Local Life 3.0: Douyin for food delivery, Meituan for video watching

Recently, the homepage of Meituan APP has been testing the "Watch and Earn" function, which has brought short videos to the platform. In addition to exploration, it is trying to find diversified traffic entrances besides food delivery. The author has experienced this function, let's take a look at the changes brought about by this move.

In early February, New Entropy discovered that the second tag on the first-level entrance of the Meituan App homepage began internal testing of the "See and Earn" function. For users who have not yet been covered, the location is still displayed as "E-commerce".

From the literal meaning, Kankanzhuan should be similar to Pinduoduo's big video, which focuses on the online earning model of cash rewards for short videos. That is, after users browse for a certain period of time, they will get gold coins, which can be exchanged and withdrawn to WeChat according to the proportion.

However, during the experience of "New Entropy", the above functions were not fully realized, and only the basic video browsing mode was available. In terms of interactive design, the short video browsing mode of swiping up and down in the style of Douyin was adopted. In addition, the only two actions that can participate in the interaction are like and share, and mainstream functions such as publishing, homepage, and commenting have not yet been opened.

In terms of content, the main categories currently include life comedy, life tips, food and life, and film and television editing. The overall distribution of categories is in line with Meituan’s positioning as a local life service platform.

It may be because it is still in beta testing, and more functions have not yet been opened. However, after sharing to WeChat, opening this function from WeChat is called "Tuantuan Video", and it is reminded that it needs to be opened using Meituan version 12.5.200 and above.

The changes in the product-level updates seem to imply that while Douyin continues to attack Meituan's territory with the traffic of its short video platform, Meituan, as a defender, has also begun to explore the short video field in depth, intending to find diversified traffic entrances beyond food delivery.

1. Internal test angle

Replacing e-commerce with "Watch and Earn" and internally testing short video content on the local life platform, this is the first time that Meituan has clearly defined a high-level entrance to short videos. While bringing more traffic and exposure, it also means putting its exploration of short videos on the table.

Previously, Meituan's actions related to short videos were mostly focused on the tool side of mini-programs and the video presentation of merchant products, which can be traced back to 2020. At that time, Meituan mainly launched the "Meituan Mlive Live" mini-program in medical beauty and other related categories, with the main mode of self-broadcasting by merchants and the launch of group purchase products. Regarding the launch of this function, the general view of the outside world is that it is a live broadcast tool assistant suitable for industries such as medical beauty.

Due to multiple factors, such as non-key vertical categories and lack of entertainment content attributes, as a live broadcast tool rather than a content platform, the data of Meituan Mlive live broadcast is not good. After the poor results of its own attempt, Meituan chose to embrace Kuaishou in 2021 and entered the short video market as a partner.

However, Meituan has not stopped exploring short videos.

In April last year, Meituan launched the "Meituan Live Broadcast Assistant" App, which is positioned as a free live broadcast tool for Meituan merchants and influencers, covering more categories across the entire platform.

In August, there was news that Meituan was testing a short video function within the App, focusing on making money by watching videos. At the same time, Meituan Pipixia's tool was launched to help creators improve the efficiency of video content creation.

Then, in November, the Meituan App launched the second-floor function, which allows users to enter the short video interface of Meituan Takeout by pulling down.

This time, the internal test of the earning function has gone from having no independent entrance in the App to being concentrated in the second tag at the bottom of Meituan, replacing the previous e-commerce; Meituan’s short video ambition has gone from the initial mini-program to the second floor, and now a Meituan version of Douyin with an independent entrance is emerging.

Coincidentally, although Douyin has made no secret of its ambitions in the local life sector, it is currently mainly in the internal testing stage.

Just yesterday, there was news that Douyin will launch a nationwide food delivery service on March 1. However, this was later disproven by the official, with Douyin insiders revealing that there is no plan to "launch food delivery services nationwide on March 1", and the food delivery business in cooperation with Ele.me is currently only being carried out in some pilot cities.

The relevant person in charge said: "The group purchase and delivery" project is still being piloted in Beijing, Shanghai and Chengdu, and has recently opened up self-service settlement for merchants in the pilot areas. In the future, the pilot cities will be considered for gradual expansion depending on the pilot situation, and there is no specific timetable at present.

This response has two meanings: one is that in addition to cooperating with third parties such as Ele.me, Douyin is indeed exploring other ways to conduct local business, such as self-operation; the other is that currently, whether it is cooperation or self-operation, it is still in the internal testing stage and is still some distance away from full All in.

This means that the price war between Douyin and Meituan for food delivery, which is of most concern to ordinary consumers on hot searches, will not be launched nationwide for the time being.

Emphasis on internal testing and pilot projects rather than high-profile declarations of war. Behind the normalization of the secret war in local life is the fact that the current competition between Douyin and Meituan seems to be tense, but in fact neither has the determination and confidence to win the battle.

2. It takes time and cash

For Meituan, the logic of the food delivery sector is the basic business of high frequency and low frequency. Therefore, in addition to the trillion-dollar market value of the food delivery market itself, it is also the traffic source of Meituan's local life sector and the basis of instant delivery capacity.

However, according to this logic, as the growth rate of the food delivery market slows down, Meituan’s traffic is almost reaching its ceiling.

