Meituan VS Douyin: A brief introduction to search life services VS interest life services

Douyin life service has become another large-scale business after Douyin e-commerce, and major Internet platforms have begun to enter the life service field. This article details the current situation, reasons behind, models and factions of major companies in the field of life services, and I hope it will be helpful to you.

Some time ago, LatePost reported that the GMV of Douyin Life Service reached 100 billion yuan in the first half of 2023, which attracted industry attention for a while. Quietly, Douyin Life Service has become another large-scale business after Douyin e-commerce.

Although 100 billion GMV is amazing, it is still not comparable to Meituan, whose GMV is likely to exceed one trillion in 2021. However, Douyin's life service has great potential and is likely to continue to expand its market in the future.

In fact, it is not just Douyin. All major Internet platforms have begun to enter the field of life services. Kuaishou, Xiaohongshu, WeChat, Pinduoduo, JD.com, and Gaode have all begun to make efforts in this market. This industry seems to have become another strong growth market after e-commerce.

Why are major Internet platforms starting to enter the lifestyle services sector?

1. Why has life service become the next battleground on the Internet?

According to data from the Ministry of Commerce, in the first half of 2023, my country's online retail sales of physical goods reached 6.06 trillion yuan, a year-on-year increase of 10.8%, accounting for 26.6% of the total retail sales of consumer goods. For the whole year of 2022, this proportion was 27.2%.

After years of rapid growth, the share of e-commerce in the total retail sales has become relatively stable. It seems that 30% is its ceiling. It is difficult for e-commerce to maintain rapid growth and continue to expand its share in the total retail sales.

When e-commerce growth is about to reach its limit, the giants will naturally look for the next growth point. After e-commerce accounts for 30% of the total retail sales, it will be necessary to explore the remaining 70% of the market space.

At this time, how to digitize offline businesses and bring income to oneself becomes a consideration.

A few years ago, Jack Ma said that new retail means digital transformation of offline businesses. Tencent later proposed the concept of "smart retail" in the hope of expanding its penetration into offline businesses with the help of its WeChat service system.

However, the company that performed best in this market was Meituan, which used group buying to digitize its offline business and combined separate catering with home delivery services, making food delivery the market leader.

According to iResearch Consulting Group, the scale of China's local life service market will be 19.5 trillion yuan in 2020 and will grow to 35.3 trillion yuan by 2025. The online penetration rate of local life services will also increase from 24.3% in 2020 to 30.8% in 2025.

Therefore, the life service market has broad prospects.

2. Two major schools of life services

The essence of Internet platforms providing life services is to use their traffic advantages to realize cash. Although they are both monetization, the ways they utilize traffic are not the same.

One is demand-driven, which can be referred to as "search life service", such as Meituan, Kuaishou, and Pinduoduo. Through years of mental building, they let consumers know that they are platforms that provide life services. When consumers have needs, they will come to these platforms to find services.

The other is interest-driven, which can be referred to as "interest-driven services", such as Douyin, Kuaishou, and Xiaohongshu. They are more based on consumers' demand for content, recommending services that may be of interest to consumers, thereby stimulating consumers' purchasing actions.

Interest-based e-commerce has already formed a trillion-dollar market and occupies a high share of the entire e-commerce market. There is reason to believe that interest-based life services also have the opportunity to reach the same scale.

The two major schools of thought, "search-based services" and "interest-based services", have different driving forces, and their business aspects are naturally different. Next, we will take Meituan and Douyin as examples to analyze the differences between the two.

3. Consumption Path: Search-Consumption vs. Content-Consumption

Generally speaking, there are two types of consumption: one is to find goods or services out of need, and the other is to see good things without clear needs and stimulate the desire to consume. The former is Meituan for the live service, and the latter is Douyin.

The user path for consumption on Meituan is search-consumption, that is, consumers first have a demand, then search on Meituan (category searching is essentially also searching, but the search scope is larger), place an order after finding a satisfactory store, and then consume in the store.

All consumers have been following this consumption path for more than ten years since the birth of the Internet, until the emergence of algorithm-driven content.

The user path for consumption on Douyin is content-consumption. On Douyin, consumers may not have a clear idea of ​​which offline store they want to go to for consumption at the beginning. They are just browsing content, but when they come across content related to their favorite life services, they will develop a desire to consume.

Such content could be a short video or a live broadcast. He saw that the recommended content vividly (even exaggeratedly) demonstrated the joy of consumption. The store was not far from him, and coupled with the expert's vivid and emotional commentary and the favorable prices, he impulsively placed an order.

Search service is like we already have a goal and go straight to the offline store to consume, while interest service is like when we are shopping aimlessly and see attractive promotions on the street and go into the store on impulse.

