How do you play the local life services that platforms must compete for?

Meituan’s adjustments have caused major brands to think about marketing. Let’s read this article to find out.

Recently, Meituan’s food delivery division announced a new round of organizational adjustments in an internal email, which means further deepening of the adjustment of Meituan’s local core business structure.

Meituan’s changes come from external competition. Since last year, local life services, which have been a "battlefield" in the business landscape of various platforms, have been strongly impacted by the actions of other platforms. Its stock price has continued to decline, causing Meituan to feel a huge sense of crisis.

QuestMobile data shows that in April 2023, the penetration rate of the local life comprehensive service industry in the entire network was 38.4%. Even as an important supporting sector, the comprehensive service (mainly group purchasing) has a penetration rate of less than 40%, which means that local life still has a large room for growth.

Data source: QuestMobile

Platforms that entered the market early are making steady efforts and actively responding to new competitors, while new social media platforms also hope to get a piece of the pie in the local life service business.

As the intermediary link between merchants and users, what marketing tricks do these platforms use to achieve a win-win situation for the platforms, merchants, and consumers?

1. The unstoppable low-price involution

According to the latest data released by Nielsen, rational consumption with careful budgeting has become the mainstream in China's consumer market.

The overall proportion of "revitalizing type" and "strapped type" consumers who care about low prices increased from 20% to 35%; the proportion of "budget-conscious" consumers who value cost-effectiveness and compare prices on multiple platforms increased from 28% to 30%.

If a platform focusing on the local life track wants to capture the minds of consumers, a low-price strategy is essential. As an early entrant in this track, Meituan has now accumulated a large number of users with its rich merchant resources and vertical business formats.

The financial report revealed that Meituan has been profitable for four quarters in 2023, with a full-year net profit of 13.857 billion yuan. However, it is worth noting that the growth rate of its order volume is higher than the growth rate of revenue. The mismatched growth rate means that Meituan is using low prices in exchange for order volume.

Meituan launched a "special group purchase" activity at a low price, cooperating with merchants to provide users with multiple discounts, in exchange for an increase in orders. The same is true for "Pinhaofan". In addition, live broadcast sales of group purchase coupons are also one of the main initiatives of the platform. "Sharpshooter" provides users with the opportunity to stock up coupons through merchants' own broadcasts and official live broadcasts.

While merchants make profits and consumers benefit, Meituan is also constantly consolidating the mindset of "daily low prices".

Another page on Dianping.com that also focuses on low-price strategy is Douyin.

According to public data, the number of overlapping users between Meituan and Douyin is as high as 320 million, with an overlap ratio of 81%, which means that the competition between the two platforms is more intense.

Judging from the page settings on the site, Douyin has also established special group buying, live broadcast selection, free trial and popular list entrances on the group buying page, and the content is almost the same as Meituan.

Douyin’s group buying page has evolved from short videos to e-commerce and then to local life services. Douyin’s model of “online content planting + offline consumption” is different from traditional local life services.

Douyin can use brand accounts to drive incubated accounts to conduct matrix live broadcasts, helping businesses complete digital transformation. For example, products such as digital human live broadcasts can leverage social media traffic for businesses in a low-cost, high-duration manner.

According to the data released by Julela Suansu, Douyin's overall local life GMV increased by 256% in 2023, among which the catering GMV increased by 191%, and the comprehensive GMV of in-store increased by 330%, which are outstanding results.

In addition, in terms of low prices, Ele.me also uses large coupons on membership day to attract users to place orders. Kuaishou also places "discount group purchases" in the middle of the page and launches the "Dare to Compare Prices" service to connect with many chain brands.

However, in comparison, most consumers still prefer Meituan.

On the one hand, Meituan has always been “people looking for stores”, while Douyin and Kuaishou are still “stores looking for people”; on the other hand, the write-off rate is also very important. According to estimates by Bocom International, Douyin’s local life write-off rate is about 60%, and Meituan’s write-off scale is about 3 to 4 times that of Douyin.

Douyin and Kuaishou, which have put a lot of effort into low prices, still need to find new growth points.

2. Various local activities

To provide good local life services, in addition to the low-price mentality, it is also inseparable from the dialogue between the platform and a city, emphasizing the emotional resonance of platform users.

The most basic thing is to focus on scenic spot business. As a key project in local life services, scenic spot travel not only carries the task of boosting the local tourism economy, but is also one of the ways for a city to promote local culture. Therefore, the platform usually cooperates with the local government to jointly create activities.

For example, this spring, Douyin’s life service’s “Douyin Heart-Stirring New Product Day·Spring Season” not only has more than 30 live broadcast channels with a low-price strategy, but also activities focusing on the scenery of various places “There will be no such scenery after this spring”.

