Tik Tok, Amap, and Xiaohongshu join the group chat. Who has the final say in local life?

Local life services have been a "sweet piece of cake" that Meituan has dominated for many years. Now it has been targeted by Douyin, Xiaohongshu and Amap. This article analyzes the local life models of major platforms to explore whether Meituan can maintain its position. Let's take a look!

Local life services have been a sweet piece of cake that Meituan has dominated for many years. However, as the world's general trend is, things that have been divided for a long time will eventually unite, and things that have been united for a long time will eventually separate. This sweet piece of cake is now being targeted by Douyin, Xiaohongshu, and Amap at the same time.

Compared with the brutal “Thousands of Group Wars” around 2015, this time, the situation faced by Meituan is even more critical - the opponents are no longer Internet “newbies”, but platforms that have developed for many years with relatively mature business models and accumulated users. They want to snatch the cake from Meituan with their own advantages, strong background strength and aggressive posture.

Douyin, Kuaishou, Xiaohongshu and Gaode are all qualified to engage in local life, and they do not need to copy Meituan's "homework" because they each have a large amount of local traffic. Among them, Douyin, Kuaishou and Xiaohongshu have the advantages of content and experts, while Gaode has mastered the living habits and travel routes of users. When they need to find their own second growth curve, they all look to the local life sector that can achieve a closed business loop.

In addition, consumer demand is growing steadily. According to data from the Forward-looking Industry Research Institute, the online market size of my country's Internet local life service industry alone will reach 2617.92 billion yuan in 2021, and the market size of China's Internet local life service industry is expected to reach 4 trillion yuan in 2025.

With a trillion-dollar market, the opportunities are equally huge. According to iResearch Consulting, the online penetration rate of local life was only 12.7% in 2021. A major problem facing the platform is that cost-conscious consumers obviously do not have much platform loyalty.

Da Jin (pseudonym), a consumer who often buys group-buying coupons on Douyin, told New Retail Business Review: "In the past, I would open Dianping to read reviews and group-buying discounts, but now I compare prices among Dianping, Douyin and China Merchants Bank's mobile life - Douyin is usually cheaper." In addition, the logic of content e-commerce has also begun to affect offline consumers. "Sometimes I will be 'planted' by short videos pushed by Douyin or store exploration notes on Xiaohongshu, and go straight to a restaurant with my friends..."

In this case, can Meituan still maintain its status in the industry?

1. Douyin: Head-on confrontation with Meituan

Since the second half of last year, Douyin has used various "9.9 yuan coupons" to directly challenge Meituan in the two sectors of food delivery and group buying. Since the beginning of this year, the two have been fighting hard with the momentum of "if you save one yuan, I will save another two yuan".

Meituan: I am only one dollar cheaper than Douyin, so I just ask you if you want to buy it

When it comes to local life, Douyin has three advantages: a large and active user base, proprietary algorithm technology, and strong financial strength.

Among them, algorithm technology helped Douyin break Meituan’s "people looking for stores" logic and transformed it into "stores looking for people" - stores produce well-made promotional content and set preferential group purchase prices, and Douyin is responsible for distributing them to the mobile phones of the people that the algorithm believes to be the most accurate, allowing potential consumers to see the store and generate consumption behavior.

“I was browsing Douyin late at night and saw delicious food near my home… Even if I knew it was an ad, who could resist it?” Daikin commented on Douyin’s group-buying “routine”. “The more group purchases I buy, the more it recommends my favorite food to me. I can’t help myself.”

Data proves that this logic is feasible. According to data from the 2023 Douyin Life Service Ecosystem Partner Conference, Douyin Life Service GMV increased 7 times in 2022 compared to 2021. By 2023, this number may be even more astonishing.

However, Douyin's strategy of spending money without hesitation may be reasonable for the catering industry, but it may not be suitable for categories such as beauty and nail care, personal training and fitness, and massage and stretching that require one-on-one personalized services.

