Local life, track changes

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Text/Jingyu

Source / Jucha WAVE (ID: WAVE-BIZ)

Although some giant companies have always claimed to be “delivering food”, the local life, especially the pattern of the food delivery track, has not changed much for a long time.

Today, this field has ushered in a real “blockbuster”.

On August 19, Ele.me and Douyin officially announced that they had reached a cooperation. The two parties “will work together to explore new scenarios for local life services to upgrade, through high-quality content, rich commodities and efficient logistics and distribution, to deeply connect merchants and consumers. In the video era, it brings a new local life experience of ‘see, click, and reach’.”

Imagine that users watch the dishes and listen to the introduction by swiping the short video, and then immediately order and receive the exact same takeout as in the short video. This new service experience is attractive enough for consumers, and it is a big breakthrough in the ceiling of the local life industry.

As soon as the cooperation announcement came out, it immediately sparked a wave of discussion in the industry, and many businesses were eager to try it.

The enthusiasm of the merchants is well understood. They need to choose, and they also expect that the new scene will bring a new “starting line”. On the consumer side, it is more of an expectation for new experiences. On the whole, behind this innovation, the local life track has not seen new dividends for a long time. It is also facing the bottleneck of solidification: the downturn of consumer confidence in the macro environment, the decline of Internet traffic dividends, etc., all have the risk of losing the vitality of the industry.

Just as the rise of live-streaming e-commerce has challenged traditional e-commerce, but also expanded the boundaries of e-commerce, the cooperation between the local life platform and Douyin is expected to bring new development dividends to the track.

The model of “see, click, and reach” is an experience upgrade for the industry, and it will stimulate new needs of consumers – including those that were not previously available, and those that were originally basic but can be upgraded. Demand – This also leaves more room for merchants to be creative.

In short, short videos must create increments for the entire local life track, rather than divide up the stock, which is a good thing for all ecological participants.

“Internal volume” urgently needs to be broken

As the leader of the local life track, Meituan’s performance is the epitome of the development of the entire industry.

Since Meituan launched its takeaway business in 2013 and Ele.me received its first tens of millions of investment, the local life track has been developing for more than 10 years. While competition and subsidy wars have never ceased, business models have been relatively stable for years.

A report by iResearch in 2020 shows that the scale of my country’s local life O2O industry will increase from 100.68 billion yuan in 2013 to 2,832.71 billion yuan in 2021.

The actual situation did not develop linearly as expected. As the market structure stabilizes, the period of rapid industry expansion has passed. In the past year or so, although new players have been entering the local life track, and new concepts and subdivision tracks have frequently appeared, the overall industry imagination has still encountered a bottleneck.

Take the community group buying sub-track as an example. In 2020, when the epidemic just started, giants such as Didi, Pinduoduo, Meituan, JD.com, and Ali scrambled to enter the game, competing for “the last wave of mobile Internet traffic dividends”. However, after the outlet, along with the normalization of the epidemic, the development of the entire sub-sector still lacks a new structural growth point.

As the “overlord” of the local life track, Meituan’s performance of “going against the current” in recent years is also sufficiently representative.

In the first quarter of this year, Meituan’s food delivery, in-store travel, and new business revenue all experienced a month-on-month decline. The growth of its food delivery business has continued to decline since reaching its peak in the first quarter of last year.

According to the data, the number of food delivery transactions of Meituan in the first quarter was 3.361 billion, an increase of only 15.8% year-on-year; at the same time, Meituan also stated that it will no longer disclose the GTV of the food delivery market segment. Although there is no explicit announcement, people in the industry can see that this basically announces the end of the high-growth era of Meituan’s food delivery business.

In addition, the growth of the number of users of the entire platform is also approaching saturation. As of the first quarter of 2022, Meituan had 692.9 million annual transaction users, compared with 569.3 million in the same period in 2021, a year-on-year increase of 21.7%. However, on the basis of 690.5 million users at the end of 2021, the number of new transaction users of Meituan in the first quarter was only 2.4 million, which was much lower than the same period last year.

The industry is saturated, and another manifestation of the “involution” of the track is the dissatisfaction of the merchants. As the track bid farewell to the rapid growth, the indicators pursued by major platforms will change from scale and growth rate to profit, and tend to increase the commissions for merchants. Especially in the pattern that Meituan occupies most of the country, it will naturally have higher bargaining power in terms of service fees. Market analysis pointed out that the overall realization rate of Meituan’s food delivery business in the first quarter of this year is expected to further increase compared with the same period last year, reaching a new record high.

Because of this, in interviews with many media, merchants generally welcomed the cooperation between Ele.me and Douyin. Merchants hope that more platforms can participate in the competition, find new scenarios to crack the status quo of involution, and further stimulate the vitality of new business formats in the market, so as to obtain better services and benefits.

not only the epidemic

The deeper reasons are more important.

On the surface, the local life track has been weak in recent years, and the epidemic is a major factor.

