Chinese viral video app Douyin, often referred to as the Chinese counterpart to TikTok, is aggressively expanding its food delivery service to compete with industry giant Meituan. Douyin, known for short video content, is making this strategic move by extending its food delivery operations to 24 new cities, including major markets such as Shenzhen, Tianjin, and Chongqing.
To bolster its food delivery capabilities, Douyin is partnering with third-party regional vendors. These collaborations aim to meet the rising demand for deliveries and strengthen operational capabilities in various regions. In the past year, Douyin entered agreements with delivery companies such as SF Express’ intracity delivery platform SFTC, JD.com’s Dada, and Alibaba Group Holding’s Ele.me to facilitate meal deliveries through its platform.
This expansion brings Douyin’s food delivery services to a total of 30 major cities, quadrupling its presence. Once completed, it will cover 70% of Chinese provincial capitals, including Shenyang, Shijiazhuang, Jinan, and Hefei.
Despite this aggressive move, Douyin remains a smaller player in comparison to market leaders like Meituan and Ele.me. Zhuang Shuai, founder and chief analyst of market consultancy Bailian, suggests that the immediate impact on China’s larger food delivery platforms may be limited. Meituan’s significant advantage lies in its extensive network of delivery riders and merchant partners. In contrast, Douyin reported having 2 million merchant partners as of April, while Meituan had over 9.3 million merchants and 6.24 million food delivery riders last year.
Douyin is positioning itself as a premium service, focusing on meals starting at 60 yuan (approximately US$8.23). This approach aims to differentiate it from competitors, as the average price of an online food order in 2021 was 48 yuan.
China’s on-demand local services market is anticipated to reach 2.5 trillion yuan by 2025, according to research firm iiMedia. This sector has been a significant driver of profit growth in China’s internet industry. Providers in the local services market, including on-demand food delivery platforms, experienced an aggregate revenue growth of 11.6% in the first seven months of this year, according to a survey by the Ministry of Industry and Information Technology.
While Douyin started testing food delivery services last year, it has seen some initial success. In the first half of this year, gross merchandise volume for local services on Douyin exceeded 100 billion yuan, albeit still less than half of Meituan’s figure for the same period. This expansion represents Douyin’s determination to establish a significant presence in the highly competitive food delivery market, challenging established players like Meituan.