Douyin expands local life services and launches shopping mall channel

Douyin has added a shopping mall channel? What changes will this bring to people's lives? This article starts with the interface of the new shopping mall channel on Douyin, briefly introduces the usefulness of the Douyin shopping mall channel, and explains the new industrial situation formed by Douyin and offline businesses under this model. It objectively analyzes the completion of Douyin's current multi-faceted service system and the competitiveness of online multi-party platforms. It is recommended for people who are interested in online and offline business combinations, and I hope it will be helpful to everyone.

A channel called "Mall" has been launched in the Douyin APP. This channel belongs to the Douyin life service. The interface design and service type of the channel are the same as the previous food, beauty and other channels. It is a consumer channel that displays merchant information and sells in-store group purchases or vouchers.

Figure: Entrance to the Douyin "Mall" channel

According to Tech Planet's experience, Douyin's "Mall" channel mainly provides sales of some vouchers for local shopping malls and in-store group purchase coupons for some commodities. Among them, vouchers can only be used to deduct designated commodities in the mall, such as cosmetics, amusement parks, fitness, jewelry and other commodities.

In addition, in the categories of the shopping mall channel, in addition to shopping malls, supermarkets, convenience stores, photography services, car services, and laundries are also classified as local shopping malls. Users can purchase relevant group purchase coupons in this channel and then consume in the store. Currently, this channel only provides the sale of group purchase coupons or vouchers, and does not support users to directly purchase goods online from these merchants.

Tech Planet also found that after users turn on positioning, if they watch Douyin videos near a shopping mall, they may come across the "Nearby Shopping Malls" page in the "Recommended" information flow on the homepage. The interface will display group purchase information of food, trendy toys and other stores located in the mall.

It can be seen that Douyin is taking shopping malls as an important direction for the segmentation and expansion of life services.

In fact, shopping malls have always been an important part of offline commerce, but their online business capabilities have not been fully developed. On the one hand, in the shopping impression of consumers, they only go to shopping malls for shopping. On the other hand, with the improvement of online payment and logistics systems, online shopping has become the first choice. However, in recent years, as major manufacturers have deployed offline and created online and offline consumption, the business model and value of supermarkets and physical stores online have been further explored.

Industry analysts believe that the launch of the shopping mall channel by Douyin is also aimed at tapping into the online commercial value of shopping malls and improving Douyin’s life services.

1. Douyin created a “shopping mall” channel

At present, the entrance to Douyin's shopping mall channel is relatively deep. It does not appear below the local interface on the Douyin APP homepage like other life service channels such as food, beauty, attractions/nearby tours, but is located on the detailed introduction page of some local shopping malls. Its slogan is "A good place to go shopping in the same city", and its main features are "Visiting nearby good stores", "A good place to shop" and "Enjoy endless discounts". According to its channel introduction, users can avoid pitfalls during consumption and choose cost-effective group purchase coupons.

Figure: The entrance to the "mall" channel on a mall introduction page on Douyin and the mall group purchase service interface

After entering the channel, users can see group purchase coupons or vouchers, recommendation index, and distance of local shopping malls. It is worth noting that the categories of shopping malls are quite comprehensive. In addition to shopping malls, there are also supermarket convenience, photography services, car services, and laundry categories. In these categories, there are further subdivisions. For example, under the category of supermarket convenience, there are also daily necessities, convenience stores, and supermarkets.

After entering the mall details page, in addition to displaying some basic information such as the mall's address and business hours, it also contains three sub-columns: "Mall Exclusive", "Discounted Group Purchase" and "Mall Stores". In "Mall Exclusive", you can view and purchase relevant group purchase coupons, which include group purchase coupons for some restaurants, tea shops, beauty stores and other stores in the mall in addition to the mall's own vouchers.

Caption: The “Mall Exclusive”, “Discounted Group Purchase” and “Stores in the Mall” interfaces on a mall introduction page.

