We absolutely cannot agree to TikTok acquiring Ele.me!

Recently, there was news that Douyin was going to acquire Ele.me, but there was no response from both parties. Let us see what the author thinks about this matter.

ByteDance is going to acquire Ele.me, the parent company of many popular apps including Toutiao, Douyin, Pipixia, Xigua Video, DoCar, and Jianying.

Of course, after the news broke, there was no official response from either party.

One is a rising star in traffic, and the other is a trillion-dollar e-commerce giant.

In the game between the two, will they continue to fight or work together?

1. Douyin food delivery is not available

As early as June and July 2021, Douyin began internal testing of its Heart-pounding Takeaway service.

At that time, it was also seen as the beginning of Douyin's official entry into the local food delivery market, and everyone was looking forward to Douyin's entry.

But today, nearly three years have passed, and neither Douyin Takeout nor Xindong Takeout has appeared as an independent brand.

At present, the same-city services on the platform mainly rely on connecting to third parties to achieve business delivery.

Whether it is Douyin visitors or Xindong Takeaway, for Douyin, the battle to layout local life is a must.

First, in the true sense, Meituan is the only dominant player in the local life sector, whether it is food delivery, hotel and travel, group buying, home delivery, or review businesses, the presence of other companies can be ignored.

Secondly, for ByteDance, a large number of its products are closely related to users’ lives, especially services related to local life. If they don’t do so, it would be a waste of traffic and would be a favor to others.

Thirdly, besides online business, we also have offline business, and offline business now occupies half of the market, which is worth trillions of dollars. How could Douyin not be interested in it?

Takeout is the entry point with the widest audience and the highest frequency of business demand.

2. Ele.me’s choice of Douyin is a good choice

Personally speaking, among the current BATD, Douyin may be the best destination for Ele.me.

Let’s not talk about Baidu. It has been busy with AI and big models in recent years, but users’ perception of it is still focused on search. Baidu Takeout also failed before.

The key point is that it is difficult for all of Baidu’s current businesses to empower food delivery.

Since Alibaba acquired Ele.me for nearly 10 billion US dollars in 2018, I personally feel that there seems to be no difference between now and the stage when Ele.me was fighting alone, at least in terms of fame.

When people think of ordering takeout, group buying, etc., their first reaction is still Meituan.

Alibaba may have given some support to Ele.me in terms of payment and other aspects, but in terms of customer acquisition and awareness, it is still average.

There is even a feeling that I hope Ele.me can help with payment and attract new customers.

Tencent already has Meituan, so there is not much point in acquiring Ele.me, just like after Tencent acquired Sogou search and input method, they were used to strengthen WeChat itself.

So at the moment, the best choice should be TikTok, or ByteDance.

First, ByteDance can bring a large amount of local user traffic to Ele.me from at least three apps: Toutiao, Xigua, and Douyin.

Secondly, the presence of bloggers on the Douyin platform alone, coupled with good activities, can create a wave of awareness and consumption for Ele.me.

Third, whether it is Toutiao or Douyin, the current same-city service business is in urgent need of support from Ele.me to help merchants attract new customers and conversions.

Now, for Douyin, local businesses can get exposure, but the actual conversion rate is not high, especially many small street businesses do not have a better way to monetize.

If Douyin could have the support of Ele.me, it would be able to attract all local merchants of all types.

3. Alipay cannot agree

Through short videos and live broadcasts, Douyin has already taken a shortcut to copy Taobao's stronghold.

Now for Taobao, the shelves are threatened by Pinduoduo, Douyin has taken a shortcut in short video live streaming, and the grocery shopping business is also being suppressed by Duoduo.

So if Taobao were to give up its food delivery business again, it wouldn’t mind, but Alipay probably wouldn’t agree.

One of Alipay’s main businesses now is user transactions on Taobao, while offline transactions such as Ele.me and in-store transactions are very important.

A friend of mine runs an offline fast food restaurant, and he shared two sets of data with me.

First, WeChat receives 200,000 yuan in payments a year, but Alipay only receives 40,000 yuan a year.

Second, Meituan Takeaway has 100,000 online customers a year, but Ele.me’s channels have less than 30,000 a year.

They are a husband and wife business, running a fast food restaurant of about 40 square meters, and they have nearly two months off a year.

Through this set of data, we can also get a general understanding of the market situation of WeChat Pay and Alipay in the offline market where users consume.

Of course, this set of data is just an individual example, but for Alibaba to enter the offline physical market and payment business, Ele.me is still very important.

Merchants in stores, users' same-city orders and in-store payments are extremely important to Alipay.

Otherwise, if Alibaba really sold Ele.me to Douyin, there would be an additional Douyin payment method when people see it offline in the future.

Think about the scenes when you queue up to make purchases offline, or when you open WeChat Pay during a WeChat chat.

Or you can be browsing Douyin or Toutiao, and then open any APP and use Douyin Pay to pay.

If this is true, when will you remember to pay with Alipay?

So even if Alibaba wants to sell it, the price will not be low.

But if Alibaba really sells it, it will be difficult for Alibaba to re-enter the market, whether it is the same-city business or the single takeout payment business, or even the chance is zero.

Therefore, from the user's perspective, it would be a good idea for Douyin to acquire Ele.me. It will be convenient for users, and Douyin will also spend money to expand its market.

But from Alibaba’s perspective, it cannot be sold even for 20 billion US dollars.

Otherwise, the stock price will fall by more than 20 billion.

Author: Shili Village WeChat public account: Shili Village