Behind the “rumor-busting”, Douyin Takeaway explores the “interest business” with high customer unit price

In the past three years, Douyin has been making steady progress in the food delivery field, from testing the Xindong food delivery service, to group buying and delivery during the pandemic, to later launching online food delivery in Beijing, Shanghai and Guangzhou. What do you think of the prospects of Douyin launching food delivery? Let's find the answer in this article.

When Meituan Taxi was competing with Didi, Wang Xing said to Cheng Wei, “I just want to give it a try.” Now, Zhang Yiming can also say to Wang Xing, “I just want to try food delivery.”

After the internal testing of food delivery business in Beijing, Shanghai and Guangzhou, there are reports that Douyin will open up food delivery business nationwide from March 1. Subsequently, the person in charge of Douyin's local life immediately clarified that according to the pilot situation, the pilot cities will be gradually expanded in the future, and there is no specific timetable at present.

In the past three years, Douyin has been making steady progress in the field of food delivery, from testing the Xindong food delivery service, to group purchasing and delivery during the epidemic, and later to the launch of online food delivery in Beijing, Shanghai and Guangzhou.

It can be said that Douyin and Meituan are not facing a fierce battle, but have already been in close combat.

Industry observer "Chou Chou Xin Shuo" said in his WeChat Moments that Douyin's food delivery products now have a very high weight in the local food selection library, and almost all the food rankings at the top are food delivery businesses.

On the afternoon of the second day after the news that Douyin opened nationwide food delivery was "disproven", the author came to the Jinji Fried Food Shop in the Hema Fresh Shopping Mall in Changying Xintiandi, Beijing.

The store clerk said that the store had joined Douyin Takeout in the middle of last year, and that the store’s fried skewers sold very well on Douyin Takeout in the past winter.

"On Douyin, we can sell large meal packages that cost more than 100 yuan, but on Meituan or Ele.me, we can only sell small meal packages that cost 60 or 70 yuan."

This is the advantage of Douyin's interest e-commerce. Compared with food delivery platforms such as Meituan and Ele.me that compete for low-price coupons, Douyin's food delivery relies on content to attract users to complete orders. Therefore, users are not sensitive to prices.

As we all know, for platforms, local life business is more of a dirty and tiring job with low profit margins. Meituan, as the leader in the food delivery field, does not make the most money from food delivery.

So, what is the purpose of Tik Tok?

For Douyin to make money from food delivery, it is not important. What is more important is to acquire customers and tie up merchants. The real way to make money is through bidding ranking and in-store business.

Unlike Meituan, Douyin does not lack traffic, it just needs to explore the best way to monetize traffic. Now Douyin is using online traffic to transfer offline traffic, and merchants will definitely participate. If the effect is good, it is only a matter of time before they pay.

1. From ambiguity to firmness

Search for "Douyin Takeout" in Douyin, and you can see the businesses nearby that have already settled in Douyin Takeout.

Each merchant's home page has two buttons: in-store group purchase and home delivery. If you look closely, you will find that in-store group purchase products are generally single items with low prices, while home delivery products are generally higher-priced packages.

A clerk at Jinji Fried Food said that from the backend, the takeaway orders from Meituan are generally from customers near the store, but some of the customers for Douyin takeaway have addresses that are very far away.

But so far, Douyin Takeaway has not been able to compete with Meituan in terms of merchant volume. Just one cashier detail can illustrate the current imperfections of Douyin Takeaway.

An employee of Jinji Fried Food Shop told the editor that after users place an order on Meituan, the store’s computers can directly receive the order information and print it out, which is not available for Douyin Takeout at present.

"We have a mobile phone that is specifically used for Douyin takeout. After users place an order from Douyin, it will first be displayed on our mobile phone, and then the clerk needs to manually enter it into the computer before the order can be processed. Moreover, after the Douyin takeout order is printed out, there is no corresponding number for the rider. If it is the same order, the rider who arrives first may take it first, which is sometimes confusing. However, the Meituan and Ele.me orders and rider numbers are strictly corresponding one to one."

According to industry insiders, the entire Douyin team is still working on interpreting the rules for entry and accelerating the large-scale entry and opening of merchants. The mentality of "being on Douyin and doing food delivery" is still being established and promoted.

In fact, food delivery is not a new business for Douyin.

However, in order to avoid a head-on confrontation with local life giants such as Meituan, Douyin Food Delivery has been keeping a low profile. Whenever there is news of the establishment of a Douyin Food Delivery team, Douyin officials deny it.

In the Internet circle, industry insiders like to use the word "penetration" to describe the slow progress of Douyin's local life.

As early as March 2020, Douyin launched the Douyin group buying function on the APP, providing two services: group buying in-store and takeaway delivery.

Users can order food online through Douyin, buy while watching, and have it delivered to their homes offline.

However, due to shortcomings in logistics and fulfillment, Douyin Takeout at the time mainly provided traffic for Meituan and Ele.me, and the platform itself did not have any contact with merchants.

Douyin's real large-scale entry into the food delivery industry was the launch of the "Heart-beating Food Delivery" project in 2021. In order to land as soon as possible, Douyin mobilized a large number of internal employees to form a local promotion team.

