online retail consumption services. The goal is to become the largest incremental platform in the group buying consumption market this year."
Coincidentally, the Video Account has released policies for local life merchants to join, including two first-level categories of catering and travel, as well as nine second-level categories such as full-service meals, fast food, baked snacks, accommodation, and scenic spots. This marks the end of nearly a year of testing and a full opening for local life merchants to join.
TikTok, Video Account, Kuaishou, and other "latecomers" are vying to develop differentiated local life services by leveraging their own advantages, hoping to seize more market share from established platforms like Meituan and Ele.me. A new round of "breakthrough battles" has thus begun. However, in new markets and fields, expanding one's reach is not easy, and these "latecomers" have a very obvious supply chain weakness.
In summary, TikTok has opened a "gap" in local life, triggering the attention of platforms like Kuaishou and Video Account to the field of local life services, and they are striving to provide more and better quality local life services to attract user traffic and enhance platform value. The situation of two tigers fighting may evolve into a scramble among many contenders...