4. Sales Model: People looking for stores vs. stores looking for people

The search-consumption model is of course a model where people search for stores. The characteristics of this model are that consumers have clear demands, merchants have abundant supply, and the role of the platform is mainly to provide information and transactions.

Meituan helps consumers find suitable merchants quickly through functions such as classification, search, filtering, and sorting, and provides auxiliary services such as coupons, reviews, and navigation to facilitate transactions.

The content-consumption model is a store-finding-people model. The characteristics of this model are that consumers' demands are vague and merchants' supply is relatively limited. The role of the platform is mainly to match related content with consumers.

Through short videos, live broadcasts and other content formats, Douyin helps merchants directly recommend their products and services to matching consumers through algorithms, thereby stimulating consumption desire.

The model of people finding stores is that consumers have full autonomy in choosing. They weigh the pros and cons based on their own needs to decide where to consume. The model of stores finding people can reduce the energy of selection for users who are not sensitive to prices. Since the algorithm has recommended a suitable store and they are interested in the content, they can just buy it directly.

5. Judging system: review judgment vs expert judgment

When consumers make consumption decisions, they will base their decisions on some recommended information.

For search service platforms like Meituan, most users will look at the review information of the store after searching. This information allows consumers to evaluate the merchants through star ratings, text comments, pictures, etc., and these reviews are displayed to other consumers to help them make choices.

For the search live service platform, there is another scenario, that is, when a consumer is shopping and sees a store that interests him or her and wants to try it, he or she may open Meituan to check the store's rating and specific reviews to avoid being cheated.

The advantages of this evaluation system are that it is objective, fair, and diverse, and can provide consumers with more comprehensive and true information, allowing consumers to make choices with greater trust and rationality.

As for interest-based service platforms like TikTok, most users see content related to a specific influencer (a small number are brands) when watching videos. They introduce products and services in a vivid and emotional way, and offer high discounts and urgent time limits. When consumers are attracted to this influencer, they are likely to place an order at the store recommended by the influencer.

The advantage of this evaluation system is that it is subjective, personal, and interesting. It can provide consumers with more inspiration and surprises, allowing consumers to make choices with more interest and impulse.

In this regard, Meituan provides enough review information to allow consumers to make their own judgments, while Douyin is more like locking you in a house and letting an infectious person introduce you to things, making it difficult for you not to be influenced.

6. Consumer Decision-Making Logic: Rational Consumption vs. Impulsive Consumption

In my article "Content e-commerce VS shelf e-commerce, how do consumers make consumption decisions?", I wrote about the difference in consumer decision-making logic between the two: the consumer decision-making behavior of shelf e-commerce is rational consumption, which is dominated by slow thinking, while the consumer decision-making behavior of interest e-commerce is fast consumption promoted by emotional factors, which is dominated by fast thinking.

This is the same for search services and interest services.

For search and live service platforms like Meituan, consumers generally compare distances, ratings, comments, prices and other methods after they have a need, and then think about which store will be more cost-effective and convenient to shop at, and then make a consumption decision. This consumption decision takes a relatively long time and is dominated by people's slow thinking, that is, rational thinking.

For interest-based service platforms like TikTok, consumers see influencers and content that they are interested in while watching videos. Certain points of these influencers, perhaps trust in the influencers, love for the content, or low prices, attract them, and they make decisions quickly. This decision-making process is relatively fast and is dominated by people's quick thinking, that is, emotional thinking.

Relatively speaking, when consumers consume on interest-based service platforms, their price comparison behavior will be lower than that on search platforms.

7. Advertising model: keywords vs information flow

For the content and service ecosystem supported by search, keyword advertising is the most important advertising model. Merchants obtain ranking and exposure by bidding for keywords. This advertising model is characterized by accuracy and efficiency. Once consumers have search behavior, there must be relevant needs. Therefore, for merchants, it can provide more efficient traffic and help them acquire customers.

For the algorithm-driven content and service ecosystem, information flow advertising is a more important advertising model. Merchants create content and distribute it in the form of information flow to obtain potential customers. This type of advertising is characterized by content and originality. Sometimes consumers don’t even know that it is an advertisement, so they don’t have negative emotions. At the same time, this form of advertising is a proactive way to bring incremental customers to merchants.

These two models are actually similar to the advertising models of Google and Facebook. At present, Google has a higher advertising market share, but more and more brands are investing in content platforms like Facebook. In the Chinese market, Douyin's advertising revenue has long surpassed Baidu.

8. Main merchants: mid-tier vs. top merchants, merchant capabilities: infrastructure construction vs. content construction

According to data from Guosen Securities, the number of Douyin's partner merchants is less than one million, while Meituan has more than 9 million active merchants. The gap between the two is still relatively large. Of course, Douyin has only been providing life services for a few years, while Meituan has been doing so for more than ten years.

