Can Meituan Live break the ceiling of local life?

Can the launch of live streaming on the Meituan APP change its market trend? This article analyzes Meituan’s market situation through the 618 event, and also provides several simple cases to help you further analyze.

In the past June, Douyin's group purchase delivery business will be moved to Doudian's home delivery platform, and Kuaishou launched a group purchase takeout delivery service. The two short video giants, one advancing and one retreating, show that the local life pattern is quietly changing. Douyin, which directly faces Meituan, seems to be completing the process of going from heavy to light, downplaying takeout, and making the asset-light advertising business the focus of future commercialization. Kuaishou, which is focusing on the sinking market, seems to be interested in strengthening its advantages in the sinking market with its differentiated layout from Meituan.

The attack of short videos on local life has entered a new stage. From the outbreak to the current balance period, all parties seem to have completed the exploration of their respective boundaries.

Among the few remaining variables, the changes in the live broadcast battlefield may have become the key to future success or failure. Starting in April last year, Meituan launched its first live broadcast, and then launched IPs such as Shengaoshou and Baotuantuan. In the financial reports of several consecutive quarters, live broadcasts have also been mentioned by Meituan many times. Meituan has strengthened the moat of live broadcasts for catering, while Douyin, on the other side of the battlefield, has shown a hesitant attitude. During the 618 event last year, Douyin had invited celebrities such as Huang Shengyi, Liu Genghong, and Wang Zulan to participate in the live broadcast of local life on a large scale. However, this year, multiple public information shows that Douyin's local life has walked out of the posture of "no longer rolling".

Judging from the conclusions of many industry insiders, this attitude seems to be a sign of "calling off the troops", which means that in the past year, under the intensive attack of cross-border players such as TikTok, Meituan has maintained its local life base. From the performance of the secondary market, after completing the rebound in performance, Meituan's stock price has also continued to rise, nearly doubling from the low point.

But such a victory seems to be a bit "lucky". To some extent, the consumption trend of low prices and cost-effectiveness is objectively beneficial to Meituan, which has invested heavily in assets. In contrast, the original advantages of short video companies, such as grass-roots mentality and content-based, are gradually marginalized by the mainstream consumer group in the current environment. To break through, a larger amount of investment is needed, which may not be cost-effective for short video companies such as Douyin.

But from another perspective, whether Meituan's success can be sustained, and how to expand into larger areas while maintaining its basic market after its consumption power enters a downward track, seems to be a question that Meituan still needs to answer.

The local life market has returned to calm and seems to have temporarily entered a rare period of peace, but the undercurrents beneath the surface seem to be continuing to exist for a long time.

1. Meituan’s new growth “secret”

Judging from public information, the launch of Meituan Live seems to carry a lot of pressure and urgency. When Meituan launched its first live broadcast in April 2023, Douyin's attack on local life was at its climax. According to 36Kr, the GMV of Douyin's life service business in just 10 months in 2022 was close to 60 billion yuan. In 2023, Douyin's life service business continued to run wild, with a total annual transaction growth rate of 256%. The group purchase GMV driven by influencers alone is close to 100 billion yuan, and the overall GMV far exceeds this value. On the other hand, the super strong traffic and user usage time seem to have given the outside world stronger confidence in Douyin's change of local life. According to data released by QuestMobile, the average daily usage time of Douyin's active users in 2022 was 125 minutes, Kuaishou was 133 minutes, and Meituan was only 16 minutes.

It is in this context that Meituan Live, which was born with multiple purposes such as content development, defensiveness, and filling in the gaps, was officially launched.

Meituan Live did not copy the successful path of Douyin and increase GMV by relying on top influencers and traffic stars. Instead, it focused on official live broadcasts and simultaneously launched two IPs, Shenqiangshou and Baotuantuan. The former focuses on home delivery, while the latter focuses on in-store delivery.

Looking back, official live streaming is obviously a more suitable route for Meituan, which not only saves the cost and dependence on top anchors, but also has a relatively low entry threshold for Meituan, which has merchant resources. However, in comparison, its risks are also very prominent, that is, it seems a bit slow to warm up in the tense battlefield.

However, in the local life market, the traffic logic is not entirely based on the content-first principle emphasized by short videos. The high-frequency nature and strong purposefulness mean that local life does not necessarily need IP to "attract attention." It is under this judgment that Meituan's IP began to expand.

In July 2023, Baotuantuan occupied a large number of Meituan live broadcasts with multiple categories and multiple city sites. According to the exclusive disclosure of Ebrun Power, in December, Meituan further expanded the cities covered by Baotuantuan and began to recruit service providers in 21 cities.

In addition to its own app, Baotuantuan is also working on video accounts. By September 2023, a group of service providers had authorized accounts to enter video accounts to promote Meituan’s live streaming. According to statistics from Ebrun, there are no less than 15 Baotuantuan accounts in operation.

After the live broadcast format was gradually determined, Meituan continued to build a low-price mentality in its strategic direction. According to Huxiu, Meituan continued to use real money subsidies to guide users to shop in the live broadcast room. In order to ensure that the items in Meituan's live broadcast room are "the lowest price on the entire network", Meituan will directly give users coupons and discount coupons.

The low-price mentality has gradually transformed into traffic, thereby further attracting merchants to settle in and leveraging a larger market scale. Data provided by Meituan shows that under this model, users can discover and purchase more quantities and more categories of goods. The average weekly purchase price of old fans of the account in the live broadcast room has quadrupled from the end of March to the beginning of May, and the average number of goods per person has increased from 2.6 to 4.1.

