Recently, Douyin launched a commission-free activity for high-quality retailers, covering clothing, shoes and hats, beauty and personal care, maternal and infant shopping and other segments, which not only aroused widespread attention in the industry, but was also regarded as a powerful impact on Meituan’s local life business.
The wind of 0 commission has blown from “takeaway to home” to “in-store group buying”.
On April 29, Douyin Life Service launched five major support measures for high-quality retailers, the most eye-catching of which is the commission-free activities: clothing, shoes and hats, beauty and personal care, maternal and child shopping, food, drinking and drinking and other subcategories, as long as the conditions are met, you will have the opportunity to enjoy commission-free treatment.
From JD.com’s commission-free combination of takeaways to Douyin’s local life blowing this wind into “in-store group buying”, a retail battle around Meituan’s local life cost reduction and efficiency increase is unfolding.
If JD.com’s takeaway is a defensive counterattack to Meituan’s flash sale, then Douyin Life Service, which was once criticized for its rising commissions, is now actively exempting commissions, paving the way for which step? In the second half of local life, head-on competition and dislocation competition are happening simultaneously.
01 Local arrivals outside Meituan
In the past, Meituan’s biggest advantage in local life was focused on in-store group buying such as “eating, drinking and having fun”. But now, a new “in-store battlefield” is opening, and the focus is gradually turning to the retail categories that have not yet been fully online in “food, clothing, housing and transportation”.
Douyin Life Service announced the launch of five support measures for high-quality retailers, and will give a zero commission policy to new brand direct merchants in 2025.
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Among them, all merchants of “clothing, shoes and hats” will settle in Douyin Life Service before June 30 and enjoy commission-free; Well-known brands mainly engaged in “beauty and personal care”, “maternal and child shopping”, and “food, drinking and drinking”, will settle in with zero commission before June 30 when they have a certain business scale and the number of offline stores; Merchants in the above categories who have settled in will be free of commission until the end of the year.
The many categories covered by commission-free are basically based on the in-store categories that Meituan has not deeply cultivated in the past. Some local life service providers believe: “Focusing on supporting these local categories that have not done well online in the past can bypass the hard subsidy style of Meituan in the past.” ”
Therefore, compared with JD.com’s competitive approach of strong impact on Meituan’s takeaway commission, Douyin hopes to find areas that Meituan has not done in the past or have not done well in the past and move it to its own platform.
In the field of in-store, this is also the way JD.com and Taobao used to promote it. For example, JD.com’s car maintenance in the auto service industry has already become the leader of local car maintenance through a high degree of collaboration with the auto parts e-commerce business of the main station. Taobao has always had small and medium-sized merchants selling coupons, living among many national chain catering brands such as McDonald’s and KFC.
Under the competition of the wrong category, Douyin’s commission-free subsidy is not only a marketing event, but a targeted “avoidance of the real and attacking the false” – when local life enters the deep water area, it is necessary to find the direction of Meituan’s insufficient strong store arrival. In the same way, Douyin also tried the “off-peak competition” of eating, drinking and having fun when it first entered local life.
Last year, Douyin Life Service successively launched two products: off-peak special offer and convenient price, the former targeting merchants’ off-season or idle hours, and the latter using LBS, the core of which is to optimize operations around Meituan’s weak scenarios.
02 “Cut Hu” Meituan flash sale?
It is worth noting that the commission-free local retail category is the retail to home vertical category that Meituan Flash Sale is focusing on.
Taking the clothing, shoes and hat category as an example, in the past year, men’s clothing brand Jack Jones and women’s clothing brand ONLY have entered Meituan Flash Sale, and a total of more than 1,400 stores of the two brands have been launched, covering more than 200 cities across the country. The underwear brand Urban Beauty has more than 2,500 stores across the country online Meituan flash sale.
Previously, many national chain clothing brands such as Heilan Home and Decathlon have also settled in. However, the advantage of Meituan’s flash sale is the ability to fulfill the contract at home, and there are shortcomings in other aspects. For example, for the evaluation system of online consumption, Meituan Flash Sale opens up the evaluation released by Dianping when shopping offline as a reference for placing orders.
However, Dianping’s lack of in-store arrivals in the clothing, shoes and hat category makes the number of offline evaluations small, and mostly revolves around the store experience, rather than the product dimension evaluation with more reference value. The lack of a closed loop of online and offline operations from “offline consumption→ evaluation →online to home” also makes Meituan flash sales not conducive to merchants’ long-term precipitation of business compound interest.