At that time, top brands including KFC and Heytea had joined the ranks of "Xindong Takeaway". Later, due to insufficient preparation, Xindong Takeaway ended up with a lot of noise but little action, and in August 2021, it suspended external investment.

In the first half of 2022, the epidemic led to the ban of dine-in in various places, which caused Douyin's food delivery to explode in the live broadcast room.

Consumers can place orders in the live broadcast room of merchants in the same city to get coupons, and verify the coupon code through private messages and send the store address information. The store will deliver the coupon to the consumer within 2 hours or half a day via express delivery such as Shunfeng, SF Express, and Dada.

At that time, a seafood restaurant like Jinyanfang could sell more than 3,000 kilograms of crayfish a day. Based on the average customer price of 258 yuan, it could make about 100,000 yuan a day.

Although the peak of takeout during the epidemic was a spontaneous exploration by merchants in the live broadcast rooms, some merchants said that it was actually reminded and acquiesced by the official Douyin Local Life storekeeper.

2. After the epidemic, we are frantically filling in the gaps

An executive of Lianlian Surrounding Tour, a local life service provider of Douyin, admitted that before the epidemic, Lianlian basically did not do local delivery of takeout, and the sales of takeout were not good. Later, it cooperated with many merchants doing takeout, with commissions ranging from 10% to 20%. Especially for crayfish, which used to be delivered to the store without local delivery, the sales increased a lot during the epidemic.

However, the food delivery during the epidemic also exposed the huge shortcoming of Douyin’s food delivery - the lack of a delivery system.

Simply put, there are no riders. Merchants in the live broadcast room can only cooperate with local errand delivery platforms such as Shansong, Dada, and SF Express. Of course, the delivery cost is extremely high.

Taking Shunfeng Express as an example, the more delivery orders a merchant has, the greater the discount. However, for some small merchants, the cost of delivery outside the Third Ring Road in Beijing is close to 60 yuan per order.

This also determines that only takeaway products with high customer unit prices can be more cost-effective to choose self-delivery. For example, only crayfish restaurants with an average customer unit price of 100-200 yuan will choose to use Douyin for takeaway. For general takeaways, the cost of a meal may not be as high as the delivery fee.

It can be seen that Douyin's food delivery at that time had high costs and low profits, and was forced to "self-rescue" during the epidemic. Some businesses have clearly stated that they will return to offline business after the epidemic, but they also hope that the Douyin platform can make food delivery a success.

After seeing the shortcomings in delivery, Douyin Takeout quickly filled the gap.

On December 5 last year, SF Express, Dada Express and Shunfeng Express successively announced that they had reached a "group purchase and delivery" cooperation with Douyin Life Service, and gradually achieved the "average 1-hour delivery across the city" for group purchase packages.

Previously, Douyin had reached a cooperation with Ele.me, and "Ele.me Takeaway" appeared in the Douyin mini program. In late November, Ele.me and Douyin launched the "see now, order now, and deliver now" local life scene experience in Nanjing.

Douyin responded that Douyin Life Service is currently piloting two methods: the Ele.me Douyin mini program and group purchase delivery (using third-party delivery or self-delivery such as SF Express, Flash Express, and Dada Express introduced by Douyin officially) to help catering merchants provide catering takeaway services to users. "Merchants can freely choose according to their own differentiated needs."

At the same time, Douyin Takeout has gradually become more formalized in terms of merchant management system and local sales team.

For example, on June 1 last year, Douyin officially started charging commissions to local merchants on the platform. This change indicates that the relationship between Douyin and merchants has changed from a one-way traffic diversion to a two-way mutual benefit - after receiving money, Douyin will naturally bring more profits to merchants, and opening up a takeaway scene is an inevitable choice.

In the outside world's evaluation of Douyin Takeout, the lack of a large local promotion team like Meituan has always been a weakness of Douyin Takeout. However, some merchants said that among the three local life teams of Douyin, one team has been specially opened up for takeout.

3. Is Douyin ready for food delivery?

Through group purchases in stores and live broadcasts, users have developed the habit of placing orders on Douyin. As a result, it is only natural for it to enter the food delivery market. In July last year, Douyin finally officially announced the opening of group purchase and delivery functions for some restaurants.

At present, from the perspective of the overall environment, Douyin Takeout is also facing a relatively severe competitive environment.

In 2021, Kuaishou and Meituan announced a strategic interconnection cooperation. The two parties will integrate content scene marketing, online transactions and offline fulfillment service capabilities to jointly create a "one-stop" complete consumption chain for users.

In other words, while TikTok was aggressively attacking Meituan, Meituan was also filling its own traffic gap.

Last June, according to Bloomberg, JD Retail CEO Xin Lijun said in an interview that JD has considered entering the food delivery business. "As for when to start, it depends on our capabilities and when we can build a team of talents."

Takeout serves as an entry point for local retail in the vast scene of local life. Like JD.com and Meituan, Douyin Takeout will eventually upgrade to the direction of home delivery and instant retail.

However, the layout of the two giants, Meituan and JD.com, in terms of warehousing, logistics and other aspects of instant delivery business has already surpassed Douyin's local life by more than one level.

Author: Sisyphus

Source: WeChat public account "Dou Jiao TMT (ID: KOL-TOPKLOUT)"