The overall closed loop of Meituan Live is thus formed. In addition to catering, people close to Meituan also revealed that in addition to the existing IPs that are popular and in high demand, for tourist cities, Meituan will open a series of "Eat, Drink and Have Fun in XX" city mixed games through the structural attributes of non-local traffic and the stronger shopping attributes of users, further replicate the existing model, help non-local users make travel strategies before traveling, and local users find cost-effective local stores, and select cost-effective local merchants.

The gradually mature Meituan Live seems to have maintained its basic market and achieved growth through efficient official broadcasts and low-price strategies. The formation of this path is also a response to the current consumer ecology. So has Meituan Live reached the point where it can relax?

2. It’s not time to relax yet

In the ranking of Internet giants in 2024, Ctrip's sudden rise has overturned people's impression of this old Internet platform. In June, Ctrip's market value surpassed Baidu and ranked seventh among Internet giants. As a company that has long competed with Meituan in the fields of hotel and travel, Ctrip's renewed growth is also quite inspiring for Meituan at present.

In summary, in the words of its founder Liang Jianzhang, Ctrip's advantages lie in three points: Ctrip has a solid relationship with high-star hotels and higher profits; Ctrip's out-of-town tours are a higher-dimensional competition; and Ctrip has international imagination.

Public data shows that in 2023, as the focus of tourism and profits began to shift to travel to other places, Meituan's local mid- and low-end merchants still accounted for more than 90% of its turnover, and the number of room nights in high-star hotels was close to 10%.

The reasons why Meituan won in the past seem to be experiencing a certain degree of reversal at the moment. Although this situation has not occurred in the more vertical field of food delivery, it seems to be a hidden worry.

For Meituan Live, the existing categories focus on top chain brands and city chain brands.

In comparison, the long tail of local life, small and medium-sized businesses and mom-and-pop stores, are still relatively marginal to live streaming. The extremely high number of small and medium-sized businesses focuses on the business of a relatively fixed customer base within three to five kilometers of the local area. Due to geographical restrictions and the limitations of the store's traffic carrying capacity, it does not match the capability model of live streaming. To a certain extent, small and medium-sized businesses neither need nor can afford live streaming businesses with efficient traffic capacity and brand advertising capabilities.

Returning to the top brands, Meituan Live's pursuit of low prices has also made its content not rich. If you look closely, you can see that Meituan Live has relatively limited appeal to directions with strong brand power. Typical representatives are scenic spot tickets or local specialty destinations. In comparison, there are already hot-selling products on Douyin, such as Zibo BBQ, Tianshui Malatang, and multiple travel destinations, but for Meituan, such directions seem to be rarely discovered yet.

An industry insider once said radically that the embarrassment of Meituan Live is that it cannot provide brand marketing and new customer acquisition capabilities for big brands or merchants in categories such as hotels and travel that need to do live broadcasts, while a large number of small and medium-sized merchants on the platform do not need live broadcasts that much.

At the moment, how Meituan Live, whose basic foundation has been gradually strengthened, can break through to a larger direction seems to have become an important focus of Meituan's development in the next stage.

3. The “Sword” Hanging Over the Industry

According to a report from China National Radio, in 2023, domestic catering industry revenue exceeded 5.2 trillion yuan for the first time, setting a historical high, up 20.4% year-on-year. The growth rate of catering revenue was 13.2 percentage points higher than the growth rate of total retail sales of consumer goods.

But at the same time, competition is more intense, more players are entering the market, and reshuffles and reorganizations are intensifying. According to Qichacha data, in 2023, the number of newly registered domestic catering companies was 3.1869 million, and the number of registrations and revocations reached 1.4002 million, more than twice the number of registrations and revocations of catering companies in 2022, setting a new record for the number of registrations and revocations of catering companies since 2020.

As profits enter a narrow door, the form of innovation will also be affected to a certain extent. The leading enterprises such as Xiabu Xiabu have stated to the media that compared with the live broadcast business, the company will focus more on adjusting store types and building private domain traffic in 2023. This change also reflects the industry's portrayal of the actual situation.

Of course, Meituan Live still has reason to be optimistic. According to 36kr's previous report, in July, when the first-level entrance of live streaming was just launched, Meituan Live's monthly GMV was about 500-600 million, with a month-on-month growth rate of 20%. However, it quickly rose to 1-1.2 billion in August, and live streaming rooms with more than 100 million views appeared one after another. By October, the monthly GMV exceeded 2 billion yuan.

In the first quarter of this year, Meituan's revenue reached 73.3 billion yuan, a year-on-year increase of 25%; the number of platform users and merchants both hit historical highs.

Behind these figures is Meituan Live's accurate prediction of current consumption situations, but insufficient consumption power is a challenge that the entire industry needs to face at present. Blindly competing at low prices will also fundamentally affect the enthusiasm of industry players. According to media reports, the rules of the Douyin Life Service Learning Center show that in 2023, the platform's service fee refund ratio for catering merchants has been reduced from 50% in 2022 to 5%, and the preferential policies for new merchants have also been tightened. If the industry enters a shrinking negative feedback loop, it will undoubtedly have a greater impact on the head.

As the leading platform in the industry, Meituan may need to think more about how to further break through the ceiling and build a more advantageous business model.

Author: Ying Mu; Editor: Jiu Li

Source: WeChat public account: "New Entropy (ID: xinshangxz)"