Statistics from the Bureau of Statistics show that from January to July this year, the total retail sales of consumer goods in my country reached 24,630.2 billion yuan, a year-on-year decrease of 0.2%, and catering revenue from January to July fell by 6.8% year-on-year. It is also difficult for local living services to prosper amid sluggish overall consumption and restricted offline activities.

But the epidemic is not the only factor affecting local life and the takeaway market. The deeper reason is that there has been no effective service innovation and model innovation in the entire local life track for a long time. In the past few years, there has been no substantial improvement in the business capabilities of businesses involved in various segments of local life, or consumers’ experience of services, and it is naturally difficult for the industry to develop by leaps and bounds.

Although in the past year or so, new players such as SF Express, JD.com, Pinduoduo, Kuaishou, etc. have all increased their layout in the local life track, but there is almost no innovation in the business model, and they are more participating in the stock competition. rather than creating new ones. Including Kuaishou and Meituan, which reached cooperation last year, the progress of cooperation between the two has only stayed in the business of group purchases in stores.

Data from iResearch shows that the scale of my country’s local life O2O industry in 2021 is about 2,832.71 billion yuan, but the online penetration rate is only 12.7%. This trillion-level track still has great potential to be tapped. However, it is not easy to open up the remaining 80% of the growth space. Local life services call for changes and require new business models and service models.

Represented by Meituan, the “borderless closed-loop” play was once popular in the local life track, that is, by spending huge amounts of capital, acquiring and aggregating super traffic entrances, and at the same time using a lot of subsidies to quickly occupy the market, squeeze out opponents, and gain a monopoly sexual status.

However, with the tightening of Internet supervision and changes in the platform’s own development strategy, the previous closed-loop play has been gradually abandoned. On the one hand, it is relatively rational for Internet companies to expand under the new development trend, and it is difficult to reappear the tactics of “vigorously producing miracles” and raising hundreds of millions of budgets; on the other hand, in the current regulatory environment, this ” The path of “boundless expansion” has gradually lost its living soil.

It can be seen that although new players such as JD.com, Kuaishou, and Pinduoduo are currently vigorously deploying in the local life track, their resource investment is relatively limited, and they have not continued the path of high-flying competition in the past.

The old style of play has failed, and the new strategy has not yet been formed. The local life track urgently needs new development ideas.

Set sail “New World”

The difference in display form actually brings about a huge difference in service experience.

In July last year, Douyin was rumored to be testing the heartbeat delivery business. According to people familiar with the matter, Chengdu was selected as the pilot city for the project, but it was eventually taken off the shelves due to the difficulty of building a logistics and distribution system.

However, Douyin did not leave the market in the follow-up. There have always been merchants doing takeaways on the curve, that is, selling group purchase packages on Douyin live broadcast, and the merchants contacted Dada and Shanshou to provide delivery services on their own.

It can be seen from this that consumers have a strong and unsatisfied demand for “see, click, and reach” for the way of local life video display.

In the video-based scenario, consumers “see, click, and reach”, the path from content planting to ordering weeding is greatly shortened, and the consumption experience is improved; merchants face consumers directly through the display of videos, and also It is expected to reap more direct and significant growth from it, and improve the efficiency of business realization.

On the surface, it seems that ordering takeout on the app and “swiping short video to order takeaway” are only different in the form of display, but just like the impact of live broadcast e-commerce on traditional e-commerce, the difference in display form actually brings about the service experience. huge difference. The ability to create these innovative experiences is what players lack today.

More importantly, “see, click, and reach” can stimulate and meet the “new needs” of consumers, and also leave room for breakthroughs for merchants to exert their subjective initiative and creativity. This is to create increments for the entire local life track, not to divide up the stock. It is foreseeable that from merchants, operators, to Internet celebrity bloggers and content agencies, the industry is expected to usher in a new round of development dividends.

According to several media interviews and reports, many people in the catering industry have expressed great interest in the cooperation between Ele.me and Douyin, and are willing to send a special talent team to operate. Many brands have even had special personnel before. Operating the company Douyin.

In addition, similar to the current models of many Internet platforms, Douyin and Ele.me, as platforms, are not only used for display and matchmaking, but the ecosystem forces that the two can mobilize—including digital empowerment, helping merchants to do fine-tuning Operationalization, etc., can help catering businesses to open up more development space and release growth potential.

When a cooperation is expected to drive more industry players to join, the industry’s “second spring” prosperity is just around the corner.

write at the end

The development history of the Internet industry in the past few years has recorded that the establishment of a self-closed loop is a “good way to go”, and the platform is also used to independently providing users with one-stop services.

But facing the next business era, multi-platform collaboration may be able to tell another story that is different from the “Meituan model”: finding the optimal solution for consumer experience, the optimal solution for merchant support, and jointly finding the efficiency of industry resource operation border.

Whether the cooperation between Ele.me and Douyin can progress smoothly remains to be verified. But this cooperation has made the lake surface, which has been silent for a long time, begin to surge.

This article is reproduced from: http://finance.sina.com.cn/tech/csj/2022-08-24/doc-imizmscv7588749.shtml
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