For interest-based service platforms like Douyin, there is still a threshold for merchants to do marketing on such platforms. In addition to basic infrastructure work such as launching stores online, merchants also need to have content capabilities and continuously create content to reach potential customers. Therefore, such platforms are actually more suitable for large brand operations.

Big brands have ready-made content and brand marketing capabilities, can afford the initial investment as a cost, and have the energy and budget to invest on such platforms to gain business growth. In fact, most of the life service content you see on Douyin is also from big brands, the following KFC is an example.

Of course, there is still a lot of room for growth for big brands in China. Currently, the chain rate of offline stores in my country is 15%, while in Japan and the United States it is around 50%. This means that there is still great market potential for leading brands in the future.

For a search engine platform like Meituan, entering and operating it should be considered a routine operation with some digital marketing business thinking. Generally speaking, operating on Meituan only requires basic capabilities and investment, which is relatively friendly to small and medium-sized businesses. For small and medium-sized businesses, even if they are not well-known, as long as they do a good job of basic information construction and maintenance, they may be able to obtain traffic and customers due to the categories, business distance, review data, etc. they provide.

In the current environment, it is very important to win over small and medium-sized businesses. After all, even Jack Ma is talking about "returning to Taobao." Nowadays, more and more users are price-sensitive and pursue cost-effectiveness. They usually have clear consumption needs and goals, and need to find the most suitable merchants or services through search and comparison.

Therefore, maintaining small and medium-sized businesses is an important measure to determine the future prospects of the platform. Meituan currently has an absolute advantage in this regard, but it must also be wary of the infiltration of Douyin.

The fact that there are more small and medium-sized businesses on Meituan does not mean that big brands do not invest in Meituan. On the contrary, big brands also invest a lot in Meituan. After all, the competition among big brands is also very fierce.

In the short term, the basic base of Meituan and Douyin is, one is the top merchants, and the other is small and medium-sized merchants, but the two will soon enter each other's territory and enter a stage of close combat.

9. It is not difficult to search on interest platforms, but it is not easy to search on interest platforms

The above article explains the difference between search services represented by Meituan and interest services represented by Douyin, but it does not mean that Meituan does not produce content or Douyin does not do search.

On the contrary, Meituan is now investing more and more energy in content, including pictures, texts, short videos and live broadcasts, while Douyin is also investing a lot of energy in search. But overall, I think it is easier for Douyin to do search than for Meituan to do content, and it has a greater advantage.

Last year, Zhang Nan revealed a piece of data that the monthly active users of Douyin search have exceeded 550 million, which can continuously provide a source of traffic for Douyin's live service.

For TikTok, its advantage lies in the algorithm-driven combination of search and content. It can form search optimization recommendations, and the recommendations then promote a cycle effect of search, forming a continuous impact on consumers.

Official data from Douyin shows that nearly 30% of users search because they “have seen this store on Douyin and want to find it out.” At the same time, nearly 80% of search transactions come from after content exposure.

Let me tell you a case of Tik Tok:

After the drama "Kuaishou" became popular, a noodle restaurant in Changsha changed the name of its set meal to "Qi Qiang Pork Trotter Noodles + Fried Egg + Drink" in mid-March, and the store's turnover doubled in March.

A pork trotter rice restaurant in Tianjin launched products such as "The same signature pork trotter rice meal for one person that Brother Qiang likes" and "Brother Qiang and his wife's pork trotter rice meal for two people" at the end of February. The store's sales in March increased nearly 5 times, and it also entered the hot-selling list of snacks in the same city.

One can imagine the logic here is that after watching "Kuang Biao", consumers go to Douyin to search for pig's trotter noodles, and find that there is a store selling it, so they go to the store to consume. Another situation is that consumers see content related to "Kuang Biao", and the algorithm determines that the consumer is interested in the food in the play, so it recommends pig's trotter noodles life service content to encourage him to consume.

Although Meituan’s traffic is far lower than that of Douyin, it also wants to cultivate users’ habits of consuming content on its own platform, especially vertical content related to the live service. Therefore, Meituan already has a large amount of pictures, texts and short video content.

Recently, Meituan asked Liu Yifei to be its spokesperson and launched a popular project, launching live streaming for food delivery, trying to form the habit of consumers watching live streaming on Meituan at low prices. Of course, I think it is still difficult to change consumers' habits in the short term.

Meituan's advantage lies in its mindset and the number of existing merchants and users, while Douyin's advantage lies in its traffic and content. Both want to penetrate each other's territory. It is conceivable that the competition between the two will be very fierce in the future.

Author: Xunkong, WeChat public account: Xunkong’s Marketing Revelation