Douyin also launched a flower-chasing map, presenting users with scenic spots in various places during the flower season.

In addition, Douyin's "**DOU is a good scenery" cooperated with Hubei Culture and Tourism, using the theme of "flower viewing" to attract the participation of key rural cultural and tourism businesses, focusing on Douyin live short video promotion, and promoting Hubei cultural tourism online and offline.

Kuaishou, which has great appeal to new users, also brought new traffic to the Tangshan Nanhu Spring Festival Lantern Festival through live broadcast.

The highly interactive and sticky approach also brings merchants a higher redemption rate, achieving efficiency improvement from starting with 0 fans to GMV payments of tens of millions.

In addition to scenic spots, localized marketing is also an important method.

The difference between local life services and conventional e-commerce products is that users' consumption scenarios are mainly concentrated offline. The platform communicates with the people of this city and conducts localized marketing to create emotional connections among people.

Among all the platforms, Ele.me’s “This drink is on me” is one of the projects that has done well.

The event has gone through four seasons and received a good response in many cities including Beijing, Harbin, Qingdao, etc. In the latest spring event, Ele.me and Hubei Culture and Tourism provided 200,000 cups of milk tea benefits.

The event not only cooperated with new tea brands such as Bawang Cha Ji, but also attracted the participation of local new and old brands such as Dehualou and Wang Yuxia.

Each milk tea cup cover can be transformed into a cherry blossom clip and cherry blossom viewing tips. Hubei also uses milk tea to convey the warm invitation of "This cup is on me" to people across the country.

Interesting peripherals are just an interesting part of this project. What’s more important is that it is disseminated locally in different cities with different themes, in line with the spiritual temperament of each city.

At the beginning of autumn last year, Ele.me’s “This cup is on me” campaign focused on Buddhist culture, attracting a large number of consumers with the social sentiment of lying down and not curling up, creating a new record in milk tea sales on the platform.

During the explosion of popularity in Harbin, Ele.me also used city postcards to attract the public's attention. If localized marketing is done well, it can often affect the emotions of the residents of a city and is an opportunity for local businesses.

Taking the event offline can also bring more interactions to the brand and is also a very effective marketing option.

3. On-site strategies that emphasize experience

Of course, there are also many platforms whose businesses are not offline, so they focus on on-site activities.

For example, Gaode and Xiaohongshu both take advantage of the platform's own attributes and use fun activities to drive merchants to make profits together, while also bringing users a richer experience.

In March 2023, Amap announced its official merger with Koubei, the in-store business of Alibaba Group's local life. In recent years, Amap has also cooperated with major merchants to bring users a good consumer experience.

The Amap APP has always provided guidance and recommendations for nearby stores, but attracting user ratings is also an important indicator.

Therefore, in order to encourage users to post more real and high-quality merchant reviews, the platform has launched an exclusive rights product "Gaode Invitation" for Gaode experts, from which merchants can also obtain higher user reservations and navigation to store rates.

In addition, Gaode also has map notes, city walk routes and other features, which meet the needs of the platform, users and merchants at one stroke.

From the above page, you may feel familiar with the notes page of Amap. In fact, Xiaohongshu also created a map gameplay.

In April 2023, Xiaohongshu launched the official local life account "Tuposhu". Users can check nearby places to eat, drink and have fun on the APP, as well as raise pets and collect treasures, thereby improving the user experience in the process of providing local life services to users.

The online experience-based gameplay on the Xiaohongshu page is Xiaohongshu’s latest traffic entrance.

In addition, the store exploration links in the notes, Xiaohongshu group purchase searches and store searches are also one of the traffic entrances provided by Xiaohongshu for merchants.

In Xiaohongshu’s local life logic, influencers are an indispensable part.

In order to enable influencers to better promote the ideas of other users, Xiaohongshu has also launched the "Searchlight Plan" and "100 Store Exploration Plan" to attract merchants and store exploration influencers through commission reductions and traffic support.

However, it is obvious that the method of focusing only online is still no match for the low-price strategy. Although the basic framework of Xiaohongshu and Gaode has been established, they are still not as good as the platforms that entered the market earlier in terms of capturing the minds of users and realizing commercial results.

IV. Conclusion

The "Instant Retail Industry Development Report" released by the Ministry of Commerce's International Trade and Economic Cooperation Research Institute shows that by 2026, the number of instant delivery orders is expected to exceed 100 billion, and the scale of instant delivery will reach one trillion yuan.

If the platform wants to share the big pie of local life services, the current situation of excessive homogeneity is not conducive to the platform's development. In addition to price wars, finding differentiated marketing methods is also an extremely important choice.

Author: TOP Jun

Source: TopMarketing (ID: TMarketing)