"From the end of last year to the beginning of this year, people from Douyin called me every day, wanting us to open a group buying channel, but I refused." Jackson, the head of a private training studio, told New Retail Business Review, "We have a total of more than 100 square meters and three coaches, and we can't serve so many consumers attracted by the 9.9 yuan group buying."

Persuading merchants to start group buying is not entirely a money-burning business for Douyin. Jackson revealed that if they successfully settle in and start group buying, Douyin will charge a certain service fee, and after the consumer successfully places an order, Douyin will share the profits with the merchant - the merchants who spend money to earn publicity are still those who are attracted by Douyin's traffic.

2. Xiaohongshu: Be careful when testing

A platform with a similar logic to Douyin is Xiaohongshu, and its move into local life business is more natural.

All along, Xiaohongshu has been doing the work of helping others: planting seeds on Xiaohongshu, and then placing orders on other platforms. Since the second half of last year, Xiaohongshu's commercialization has finally picked up.

For example, the "Notes Bring Goods" function allows brands to cooperate with influencers in the form of pure commissions, rather than just advertising. At the same time, Xiaohongshu also takes live e-commerce business as its main focus, creating a successful example of Dong Jie's live streaming selling goods.

In the matter of promoting products, Xiaohongshu has an irreplaceable advantage: a large user base, mainly female, that can provide a large amount of real and detailed user feedback. This is especially valuable at a time when sincerity is the ultimate skill.

Xiaohongshu also reinforces this point - after shopping on Xiaohongshu, the platform will invite consumers to post their orders directly in the form of notes, and consumers can freely speak out about their experience in their notes.

However, Xiaohongshu's business territory is not yet very stable, so it remains cautious in its exploration of local life.

Currently, most of the nearby restaurant display pages on Xiaohongshu only provide a centralized display and check-in of relevant store notes.

At present, Xiaohongshu has opened an official local life account "Tuboshu", launched the "Food Power Store Plan" and "Searchlight Plan", recruiting in-store catering merchants and service providers, and local food store bloggers. Many service providers told the media "New Entropy" that Xiaohongshu's group buying internal testing began in late April, and the investment is mainly aimed at the food and beverage industry, with Shanghai focusing on coffee stores and Guangzhou focusing on tea stores.

Many brands also "heard the news" and started operating their own official Xiaohongshu accounts since the second half of last year.

For example, "Slowww melt肆楼慢", which was previously reported by New Retail Business Review, chose to intensify its operations on the Xiaohongshu account after closing its store on Yuyuan Road in Shanghai, hoping to "make a comeback" by leveraging the commercial development of Xiaohongshu.

Today, Silouman has reopened its offline raw bean chocolate laboratory and is relying on Xiaohongshu's store system online to sell fine handmade chocolates, continuing its small but beautiful business.

It is not difficult to see from the example of Silouman that, unlike Meituan and Douyin, which are engaged in a price subsidy war, Xiaohongshu is taking a route of planting grass and checking in that is in line with its own tone , using "niche", "Internet celebrity" and "check-in" as keywords, hoping to highlight the brand's "style" with high-quality content without having a price advantage, thereby attracting consumers.

Although there is no obvious and unified entrance to Xiaohongshu's local life service section for consumers, the agents have already taken action and provided merchants with packaged agent operation services of Xiaohongshu, Amap and other platforms. Compared with Meituan and Douyin, such packaged services are much cheaper. In this way, even merchants who originally did not intend to get involved in one platform will start to consider multi-platform development.

3. Amap: On-the-go scene mining

In March this year, AutoNavi announced its official merger with Koubei, the in-store business of Alibaba Local Life. AutoNavi responded that the addition of the new team will help the platform provide better "to-destination" services.

Since then, AutoNavi has taken an important step in the local life business - launching the "Street Pickup" service in cooperation with Starbucks China. Users can order and pay in the AutoNavi Map App, and then pick up the food at the Starbucks store along the way. Currently, the service has been launched in 100 Starbucks stores in Beijing.

