Douyin, the domestic counterpart to the viral sensation TikTok, has been steadily expanding its local services business, although it still trails far behind Meituan’s commanding market position, according to a report by LatePost.
In the first half of this year, ByteDance-owned Douyin’s local services business achieved a gross merchandise volume (GMV) surpassing 100 billion yuan ($13.9 billion), which remains less than half of Meituan’s equivalent business. Despite this, Douyin has set its sights on a 290 billion yuan GMV target for its local services operation by 2023.
While Douyin hasn’t yet commented on these figures, China’s on-demand local services sector is projected to reach a substantial 2.5 trillion yuan in 2025, as per a report by research firm iiMedia. The growth of this sector is particularly pronounced in emerging tier-one and tier-two cities, surpassing even established urban centers like Shanghai and Beijing.
Currently, Meituan and its competitor Ele.me, owned by Alibaba Group, maintain a firm grip on the local life services ecosystem and dominate the market. However, as Douyin intensifies its presence in the sector, the report anticipates a future of multi-platform competition in the local services industry.
Douyin, which entered the local services landscape in 2018, offers a range of services encompassing local dining, entertainment, and more. This diversification stems from the short video app’s aspiration to leverage its vast user base and explore new revenue streams.
The report by LatePost observed that Douyin’s local services segment didn’t initially meet internal expectations in Q1. However, it experienced an upsurge in orders in April as people prepared for the May holiday. Following a decline in May, orders regained momentum in July.
In terms of their selling points as online consumption platforms, Douyin and Meituan differ. Douyin, for instance, boasts the ability to rapidly increase business traffic and brand exposure, according to a Guosen Securities report from January. On the other hand, Meituan’s substantial “natural traffic” built over the years remains unmatched by Douyin.
Tong Wenhao, an analyst at LeadLeo, pointed out that the two platforms might be suited for distinct scenarios. He stated, “Compared with Meituan, Douyin has more [user] interaction, where [restaurants] can use video and live-streaming to introduce products and services … The disadvantage is that it started the business later.”
As Douyin continues its strides into the local services realm, it strives to carve a space in a competitive landscape dominated by established players, hinting at an evolving and intriguing market dynamic.