Douyin Supermarket is launched, will it “disrupt” local life?

Following JD Supermarket and Tmall Supermarket, Douyin Supermarket is here too. The business is self-operated and delivered to the door, grabbing a share of the local life pie. Will Douyin Supermarket become a new variable in local life? This article compares the business areas and system design, price standards, service quality and other indicators currently involved in Douyin Supermarket, and puts forward some of its own views. Recommended reading for those who are interested in Douyin e-commerce and local life business operations.

Douyin Supermarket is here, targeting the local life field.

In June last year, some media reported that Douyin was operating its own business similar to JD Supermarket, which delivers goods to customers’ homes and was being piloted in cities such as Guangzhou, Shenzhen and Hangzhou.

In November, according to Qichacha, Beijing Zitiao Network Technology Co., Ltd. applied for the trademark "Douyin Supermarket".

Local life is a big cake. According to iResearch Consulting, the scale of China's local life service market was 19.5 trillion yuan in 2020, and this figure will grow to 35.3 trillion yuan by 2025. The online penetration rate of local life services will also increase from 24.3% in 2020 to 30.8% in 2025.

Alibaba, Didi, JD.com and others all want to get a piece of the pie, and short video platforms Douyin and Kuaishou are also vying to join the game. After the battles and mergers among thousands of groups, can Douyin become a new variable in local life?

01 Douyin Supermarket is launched

On January 27, Douyin Supermarket was officially launched.

In fact, as early as June last year, some media reported that Douyin was operating its own business similar to JD Supermarket, which provides door-to-door delivery, and was piloting in cities such as Guangzhou, Shenzhen and Hangzhou.

In November, according to Qichacha, Beijing Zitiao Network Technology Co., Ltd. applied for the "Douyin Supermarket" trademark. After opening the Douyin Mall, you can see the entrance to the Douyin Supermarket.

More than half a year after Douyin entered the supermarket business, "Douyin Supermarket" was officially launched nationwide during the Spring Festival.

After the full launch of "Douyin Supermarket", "Douyin Supermarket" has lost the independent column that existed in the pilot phase. You need to search for "Douyin Supermarket" in the search bar to enter Douyin Supermarket for shopping.

Entering the homepage, Douyin Supermarket currently only retains the "Supermarket" category. Previously, Douyin Supermarket was divided into "Supermarket" and "Hourly Delivery" categories.

At present, Douyin Supermarket mainly includes nine categories: "dairy beverage preparation, paper laundry, wine and health care, household cleaning, personal care and beauty, snacks and sweets, maternal and child pets, grains, oils and fast food, and electrical appliances and general merchandise", which basically covers the basic categories of supermarket operations. It is worth noting that Douyin Supermarket currently does not have a fresh food category.

Bianniu.com found that Douyin Supermarket currently has relatively few categories. Taking the beverage category as an example, there are only two carbonated drinks, five ready-to-drink coffees, two functional drinks, and four coconut juices. The popular sparkling water category is empty.

In terms of price, Douyin Supermarket has no advantage. Taking the iPhone 14 256G version as an example, the price of Douyin Supermarket is 6299 yuan. After inquiry, the price of JD Supermarket is also 6299 yuan. In comparison, Pinduoduo's price is lower.

In addition, unlike JD.com and Tmall Supermarket, which have their own logistics, Douyin Supermarket's products are shipped by SF Express, and orders placed before 16:00 in the afternoon can be delivered the next day. There are also certain restrictions on shipping prices. If the weight limit is not exceeded, the shipping fee is 6 yuan for orders below 50 yuan, 5 yuan for orders between 50 and 88 yuan, and free shipping for orders above 88 yuan.

According to media reports, as of January 29, Douyin Supermarket had 69,000 store reviews, with over 20,000 comments from repeat customers.

Regarding the news of Douyin opening a supermarket, most netizens said "It's a good thing, consumers have more choices", while some netizens said "It's okay to replicate Tmall Supermarket on a one-to-one basis". Chen Yi told Bianniushi that he would not use Douyin Supermarket, "I'm used to Tmall Supermarket, Hema, and Qixian online supermarkets, and I don't want to try anything new; I don't trust Douyin products."

"I won't try it unless there are big discounts in the early stages," user Li Xiang also said.

Qingqing told Bianniu that she had long anticipated the emergence of Douyin Supermarket. "The end of the universe is e-commerce. In fact, since Douyin live streaming and the emergence of shopping carts, it seems that the emergence of Douyin Supermarket has been foreseen."

02 Continuously increasing investment in local life

According to media reports, at the beginning of last year, Douyin Life Service set an annual target of 50 billion GMV. And according to unconfirmed news, it exceeded expectations and achieved various targets, with the final GMV of about 77 billion yuan.