The financial report shows that in the past year ending September 30, Meituan had 687.1 million transaction users, a year-on-year increase of only 2.9%, a record low growth rate. In contrast, JD.com's annual active users increased by 6.5% year-on-year; even WeChat and Wechat, which have more than 1.3 billion monthly active users, achieved a 3.7% increase in users.

Previously, Meituan's main response strategy to user growth saturation was to increase supply. Taking Meituan Youxuan, which is aimed at the sinking market, as an example, in the first quarter of 2021, Meituan's users increased by 58 million month-on-month, a record high since its listing. Among them, about half of the new users were created by Meituan Youxuan.

Investing in new businesses in exchange for new growth, but after the business quickly covers the whole country, user growth will be saturated again. Not only that, the premise of increasing supply and attracting new users is that the new business has the business attributes of low price and sinking. At a time when the Internet as a whole emphasizes cost reduction and efficiency improvement, the logic of exchanging losses for growth is obviously no longer popular.

Therefore, exploring diversified traffic entrances for entertainment content in the form of short videos may be Meituan’s only direction at present.

Take the e-commerce platform Pinduoduo as an example. In February 2022, the Pinduoduo App added a "Duoduo Video" column and began to promote it by making money by watching videos. In the end, the user penetration rate of Duoduo Video increased significantly, from 8% in February to 25% in July, significantly improving user stickiness.

For Douyin, food delivery is not highly relevant to its existing overall business ecosystem. Some industry insiders said that Douyin does not lack traffic or stickiness, and that food delivery is aimed at the growth space of the local demand market, which is the most primitive logic of traffic monetization.

Under this premise, compared with small and non-standard catering delivery services, Douyin’s main partners at present are still mainly chain brands in the KA channel.

Compared with small and medium-sized businesses, the core of chain brands lies in standardization. There is also greater imagination in local instant retail business. The expansion logic of Douyin Takeaway may start with restaurant chain businesses and gradually form local e-commerce services covering department stores and supermarkets.

On the one hand, compared to competing directly on food delivery experience, which requires efficiency and extreme transportation capacity, the current delivery timeliness of local e-commerce home delivery services can be relaxed to hours rather than minutes; on the other hand, whether it is a chain restaurant brand or a department store or supermarket, the former's traffic exposure return rate is within the national or municipal area, and the latter is the standardization of packaged goods, both of which are easier to form economies of scale.

The reason why Douyin focuses on food delivery may be that compared with the division of strategic directions and service understanding within the company, there is no clear definition of catering, supermarkets and other formats on the consumer side. Starting from the consumer demand for home delivery, when the consumer mentality of food delivery has become the mainstream, Douyin can use food delivery to gain a lower threshold for new users to try it out.

3. Local life enters the global era

Not only is Meituan exploring diversified traffic sources for local life in the form of short videos, but Douyin is also further investing in local life and setting a small goal of 150 billion yuan; in the second half of the Internet, as the central hub connecting the Internet and the real economy in the C-end market, local life is entering more Internet platforms.

Last year was the year of interconnection in local life.

At the beginning of the year, Baidu, together with local life service companies such as Meituan, SF Express, Ctrip, Tongcheng, Maoyan, and 58.com, announced that they will carry out interconnection cooperation in the three major aspects of traffic, technology, and service ecology.

In addition to companies such as Ctrip, which Baidu has invested in, the parties involved in this interconnection also include Meituan and Tongcheng, which have Tencent investment backgrounds or are platforms with which Baidu has a certain competitive relationship.

Under the interconnection of local life, Baidu Maps launched a new "food group purchase" function. Users can check and purchase packages and coupons based on geographic location information directly in Baidu Maps without switching to other apps. The third party partner is Dianping, a subsidiary of Meituan.

Not only Baidu, but also Kuaishou's open platform, local life merchants such as Meituan have also chosen to embrace and join. In addition, Ele.me has also carried out in-depth cooperation with Douyin based on local life, and Video Account upgraded the "Chasing Light Plan" for local merchants in 2022.

Almost the same as the development history of traditional e-commerce, the first stage of local life was concentrated among the major leading players. Under the food delivery war between Meituan and Ele.me, food delivery moved from the campus regional market to the social national market; in the second stage, under the platform strategy adjustment and industrial upgrading of the leading players, it expanded from catering food delivery to instant retail; in the third stage, in the stock environment where the entire Internet emphasizes cost reduction and efficiency improvement, there is less fierce competition and more cooperation for better solutions.

More goods, more demands, and more consumption venues have made local life gradually mature and move towards global operations. In the third stage of local life, how to improve the competitiveness of the platform and bring better consumer experience in the global era is more critical and important, rather than just focusing on what the competitors are doing.

The appearance of the whole domain is a comprehensive business scenario and channel field, which seems to be a rich, diverse and cross-border joint scenario. But behind these means, the result of the whole domain is definitely an increase.

For local life platforms, whether it is short videos or live broadcasts, if they cannot generate new volume in a more efficient way, they will be eliminated in the global market.

Author: Gu Er; Editor: Yi Ye

Source public account: Xinentropy (ID: baoliaohui), insight into business variables and exploration of the essence of business.