Three major players and many competitors are surrounding each other, and the "chaos gate" of local life has begun

Introduction: With the development of major content service platforms, the local market has become a battleground for major platforms in recent years, compared to the broad national market. This article uses the local life marketing methods of Douyin, Meituan, and Kuaishou as examples to open up a big picture perspective of localized marketing for everyone.

In the past decade, the smoke of war in the local life track has never been extinguished. From Meituan's all-round layout of "food, drink, housing, transportation and entertainment", to platforms such as Koubei's deep cultivation of niche fields, to the entry of short video platforms such as Douyin and Kuaishou, today's local life track is caught in fierce competition and involution.

Major content platforms have entered the localized marketing market, hoping to grab a piece of the pie from service platforms. They have begun to place the entrance to local content in a prominent position on the platform, and seize the market opportunity by deploying local content. Service platforms are constantly moving towards "videoization", starting to make up for their shortcomings and increase the attractiveness of content.

As various platforms enter the market one after another, the already involuted local life track is once again in a state of "gunfire". With multiple parties competing, a market "battle" has begun. What are the differences in the gameplay of different types of platforms in the local life track? What are the differences in the localized content of major platforms? In the future, who will be able to stand out and "swallow" the localization market?

01 Douyin - content-driven, firing the first shot in the price war

Ultimately, the local life business relies on a steady stream of traffic and a continuous supply of merchants, and the platform charges commissions and advertising fees in the middle. At this point, Douyin already has the prerequisites for developing the local life market.

According to public data, Douyin currently has more than 750 million daily active users and nearly 1.1 billion monthly active users, with an average daily usage time of 140 minutes per person. From the perspective of users and traffic, it already has inherent advantages. On the merchant side, Douyin's life services have covered 377 cities across the country, with more than 1 million cooperative stores. Such a large number of merchants has provided Douyin with a certain confidence to deepen its local life.

When the basic elements and conditions are in place, what Douyin needs is a "spear" that can leverage user interest and experience, and Douyin's choice is to stimulate consumers to shop in stores through a low-price strategy.

In the local life track segment, Douyin chose to lightly develop the takeaway business and deepen the "in-store consumption" model. This is because takeaways require strong back-end infrastructure construction, such as riders, delivery platforms, etc., which requires Douyin to invest more resources and costs at this stage. The in-store consumption model is more important to attract users to consume offline through traffic distribution and high-quality content. This model is more in line with Douyin's platform mechanism and content advantages.

From a price perspective, Douyin will always implement a low-price strategy for both users and merchants who want to settle in.

From the perspective of consumers, Douyin officials emphasized to local life service providers in the early stage that Douyin packages must be the "lowest discount price on the entire network", using high-value discount coupons and preferential policies to attract users to consume. Take Kudi Coffee as an example. The merchant once put low-priced products such as 8.8 yuan new customer unlimited drink coupons and 9.9 yuan "3 out of 1" group purchase coupons on Douyin to promote user consumption through the method of small profits but quick turnover. The relevant discount coupons have sold more than 3 million.

For merchants, the commission of Douyin's local life services is also lower than that of most service platforms. According to public rules, Douyin's commission is settled monthly, and merchants who meet relevant conditions can also return 50% of the commission, and Douyin will also provide new merchants with 60 days of commission-free service. When the commission starts, Douyin's average commission rate is 4.06%. Compared with Meituan's 10% and Ctrip's 10%-15%, Douyin is more attractive to merchants.

However, lower sales prices mean that merchants need to control costs, which has led to some unfair competition on Douyin group buying. For example, some merchants launched so-called "9.9 seafood" and "9.9 yuan hot pot" discounts, but consumers found that the facts did not match the promotion after arriving at the store, and no actual value was created, which ultimately led to a decrease in user trust.

Overall, the advantage of Douyin in the local life track lies in its large traffic and user volume, coupled with the spread of high-quality content, which gives businesses the opportunity to attract users to consume through short videos and discounts. However, blindly adopting a low-price strategy forces businesses to control costs to achieve revenue, which leads to some fabricated gimmicks and malicious low prices. For Douyin, how to optimize the competitive strategy and maximize the commercial value of each viewing and playback may be the fundamental problem at present.

02 Meituan - Seizing the "scale effect" to resist content anxiety

Unlike Douyin, Meituan’s biggest competitive advantage in the local life track comes from its user base and mature service system. It has an early layout and complete infrastructure. It is a platform that quickly layouts the local retail track based on economies of scale.

According to data from Meituan's 2022 annual report, Meituan has 678 million transaction users and 9.3 million active merchants; at the same time, a total of 6.24 million riders earned income from Meituan last year. The huge number of consumers and merchants is the basis for Meituan, the "big brother", to hold on to the city. Based on the large volume of user transactions and order demands, Meituan has also established hardware facilities such as intelligent decision-making platforms and merchant SaaS service systems in advance, thus forming its own technical and commercial barriers.

Faced with the fierce offensive of short video platforms, in addition to sticking to its own business, Meituan also chose to step out of its comfort zone and try to use content as the courage to resist.