In "Discounted Group Purchase", the coupons for group purchases from some of the stores with the largest discounts in the mall are displayed, such as a 43% discount coupon for fresh coconut latte. In "Stores in the Mall", all the stores in the mall that are selling group purchase coupons can be seen. The platform also classifies these stores by floor, so that users can see at a glance when making purchases.

In general, making "mall" a separate channel in Douyin's life services can not only promote linkage with offline scenarios and enhance service experience, but also make mall a major category of life services, which can better integrate group purchase activity information of some stores in the mall, allowing users to go "shopping" online and choose group purchase coupons more conveniently through the "mall" entrance.

In addition, the emergence of the "mall" channel can also provide a group purchasing entrance for offline physical stores. Currently, daily offline consumer categories such as supermarket convenience, photography services, car services and laundries have become part of the "mall" channel.

In addition to the shopping mall channel, Douyin Life Service already has local food, leisure and entertainment, attractions/nearby tours, beauty/hairstyle channels, etc., Douyin Life Service currently covers five major life service areas. Douyin is gradually improving its own life service system.

2. Douyin and offline business are heading in both directions

With the emergence of online shopping, the wave of online shopping has brought a certain impact on offline physical businesses. In the eyes of some consumers, shopping has become a luxury because people around them do not like to go shopping offline, which is not as convenient as online shopping.

Moreover, the business of large supermarkets is not easy to do. Zhang Xuansong, chairman of Yonghui Supermarket, once said, "The current retail market has begun to enter the stage of stock competition." According to incomplete statistics from the Retail Research Center of Lianshang.com, 34 supermarket companies including Carrefour, Lianhua Supermarket, Hongqi Chain, Yonghui Supermarket, and JD Seven Fresh will close more than 680 stores in 2022.

This is mainly because the profits in the large supermarket industry are relatively thin. The gross profit margin of most supermarkets is around 10%-15%. Listed supermarket companies such as Yonghui, Aeon, and Zhongbai are still in a loss-making state.

Industry insiders said that many supermarkets have begun to transform and go online, and the online and offline integration model has become the first choice. For example, in 2021, JD.com acquired 10% of Yonghui's shares for 4.31 billion yuan, accelerating the in-depth integration of JD.com and Yonghui. Carrefour is also seeking online cooperation. According to data from China Resources, less than a year after the connection, Meituan and JD.com's instant retail accounted for more than 50% of online sales.

As a major traffic platform in China, Douyin has naturally become the focus of shopping malls and supermarkets in this environment. In the previous Douyin e-commerce launch of the "Douyin 55 Trendy Shopping Season", shopping malls such as Shanghai New World Daimaru Department Store and Pudong First Yaohan started broadcasting on Douyin e-commerce. In addition to e-commerce, the same is true for life services. Taking Wuhan as an example, mainstream shopping malls such as Wanda Plaza, Wushang, Ocean Department Store, K11 Shopping Center, etc., have already set up group purchase coupons exclusive to shopping malls in Douyin.

After these shopping malls were connected to Douyin, they also provided new consumption entrances for the stores in the shopping malls, allowing the brands of physical shopping malls to be accurately exposed online and gain the attention of users. A large number of online users were brought into the physical shopping malls, which helped to increase the malls' passenger flow and transaction volume.

A merchant who runs a laundry shop in Wuhan Wanda Plaza told Tech Planet that this entrance is quite important. Since the appearance of the shopping mall channel, the sales of group-buying coupons on Douyin have increased by 10%. This is because this channel can provide a stable entrance for merchants like them who are difficult to classify, while also allowing some consumers browsing the channel to become potential target users.

For Douyin, launching a shopping mall channel can not only enrich the life service system, but also become a major revenue point. According to the 2023-2029 China Shopping Center Industry Market Status Survey and Investment Development Potential Report Analysis released by Market Research Online, China's shopping center industry will continue to grow in the future. The market size is expected to reach 1.07 trillion yuan in 2022 and 1.3 trillion yuan in 2026, and the online market has great potential.

