The penetration of Douyin local life in the sinking market has brought huge market opportunities, especially in the special scene of the county. This paper provides an in-depth analysis of Douyin’s potential in the field of local life in the county, pointing out the lag of county merchants in digital marketing, and how Douyin provides county merchants with a market environment with low competition intensity and high growth potential through content-driven and social communication.
This may be a market opportunity with a time window of 10-18 months, of course, from another perspective, this is also the prelude to a new round of local merchants in the county. In the past, there is a new ticket to digital marketing; I can’t get over it, and maybe in this wave, some county stores will wither and die.
We bring our perspective back to the level of opportunities and dividends. Last month, I went back to my hometown of a small county in northern Shanxi with a population of only 100,000 and widespread electronic payment, but half of the movie tickets were still sold through the front desk. My cousin-in-law found me and wanted me to help him buy on Douyin and put his new billiards club on the shelves.
I searched and found that in the search results of Douyin, there are only 2 billiard halls in the county that have set up Douyin group buying, with sales of 400+. The cousin-in-law’s newly opened billiards club sold 2 orders on the day of its launch without releasing a short video diversion.
I realized that whether it is in the market volume dimension or the competition dimension, Douyin’s local life has brought great opportunities to county merchants.
According to data from QuestMobile and Kaiyuan Securities, Douyin’s monthly active users have reached 1.001 billion, of which 54.7% are users in third-tier cities and below, which means that for local life merchants in the county, there is a large market dividend waiting to be tapped. And the most important thing is that due to the lag of market development and the characteristics of the county economy itself, for merchants who are at the forefront of digital marketing, the intensity of competition is not great, and it is relatively easy to stand out.
Huge market volume and undertapped local demand
No matter what kind of business format, the judgment of market volume comes first.
First of all, in the sinking market, the penetration of Douyin’s local life may be greater than we think.
To achieve these three challenges, product managers will only continue to appreciate
Good product managers are very scarce, and product managers who understand users, business, and data are still in demand when they go out of the Internet. On the contrary, if you only do simple communication, inefficient execution, and shallow thinking, I am afraid that you will not be able to go through the torrent of the next 3-5 years.
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According to QuestMobile data, in March this year, the combined monthly active users of Douyin and Douyin Express Edition exceeded 1 billion, and the most important thing is that the average monthly usage time of Douyin has also reached 46.54 hours, which means that each person per day will use an average of more than 1.55 hours. Combined with China’s demographic structure, on the whole, Douyin may be the only national app comparable to WeChat, people spend a lot of attention on Douyin every day, in the county, the relatively monotonous rhythm of life and more free time, users on Douyin market will only be longer than 1.55 hours.
Just looking at this huge national data, of course, it cannot confirm Douyin’s coverage in the county, so another set of data needs to be introduced. According to research by Kaiyuan Securities, Douyin’s users in third-tier cities and below account for at least 54.7%, that is, 548 million. In fact, Douyin’s growth in the past one or two years mainly comes from the sinking market, and this number will only be higher.
If you want to discuss local life, you can’t avoid Meituan, as a control group, Meituan’s data in the sinking market can better support Douyin’s dominant position. Meituan has 496 million monthly active users, but the user overlap between Meituan and Douyin is as high as 81%, which means that most of Meituan’s users are covered by Douyin at the same time.
Not only that, compared with Meituan’s local life, Douyin’s local life has more advantages in the county. Meituan is a shelf form, mainly undertaking deterministic search needs; Douyin, on the other hand, is content-driven, undertaking immediate and unplanned needs. Therefore, using Meituan for consumption often requires consciously opening Meituan in order to obtain the next step of conversion, but because the supply of the county is relatively single, there are fewer scenarios where Meituan can be used to consume, so the mentality of opening Meituan to purchase coupons is not very mature, which further reduces Meituan’s opening rate in the county.
But Douyin is different, as a super app that seizes users for 2 hours a day, Douyin is essentially creating demand, using rich content and unlimited information flow to chase the needs of users, which is more open in the county economy. Local acquaintances, coupled with relatively empty entertainment activities, after swiping the preferential information of some local merchants, it is easy to improvise, complete consumption, do a pedicure, or play a game of billiards.
For Douyin and Meituan, the core of the problem is no longer “who is occupying the county”, but “who the county has chosen”.
Secondly, low-tier cities only have low urban scale development, not low consumption, on the contrary, counties have unique consumption structure and content potential.
Local life consumption in small counties has three characteristics:
First, county consumption not only has the pursuit of cost-effective pragmatism, but also has a strong demand for “face consumption” and social display. The preferential information of Douyin group buying can reach local people in a very efficient way; At the same time, popular, trendy and trendy local formats can also be quickly promoted through Douyin, triggering a herd effect – Douyin’s content is basically leading the direction of local trends. For example, in the billiards format, in the past, most of the billiard halls were ordinary billiard halls, paying more attention to the entertainment itself, and in recent years, Qiao’s billiards has become a new trend in the billiards circle, and billiards players have begun to pursue professionalism and a sense of ritual.
Second, the “humane” life and acquaintance culture make users prefer “human” merchants. Compared with the cold Meituan shelf platform, the Douyin boss who publishes store information in a dialect on Douyin every day is much closer. This kind of content with regional characteristics is naturally suitable for short videos and LBS dissemination.