One of the problems that Dianping’s content-based transformation has brought to Meituan flash sale is that it currently does not have the advantage of in-store in local physical retail. Therefore, Meituan flash sale used to use the flash warehouse model to develop multiple vertical categories such as beauty and clothing to meet the needs of instant retail with new supply.
When Meituan Flash Sale falls into a strong and weak situation of “strong performance at home and weak group buying at store” in local retail, for Douyin, as a content-based platform, there is no shortage of users through short videos, live broadcasts and other forms of natural user experience content.
This is also a successful path imitation of Meituan’s transformation from in-store group buying to home takeaway. In 2015, the merger of Meituan and Dianping became an important turning point when it competed with Baidu and Ele.me for takeaway. One of the main factors is that the merger of the two forms a complementary advantage in the operation of the home business and the store business.
After the merger, Meituan continued to strengthen its takeaway business, and Dianping continued to strengthen the merchant evaluation system that had been established for many years. So far, Dianping’s merchant reviews are still the most important guide for catering to store consumption. Meituan has also taken advantage of this business advantage to strengthen its in-store business and become the main position for long-term operation of catering businesses.
It can be said that arriving at the store + arriving at home is the legs of the local life track, and it is difficult to become a super platform for local life without Meituan. Now when Douyin makes efforts to intercept the in-store category of instant retail, it may not be seen in the short term whether Hu Meituan’s flash sale will be cut off halfway, but when the entire instant retail passes through the development period and comes to the stock stage, it may be a variable.
03 Competition beyond price
Under the current situation of a gap in performance capabilities, Douyin has made efforts to find new breakthroughs in the direction of in-store group buying of local physical retail, trying to find new breakthroughs outside the price war. Although it is currently difficult to form strong competition with Meituan flash sales, this strategy reflects Douyin’s differentiated layout of the local life service track.
In fact, the commission-free strategy was once an important means for Douyin to open up the local life market. Before June 2022, Douyin Life Service adopted a commission-free model for a long time in the early days of catering-to-store group buying, seeking a balance between low-price drainage and merchant interests. At present, although the era of 0 commission is over, its commission rate is still lower than that of mainstream platforms, but the lower commission has not achieved the long-term low price advantage.
According to Kaiyuan Securities’ 2024 local life service industry special report, the price advantage of Douyin’s local life is weakening. With the reduction of traffic, goods and user subsidies, the price of Douyin group purchase coupons for consumer perception is no longer generally lower than that of Meituan. In terms of discounts on the consumer side, the two sides tied. On the supply side of eating, drinking and having fun, Douyin and Meituan are also very close.
According to Newberry daybreak statistics, there are 20 first-level entrances for group buying in the Douyin APP, and Meituan has 12, and the subdivision settings of the two sides under major categories such as food are basically the same. Under the highly homogeneous competition of price and supply, the remaining competition is the difference in distribution efficiency.
Meituan focuses on the strong search user mentality that is just needed, and the traffic conversion rate is high; Douyin’s main interest content recommendation mentality, the traffic conversion rate is weak. According to 36Kr, Douyin Life Service’s sales in the first quarter were less than 100 billion yuan, and in the second quarter it was about 110 billion yuan, which tended to slow down.
At present, the commission-free model has entered the category of in-store group buying such as clothing and beauty, and there may be hope to break the slowdown in growth with differentiated supply.
But this is not enough, on the one hand, the service retail represented by the in-store business in the past is mostly based on experiential consumption of eating, drinking and having fun, and the high trial and error cost makes consumers very dependent on the evaluation of other users when making decisions. In terms of physical retail, under the standard categories such as clothing and beauty, the competition for in-store group buying may still have to return to the price competition on the supply side, facing the impact of the e-commerce price system.
The other is the lack of ability to fulfill contracts at home, making it difficult to directly differentiate itself from the e-commerce business. At the same time, Meituan also has some layouts in a number of high-margin retail categories such as clothing and beauty. For example, Business Observer has reported that Li Shubin, the current head of Meituan’s platform, was mainly responsible for the operation of shoe (clothing) vertical e-commerce – Haolemai before joining Meituan.
In addition to opening the incision of local life through off-peak competition, if you want to really eat the meal of local life, Douyin may need to come up with more real effort.
Resources:
Meituan attacks clothing and asks Ali for profits? – Business Observer
Douyin’s local student server, the more you do it, the lighter it gets? — Newberry Daybreak
Can instant retail expand categories and normalize “ordering clothing” like ordering takeaway? ——Zhuang Shuai Retail E-commerce Channel