Nowadays, Douyin Life Service has started to charge service fees. If shopping malls and most of the stores in the shopping malls can be settled in Douyin, the service fees alone can bring incremental revenue and profits.

Moreover, Douyin's creation of a shopping mall channel can also provide room for imagination for the development of other businesses, such as connecting the payment and membership systems with shopping malls to provide consumers with a better shopping experience. Previously, when Meituan launched the mall/shopping center channel, it connected with the mall's membership system to facilitate the mall's membership management, relying on personalized marketing to convert platform users into mall members, and also connected with the mall's cash register system to create a smart payment platform, allowing users to experience convenient payment while enjoying discounts.

3. New battle in the trillion-dollar local life market

Compared with the initial trial of local life in 2021 and the launch of the "group buying" service, Douyin has basically completed the layout of local life services. From group buying, travel, to food delivery, Douyin is becoming a force that cannot be ignored in the local life service industry. Douyin's life service has also become a key support target after the e-commerce business, and the life service business has not disappointed Douyin.

At the first national service provider partner conference held by Douyin Life Service, a series of key data were officially announced: Douyin Life Service has covered 377 cities across the country, the overall transaction amount has increased by more than 30 times year-on-year, and the number of cooperative stores has exceeded 1 million.

At present, the domestic local life service market is undoubtedly a big cake for Douyin. Data shows that the current scale of China's local life service market in 2020 is 19.5 trillion yuan, and it is expected to grow to 35.3 trillion yuan by 2025. In addition, the latest statistics from iResearch Consulting show that under the huge trillion-level market, the penetration rate of life services is only 12.7%. This means that in the track of deep penetration, whoever runs faster will get a bigger share.

According to LatePost, the long-term goal of Douyin's life service is to achieve a GMV of more than 250 billion yuan in 2024. It is worth noting that a research report by Bocom International pointed out that the GMV of Meituan's store business in 2022 will be about 236 billion yuan. It can be seen that the gap between Douyin and the leading platforms in terms of GMV targets is narrowing.

It's not just TikTok. Local life business players like Alibaba and Meituan have also stepped up their efforts this year.

At the beginning of this year, AutoNavi announced internally that it had officially merged with Koubei, the in-store business of Alibaba Local Life, forming Alibaba's local life sector with the strategic framework of "home delivery + destination delivery". Regarding the merger of AutoNavi and Koubei, Yu Yongfu, CEO of Alibaba Local Life Service Company and Chairman of AutoNavi Group, said that organizational adjustments are only a means to achieve business development, and everyone should work together to do a good job in the in-store business.

As competition in the local life service sector intensifies, Meituan's takeaway business, as its core business, has also made corresponding adjustments. On the one hand, it is laying out the takeaway market in Hong Kong, and on the other hand, it has launched new tools for takeaway marketing. Not long ago, Meituan revealed at the Takeaway Industry Conference that it will launch a number of marketing tools for merchants, such as the "God of Grabs" to promote hot new products, which is currently being tested in Shenzhen and will be launched nationwide this year. It is reported that "God of Grabs" launches big-name dishes at low prices and limited-time rush purchases to allow merchants to operate hot products. In addition, the "Must-Order List of the City" will cover 15 cities across the country.

Meituan has also embedded the short video function into food delivery. When users browse the merchant’s store, they can see the short video module and increase the transaction rate of goods by promoting products through short videos.

As Tencent's key development platform, Video Account also wants to get a share of the local life service. On March 28, Tech Planet learned at the "WeChat Open Class" event that Video Account is testing the function of selling redemption coupons for in-store verification/self-pickup or door-to-door delivery in the same city, which is expected to be launched in May.

Faced with the trillion-level local life market, no one, whether it is Douyin, Alibaba, or Meituan, will take it lightly.

Author: Chen Qiaohui

Source: WeChat public account "Tech Planet (ID: tech618)"