According to relevant sources, video is one of the key projects of Meituan's in-store business in 2023, and it will open recruitment needs for nearly 40 short video business-related positions. This is not the first time that Meituan has deployed video. In 2021, Meituan reached a strategic interconnection cooperation with Kuaishou, launched the Meituan mini program on Kuaishou, provided Meituan merchants with package and voucher support, and guided user consumption through short videos. Last year, Meituan also launched the "Meituan Live Assistant" APP, encouraging merchants to sell group purchase products in a self-broadcasting manner, but it did not cause much splash.

Ultimately, the difficulty faced by Meituan in going video-based is that it has not found a clear content outputter.

Most merchants developing local businesses do not have the foundation and ability to create high-quality content, and more often choose to rely on third-party service providers for content promotion. However, relying on third-party service providers means higher economic and communication costs, and merchants are also taking a wait-and-see attitude towards the influence of Meituan’s video content, which makes the commercial effect of the content extremely uncertain.

If Meituan wants to attract more C-end creators, it needs policy support in terms of traffic, cash, etc., which means a considerable cost investment for the platform, and the effect of this investment is not clear. This makes Meituan lose its appeal to creators, which fundamentally affects the construction of Meituan's content ecosystem.

In addition, facing the low-price strategy, another important weapon of Douyin, Meituan chose to face it head-on, launching a special group purchase business, providing platform subsidies for large chain merchants, and building a low-price mentality in the minds of users by launching discounted group purchase products. It is not difficult to find that in the face of the aggressive short video platform, Meituan is making changes and being dragged into a price war, which is something that traditional local service platforms like Meituan do not want to see.

However, even so, Meituan does not seem pessimistic about the impact of short video platforms. Meituan CEO Wang Xing said: "Short video platforms have achieved rapid growth in local services, but their sales are not comparable to Meituan's sales. Our services are based on stores and search results, which can meet the most direct needs of consumers and also meet the stable daily operation needs of stores."

In general, as a traditional local life service platform, Meituan has unique advantages in terms of user mind, user volume, infrastructure construction, etc. However, with the development of the content-oriented market, Meituan must face the difficulty of producing high-quality content, and at the same time be wary of blindly involuting prices, and find a balance between content and local transactions as soon as possible.

03 Kuaishou - Entering the market from a late position, and “having to do” after hesitation

Unlike Douyin's bold and decisive approach, Kuaishou has always been cautious about local life business, and has chosen to cooperate with relatively mature platforms to test the market's feedback on its own business.

Kuaishou's earliest local life layout was carried out in cooperation with platforms such as Tongcheng Travel. Kuaishou itself was an aggregation platform that provided an entrance for traffic distribution. It was not until the end of 2021 that Kuaishou clearly identified local life as its own independent business direction and began to discover and cultivate high-quality talents in the local life field. In October last year, Kuaishou finally upgraded its local life business to a separate business unit and released a large number of recruitment positions. At this point, Kuaishou officially released a signal that it would deepen its roots in the local life track.

Rather than saying that Kuaishou is slow to respond to the local life market, it is better to say that it is "forced to do" under market pressure. First of all, the local life market continues to expand. According to relevant data, the scale of China's local life service market in 2020 is 19.5 trillion yuan, and the penetration rate is only 12.7%. It is estimated that by 2025, the market scale of China's local life services will grow to 35.3 trillion yuan. Kuaishou is naturally unwilling to give up a market of such scale and growth rate.

In addition, Douyin, which has entered the market quickly, will create about 77 billion GMV in the local life market in 2022, and set a GMV target of 150 billion in 2023. In about two years, the total transaction volume of its in-store business will reach nearly one-third of Meituan's similar business. This also makes Kuaishou feel the potential of the local life market for the commercial development of short video platforms.

Kuaishou's opportunity lies in the fact that its user groups are different from those of Douyin. For relatively low-tier cities, the local life market has not been fully explored, and snacks, fast food, affordable buffets and other businesses with low customer unit prices are expected to become the focus of Kuaishou's deep cultivation. Kuaishou can choose to make full use of its advantages in the sinking market to build its own marketing and service system.

Image source: Orient Securities

For Kuaishou, a latecomer, differentiation is an important factor in helping it overtake others. Kuaishou chose a way to enter the market that is quite different from Douyin and Meituan. In addition to mass services such as catering and entertainment, Kuaishou also provides services with higher customer unit prices and greater professionalism, such as automobiles, real estate sales, and legal consulting. Although it has not achieved large-scale promotion and transactions, Kuaishou's local life business has reached groups in different fields and established its own differentiated advantages.

Kuaishou, which is a step behind, still has a long way to go to catch up with Douyin and Meituan, but its user and service differences provide it with a fast lane and have secured a place in the local life market. In the future, whether Kuaishou can grab a larger market share with its own advantages still needs to be tested by the market and consumers.

04 There are many powerful enemies, and local life is still in turmoil

Nowadays, content platforms are "declaring war" on service platforms using the group buying function as an entry point. While the service platforms are using their own relatively complete service systems as a "shield", they are also accelerating the creation of content "weapons" to cope with market loss.

In addition to Douyin, Kuaishou and Meituan, platforms such as AutoNavi, Koubei and Xiaohongshu have also announced their entry into the local life battlefield. The entry of new players has brought new gameplay and changes to the local life competition. In the future, the competition in the local life track will become more and more fierce. Who will succeed may still require a lot of resource investment and market training.

Author: Dake Jinan

Source: WeChat public account "TopKlout"