Image source: Amap

Despite some innovations in exploring “on the go” scenarios, Amap’s local life is essentially still based on the logic of “people looking for stores”.

Opening Amap, we can see that its local life section is named "Nearby". This has been questioned by many businesses, who think it is not "simple and direct" enough - "Can't you just write about eating, drinking and having fun?" Therefore, "the overall traffic is not large."

In addition, one of the merchants interviewed said that the review mechanism of Amap is "very inhumane": "The review materials I submitted were not passed the first time. I appealed immediately, but it was still unsuccessful after many days. I also called the appeal phone number, but no one answered."

Merchants join Gaode mainly because it is "cheap" - because its local life business is just getting started, the operating cost is still more economical than Meituan and Douyin, and there is no need to rack their brains to take beautiful photos and come up with attractive copywriting like operating Xiaohongshu.

So what is Meituan doing at this time?

4. Meituan: Difficult Defense

For merchants, Meituan is a platform that they have to join. Therefore, according to Meituan’s 2022 financial report, the number of active merchants on Meituan is 9.3 million, a year-on-year increase of 5.1%. But the big background is that both merchants and consumers have been "bittered by Meituan for a long time."

One of Meituan's advantages is its complete evaluation system and the various rankings derived from it, but its fairness has long been questioned by all parties . Although Dianping has introduced a series of measures such as manual review and algorithm optimization, and has also encouraged real consumers to make high-quality reviews by rewarding free meals, it is difficult to completely eliminate the artificial manipulation of good and bad reviews. The credibility of the ratings has therefore decreased, affecting consumer judgment and the operation of merchants.

In addition, many businesses have also felt that the input-output ratio of traffic on Dianping is becoming lower and lower - for small shops, it is very uneconomical to spend money on advertising.

A merchant told New Retail Business Review: "I spent more than 10,000 yuan (on traffic) on Dianping in one month, but there was not much splash. Only one person came to the store and two consulted online. We communicated for a long time, and the two online people were both doing agency operations." So she stopped the investment immediately.

Meituan’s second advantage is the mature service system for merchants accumulated over the years, such as the catering SaaS system, the online business growth system for catering merchants - merchant ROS points, hotel management system PMS, hotel business index HOS points, and so on.

In addition, Meituan’s abundant resources of food delivery riders also have certain advantages in solving the last-mile problem.

However, merchants found that Meituan was making major adjustments to its offline business. Many merchants told New Retail Business Review that the sales staff they had previously contacted with from Dianping had been replaced. As for the new sales staff, merchants outside the catering industry also had mixed opinions.

"They are obviously not familiar with the business and don't even know what 'Welsh' is." "They asked us to increase the flow of traffic and update our notes more often... There seems to be no other way." "They can't explain why the customer flow has dropped so much recently..."

In the short term, merchants will still use Meituan as their main operating platform, but as time goes by, Meituan's advantages are visibly being overtaken by other platforms.

For example, in terms of merchant services, Douyin launched the local life merchant service platform "Douyin Guest" in March 2022. According to QuestMobile data, from March to December 2022, the number of Douyin Guest App users increased by 2.065 million, a growth rate of 3,182.4%, and an increase of 1.356 million in the first four months of this year. At present, all merchants in Douyin are leading chain brands in various fields, and the store access rate is over 90%.

In the future, businesses will definitely choose to develop on multiple platforms. "Dianping is currently the main platform, which we operate ourselves. We have also hired agents to operate Amap and Xiaohongshu. We are watching Douyin. There are also vertical niche platforms such as ClassPass in the fitness industry..." Jackson counted on his fingers, frowning slightly, and must be having a headache. "Each platform has a different style and brings different consumers. We have to explore and adapt."

If the microphone is given to consumers, they will definitely watch the fun and not mind the big deal: "Fight! Fight! I will download the app of whichever platform can let me spend less money!"

Author: Qian Luoying

Source: WeChat public account "New Retail Business Review (ID: xinlingshou1001)"