Third, the “small city light luxury” crowd is not inferior to the big city in terms of consumption power. Although the absolute income of residents in small cities is lower than that of large cities, the proportion of rigid expenditures such as housing, education, and commuting is significantly lower. For example, county housing prices are generally only 1/3 or even 1/10 of big cities, and garages are mostly supported by families, so the living pressure of people in counties is less, which makes them more willing to consume.
According to the data of 36Kr, our country’s third-tier cities account for about 70% of the population, corresponding to 300 prefecture-level cities and 2,800 counties, and the county economic GDP has accounted for 38% of the national GDP.
In a simple word, consumers in the county are idle and rich, and Douyin’s appeal is also very large. However, at present, the needs of these users in local life have not been fully met.
The weak operational capacity of local merchants leads to extremely low competition
Although Douyin has a huge potential energy to leverage local life in the county, it is still seriously insufficient in the supply of merchants in the county.
This is not because there are not enough merchants in the county, but that most of the merchants in the county continue to rely on traditional business methods and do not fully carry out online operations. Therefore, corresponding to Douyin’s 500 million sinking users, there is a serious lack of online group buying supply.
So much so that some merchants can lead the city with a little online operation.
In the county where my cousin opened a billiard hall, there are a total of 23 billiard halls in the map search, only 2 have Meituan packages, 3 have launched Douyin group buying, and the Douyin listing rate is only 13%.
However, after the opening of online group buying, the effect of the increase in in-store traffic is visible to the naked eye, and the billiard hall that launched Douyin group buying at the earliest time has become the largest billiard hall in the local area. Another hairdresser in the county has sold 600 orders through Douyin, and the effect of the catering category is even more significant.
The reason for this is that the competition intensity of group buying in the county is extremely low, and this low competition intensity is actually two levels.
The first level is the local life market, which is itself a “honeycomb” market, which is limited in scale effect but has advantages in terms of competition difficulty. Local life is to compete in the “cellular” within a range of 5-10km, as long as there is enough influence in this range, which leads to the intensity of competition will not be particularly strong.
The second level, and the most important reason, is that the current competition of county merchants is itself in a competitive depression, and most merchants are in the stage of “not knowing online”, “unwilling to go online” and “not going online”.
This is the polar opposite of a big city. To a certain extent, because the degree of informatization in big cities is higher, people living in big cities can master more information means, and in turn continue to strengthen the level of informatization in big cities, which is a cycle of mutual promotion between the market and participants. However, the county market is a reverse cycle, because a large number of intellectual young people have flowed out, resulting in the county’s own receptivity to new technologies, which has exacerbated the shortcomings of online promotion of county merchants.
The general status of county merchants:
- Billiard halls, KTV, farmhouses and other formats are mostly individual or family operations, and the boss’s core ability is physical service/supply organization rather than online operation;
- The cognition of Douyin stays at the level of “sending videos to increase fans”, and does not understand in-depth operations such as POI page decoration, group buying tool configuration, local push delivery, and hot spot exploitation, and even many store owners can’t even understand mobile phones;
- Weak content creation ability: rough shooting, no script design, no data review awareness.
Therefore, the competition depression of Douyin’s local life is actually not without competition, but the competitors are still in the primitive stage, and with a little “micro-innovation”, they can lead the county to the forefront.
The unique “micro-innovation” dividend of the small market in the county
If the ability to operate a local life store is divided into 5 levels, you can get such a table:
In this local life merchant capability map, county merchants only need to master L2 level capabilities (group buying + basic release) to exceed 80% of their peers, while merchants in first-tier cities may need L4 level to be effective.
For county stores, online group buying in local life is enough for “three axes”.
The first axe, master the store trailer, simply operate to settle in the Douyin local life platform, and set up a group buying package. From 2024, both Douyin and Meituan will reduce merchant deposits on a large scale, and most categories will be free to enter.
The second board axe, keep the daily frequency of publishing store videos, which can be real shots of the store, or oral broadcasts by the store owner, if you have the ability, you can do some professional knowledge, such as billiards skills teaching. Each video is accompanied by a store link and current positioning, and intra-city traffic is obtained through Douyin’s LBS. At the same time, change your thinking, do not care about the number of video playbacks, but pay attention to how many in-store conversions there are.
The core purpose is to make the store a “stronghold” for a certain type of local group and form a high stickiness.
These three axes, if placed in big cities, are far from enough, but in small counties, they are enough to exceed more than half of the merchants, and there is no need for advertising, and the operating cost is close to 0.
In terms of business strategy, it is generally believed that if the penetration rate of a certain market exceeds 50%, then it will be difficult to consider this market as a stock market, which requires fierce competition; If it does not exceed 50%, it is considered to be an incremental market, and there is a dividend period for merchants to grow with the market.
According to QuestMobile data, the current penetration rate of local life service users, mainly group buying, is 38.4%, and there is still huge room for growth.
Therefore, the traffic side of Douyin has completed the grassroots coverage, but the moment when local merchants have not yet reacted, it has objectively formed a competitive depression for county merchants, giving birth to a new window dividend.
Resources:
1. The stock of local life: Super platforms reshape the offline service industry and empower efficient life – Open Source Securities
2. The local life track is growing rapidly, and the differentiated value of Meituan Douyin coexists – Open Source Securities
3.App Monthly Active Data – QuestMobile
