In the competitive world of China’s mobile internet, short videos have overtaken other forms of communication, e-commerce and gaming in the popularity stakes. Data from analytical firm QuestMobile shows that short videos were the biggest online draw in 2021, accounting for nearly 26% of the time users spent on the Internet.
Propelled by the huge traffic in short videos, Douyin branched out into e-commerce in recent years. Last year Douyin’s total sales exceeded one trillion yuan, making it the fourth biggest e-commerce platform in China, according to the Chinese business news outlet LatePost. Now, the video-sharing platform is migrating from online to offline, expanding its local life and city retail businesses, thus encroaching on Meituan’s territory. A battle could be brewing.
In March 2020, Douyin launched a group-buying function in its app, establishing a system of influencer-oriented food marketing. The function allows the use of group-buying coupons at restaurants or for takeout orders, but the food was actually delivered by Ele.me and Meituan at the time. In July 2021, Douyin tested a “Heartbeat Delivery” applet, but the service never made it to the launch stage due to logistical challenges and company restructuring.
By 2022, as Covid disrupted dine-in services, some restaurants spontaneously flocked to Douyin to livestream their food for delivery. Douyin then worked with third-party delivery agents such as Ele.me and Dada to meet the demand.
Meituan’s on-demand food delivery service depends on users’ active searches for desired food providers, while Douyin’s model uses merchants’ self-made promo videos that can be channeled to interested customers, requiring a more sophisticated algorithm.
Meituan, as a traditional local life app, has long ranked first in usage for in-store consumption, such as dining, entertainment and education, with a relatively high rate of actual transactions, according to research from China’s Sealand Securities.
Meanwhile, Douyin has been less good at turning online traffic into transactions in its local life business, as users may scroll through videos merely for pleasure. But the greater volume of Douyin’s users and the longer time spent online compared to Meituan offer benefits for new businesses looking to break into the market.
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