This result is not surprising. A recent report released by Douyin Life Service shows that in 2022, Douyin Life Service covered more than 370 cities, with more than 1 million cooperative stores, and more than 280,000 small and medium-sized businesses achieved revenue growth through Douyin Life Service.

In fact, Douyin has been exploring the local life service track for a long time, and it even started testing the waters as early as two years ago, and it initially started with in-store group buying.

In March 2020, Douyin launched a group-buying function and established a store exploration expert system. By the end of that year, Bytedance's commercialization department officially established the "Local Direct Business Center" to expand local life services, which was affiliated with the first-level department "Commercial Products" and incorporated the SMB (small and medium-sized customers) department of the original advertising business line. A year later, the department was upgraded to "Life Services" and ranked alongside departments such as "Commercial Products" and "Interactive Entertainment Community".

In July 2021, Douyin began internal testing of "Heart-beating Takeaway" and arranged pilots in Beijing, Shanghai, Guangzhou and other places, but it ended in failure. Last year, Douyin restarted the takeaway pilot again.

Since 2022, Douyin has continued to increase its investment in local life business and its strategic position has continued to improve.

In August last year, Douyin cooperated with Ele.me; in December, Douyin reached a cooperation with Dada, SF Express, and Flash Express to provide "group purchase and delivery" services for Douyin merchants.

As the largest short video platform at present, Douyin naturally possesses a huge traffic pool, and traffic and content are its killer features.

"While browsing, I often come across stores I visit. The group purchase price is much cheaper than going to the store, so I will place an order," Mo Mo, who is used to group purchases on Douyin, told Bianyushi. "Sometimes when I am watching short videos, I will be attracted by the products and then go to buy them."

Regarding Douyin's progress in local life, many users said: "This will curb the dominance of other platforms and benefit users."

"The Sichuan restaurant I often go to, Douyin group buying is 10 yuan cheaper than other platforms." Mo Mo discovered that Douyin group buying is often cheaper than other platforms, which also made him accustomed to using Douyin group buying, "Of course I choose the cheaper one."

For merchants, the emergence of Douyin group buying has also given them more choices. "We are no longer constrained by the top platforms," ​​restaurant owner Lin Feng told Bianyushi. Many merchants have shifted their focus to Douyin. "We have given up Dianping and only do Douyin," said Zhang Qi, the owner of a Dianping store.

However, some merchants also said: "The customers attracted by low-price group buying are mostly attracted by low-price packages. Users have no stickiness. Once the low price is cancelled, customers will be lost."

03 Local life is full of smoke

"In-store" and "home delivery" together constitute the basic meaning of local life services.

Home delivery services are the most commonly used takeaways, fresh food delivery, home housekeeping, repairs, etc. In-store services are offline food, drink and entertainment services.

"Home delivery" consumption is more frequent and closer to consumers. Among all consumption links, "home delivery" services are easier for consumers to obtain and the decision-making difficulty is lower. However, the home delivery business reflects the platform's delivery and fulfillment capabilities.

Data shows that the scale of China's local life service market was 19.5 trillion yuan in 2020, and is expected to grow to 35.3 trillion yuan by 2025. Major local life players such as Meituan, Alibaba, and JD.com have listed home delivery services as the core of their business.

"Supermarkets are a category of high-frequency consumption. Many fast-moving consumer goods in supermarkets are weekly and seasonal products, which are consumables that need to be purchased every week and every quarter. The repurchase rate is very high, and they are also standard products. Therefore, supermarkets are basically a must-win business online." Zhuang Shuai, founder of Bailian Consulting, once said in an interview.

From this perspective, it seems natural for Douyin to engage in supermarket business.

Competition in online supermarkets mainly tests the platform’s supply chain and logistics capabilities.

On the supply chain side, in the supermarket category, many brands are already quite mature, and consumers mainly care about price. In the short term, platforms can increase their market share through subsidies, but in the long run, the level of prices tests the bargaining power of the platform and the brand as well as the speed of inventory turnover.

In terms of fulfillment capabilities, Douyin currently still chooses to cooperate with third-party logistics, and the goods in Douyin Supermarket are shipped by SF Express. Compared with JD.com and Tmall Supermarket, which have their own logistics, the fulfillment model that Douyin Supermarket can currently meet is mostly "next-day delivery".

In addition, major platforms in the online supermarket field have already been laid out for many years. At the top are Alibaba Supermarket and JD Supermarket, which have a solid position, and at the bottom are Meituan Youxuan and Duoduo Maicai, which focus on low prices.

After the "Thousands of Group Wars" ten years ago, there has been no new stories in the local life market for a long time. With the entry of giants such as Alibaba and Didi, short video platforms such as Douyin and Kuaishou have also increased their investment in local life.

Will Douyin's exploration in the local life field promote a reshuffle of the industry?

Author: Qianqian

Source: Bianews (ID: bianews8); accurate, fast and in-depth technology media