The three words “short video” have long been insufficient to support Douyin’s ambitions.
Editor’s note: This article is from the WeChat public account “AI LanMediahui” (ID: lanmeih001).
Author | Han Xiaohuang
Edit | Wei Xiao
The cake of local life is sweet enough to attract giants to the track again.
This time, it is Douyin.
Since February this year, “group buying” has appeared at the top of the first entry on Douyin’s same city pages where Beijing, Shanghai, Hangzhou and other first- and second-tier cities are located. The business model covers in-store catering, hotels and guesthouses, etc. The model refers to Dianping, a subsidiary of Meituan.
Obviously, since the launch of the group buying function in the enterprise account at the beginning of last year, the establishment of a local life business department at the end of last year, and the internal testing of the “preferential group buying” function at the beginning of this year, and the official launch of Douyin group buying in three major cities in March, Douyin The pace of entering the local area of life has become more and more determined.
Unexpectedly, reasonable.
The Douyin, which plays a role of nearly 600 million daily livelihoods, may have time to attack on a broader monetization model. From Tencent’s competition for information flow, Taobao’s competition for live streaming products, and Wang Xing’s competition for local life, the three words “short video” are no longer enough to support Douyin’s ambitions.
Starting from the group purchase, Douyin has prepared ample reasons and ammunition, and a close hand-to-hand fight may be staged.
Flow “grain and grass” is ready
To be sure, Douyin has prepared a basic prerequisite for entering local life-traffic.
According to the official data released by Douyin, as of August 2020, the number of daily active users has exceeded 600 million. As of December 2020, the daily average of DouyinThe number of video searches exceeded 400 million. According to the public disclosure of Bytedance CEO Zhang Nan on social platforms, the current (in February this year) Douyin search portal has more than 550 million monthly active users.
Meituan simply and rudely stated in its financial report that in the year ending December 31, 2020, Meituan’s cumulative transaction user data reached 510 million, a year-on-year increase of 13%; the number of active merchants It was 6.8 million, an increase of 10% from last year.
Although each company has different calculation methods and statistical calibers for “flow”, the two are on the same level as a whole.
In other words, Douyin already has the basic strength to enter local life in terms of traffic.
In fact, Douyin has been experimenting with the “comment” feature on the content side for some time before this.
Since 2018, the market reported that Douyin had established a local life team of 30 people, and the platform has made frequent moves in this regard. First, the 2018 big data report included related lists related to tourism, accumulating users’ data preferences for related fields; in early 2019, the “shaking shop” function was launched for local stores to assist shop owners to display addresses and contact information. , Discount information, etc.; last year, the group buying function was launched for enterprise accounts…
So far, a vibrato version of “Dianping” has begun to take shape.
The data shows that in terms of traffic preparation, various layout actions have achieved little success.
In December last year, Douyin first announced the “Heartbeat Restaurant” list. A total of 300 high-quality restaurants in six cities were selected, of which 61.3% were rated restaurants below 100 yuan per capita. According to the data given by Douyin, the selection activity of Xindong Restaurant attracted a total of 150,000 user submissions, related videos played more than 17 billion, and received more than 260 million likes.
This also proves from the side that whether it is driven by traditional graphics or short video, Douyin already has a certain level of “grass planting” in local life, laying the foundation for the official entry.
Naturally, the second key issue after traffic-conversion, is put on the agenda.
Different from traditional e-commerce fields such as live streaming and online shops, local life is a subdivision track of e-commerce. One of the most intuitive difficulties is that the transaction link is completed offline, and the cost of “weeding” Higher, the conversion is more difficult.
In other words, the local life track has the largest area compared with regular beauty, apparel and other daily necessities e-commerceThe other thing is that it cannot be driven solely by the logic of “planting grass”. The greater competitiveness lies in low-price-driven group buying or other preferential functions.
Looking at the platform’s revenue model, planting grass represents advertising revenue, while group buying is linked to commissions. From the perspective of Douyin, it is generally recognized that its main revenue driver comes from advertising revenue, and commission is a business model that it urgently needs to develop.
In this way, offline group purchase services other than live streaming is one of the best solutions.
Is group buying a good business?
To be reasonable, the “group buy” cake is really sweet enough.
The allure of this part of the market can be seen intuitively from the public data that Meituan has.
According to the annual report released by Meituan not long ago, as of December 31, 2020, Meituan’s annual revenue reached 114.8 billion yuan, a year-on-year increase of 17.7%, and operating profit was 4.33 billion yuan, a year-on-year increase of 61.6%. The adjusted net profit (adjusted net profit) was 3.12 billion yuan, a year-on-year decrease of 33%.
From the perspective of revenue structure, food delivery is still the largest, accounting for nearly 60% of total revenue.
But it is worth noting that the profitability of the takeaway business that seems to be the basic market is worrying, with a net profit of only 2.8 billion yuan and a net profit margin of only 4.3%; on the other hand, the business of visiting stores, hotels and tourism represented by local life , The revenue accounted for only 18.5%, but the net profit reached 8.2 billion yuan, and the net interest rate reached 38%.
Undoubtedly, from the perspective of business structure, the local life business represented by shops, wine tours, etc., is the embodiment of the profitability of Meituan at this stage.
And the horizontal split revenue model is alsoIt can be clearly seen that in Meituan’s overall revenue, commission income accounted for the largest proportion, reaching 74.2 billion yuan for the year, accounting for nearly 65% of total revenue. It was refined into in-store and wine travel business, commissions and online marketing. The ratio of service income is basically maintained at around 1:1, and the structure is relatively balanced.
No matter from which dimension, the local life business, which is mainly driven by commission income, has demonstrated good profitability.
This is a good model supplement for Douyin. The industry generally recognizes that the current profit model of Douyin is mainly derived from information flow advertising revenue.
Futu Securities research data shows that Bytedance’s 2020 revenue will reach about 37 billion US dollars, or about 240 billion yuan. At the same time, Bytedance also achieved an operating profit of more than $7 billion last year. Among them, advertising revenue reached 175 billion yuan, accounting for more than 72.9%. Compared with the proportion of more than 90% of advertising revenue in 2019, its revenue structure has obviously been optimized, but it still needs to develop new businesses to further diversify revenue to improve risk resistance.
So if you want to further diversify revenue, a commission-driven local life is a good choice.
Furthermore, as the saying goes, the cake of local life is attractive enough. According to the analysis of local life industry data released by iiMedia Consulting, the scale of China’s local life service O2O market is expected to reach 1.3 trillion yuan in 2020, a year-on-year increase of 20.9%.
From the perspective of the overall plate, this track still has a lot of room for development.
The reason for entering is sufficient, and the flow of “grain and grass” is basically ready. When implemented at the operational level, it is a front-line “fighting bayonet”. First look at the ability to push the ground, second look at the price advantage, simple and crude.
One point generally recognized in the industry is that, as the Internet upstarts that have risen rapidly in recent years, the biggest commonality between Bytedance and Meituan lies in its strong mobility and decent capital strength. From this perspective, they both come from Longyan. Zhang Yiming and Wang Xing of Sanjie are enough to fight.
I just don’t know whether this time Douyin can continue Zhang Yiming’s usual style of doing miracles. At least from the user’s point of view, a new round of woolen carnival may be something to look forward to.