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Douyin has shrunk its food delivery business, while Meituan’s instant delivery daily order volume has exceeded 90 million, a historical peak, becoming a hot topic in the industry recently.

Recently, according to media reports, Douyin's local life home delivery business "group purchase and delivery" (i.e. Douyin takeaway) has been officially assigned to Douyin's e-commerce instant retail business "Hourly Delivery".

In addition, in June this year, Douyin Life Service's "Group Purchase and Delivery" business was adjusted. No new merchants will be added to this business. The original group purchase and delivery products are expected to be removed from the shelves on July 15, and no new orders will be received. This business has been integrated into Douyin's e-commerce Doudian home delivery platform. Douyin's takeaway has shrunk in terms of both volume and traffic exposure.

Regarding the reorganization of Douyin Takeout and the contraction of its business, a Securities Times e-company reporter contacted the relevant person in charge of Douyin Group, who said that there would be no response at this time.

In fact, Douyin had vigorously expanded its food delivery business last year by recruiting regional agents, but at the end of that year, news spread in the market that Douyin Food Delivery would not renew its contracts with some regions, which also meant that Douyin Food Delivery had already massively reduced its business at that time.

"Douyin's food delivery business is not mature and does not yet have the ability to operate independently. Therefore, the food delivery business is not feasible at the current stage. Although Meituan initially started out through group buying, this is actually a marketing service, which is different in nature from the food delivery business. The food delivery business is highly dependent on local logistics delivery capabilities, while third-party delivery capabilities are very limited. In addition, users and merchants have formed usage habits. It can be said that the advantages of mature platforms such as Meituan in delivery make it difficult for new entrants such as Douyin to enter the food delivery market." Li Chengdong, a well-known e-commerce investor, told Securities Times e-company reporter.

Insufficient delivery and fulfillment capabilities

Securities Times e-company reporter noticed that the "food takeaway" entrance has been launched in the "Hourly Delivery" channel of the Douyin App.

Taking Beijing Jintai Xizhao as the location point, the reporter found that the businesses currently providing takeaway delivery services on the Douyin App are mainly cake shops and dessert shops, while there are relatively few businesses providing full meals.

A Japanese restaurant has put a variety of takeout packages on sale, with the fastest delivery time shown as 95 minutes. The prices of these packages range from 159 yuan to 520 yuan.

"Currently, Douyin's food delivery service mainly provides meal packages, which results in relatively high prices. In addition, the delivery service is limited to a range of 2 kilometers. For orders beyond this range, we need to arrange the delivery ourselves. On the Meituan platform, you can choose to purchase meals individually, and the delivery time is faster." The merchant told reporters.

The head of a restaurant group listed on the Hong Kong stock market revealed to the Securities Times e-company reporter that in the past two years, with the significant growth in demand for takeout delivery, the Douyin platform tried to expand the market and vigorously promoted the takeout business. "At the time, at the invitation of the other party, several chain restaurant brands under the group also tried the Douyin takeout service, but due to the low delivery and fulfillment capabilities of the platform, consumer complaints increased significantly, and the group quickly removed the Douyin takeout. The Douyin platform has a more obvious traffic advantage, and the overall performance of group purchase store packages is relatively good at present."

The reporter logged into the Douyin Life Service Learning Center and found the "Announcement on the Adjustment of Takeaway Business Methods by Douyin Life Service" released in June this year.

The announcement shows that the platform will carry out refined operations for group purchase and delivery business. The group purchase and delivery business will be migrated to Doudian.com to provide better delivery solutions and delivery experience for catering merchants; the merchant's self-delivery mini program delivery business will not be affected, and Douyin Life Service Business will support chain merchants with high-quality logistics and fulfillment capabilities to serve consumers through mini programs through targeted invitations.

The announcement also pointed out that from June 15, 2024, the original Douyin Life Service [Group Purchase and Delivery] business will no longer accept new merchants. After July 15, 2024, the POI shelves, search and other traffic entrances of Douyin Life Service will only retain the products in the [Takeaway Mini Program], and the products of the original [Group Purchase and Delivery] business will no longer be displayed, and you will no longer have new user orders under this business.

Jiang Han, a researcher at Pangu Think Tank, said that the reason for Douyin's food delivery contraction may be related to its strategic adjustment. "The food delivery market is highly competitive, and traditional food delivery platforms such as Meituan and Ele.me have already occupied a large market share. As a latecomer, Douyin Food Delivery needs to invest a lot of money and resources to expand the market. In addition, challenges in user habits and contract fulfillment may also be factors in Douyin's food delivery contraction. The food delivery business requires a complete supply chain system, efficient delivery services and good user experience, all of which require long-term accumulation and investment."

Frequent adjustments to takeaway business

Looking back, in December 2022, Douyin officially launched its food delivery business, which attracted attention.

At that time, Douyin's official account posted that Douyin Life Service has joined hands with high-quality ecological partners to launch "group purchase and delivery" and other methods for merchants to help merchants provide users with food and takeaway delivery services. Currently, "group purchase and delivery" is in the exploratory stage and is temporarily only open to merchants in pilot cities.

Since then, news about Douyin's expansion of food delivery has been reported frequently. Douyin Life Service has officially announced that it will first pilot group purchase and delivery services in Beijing, Shanghai and Chengdu.

In June 2023, Douyin Takeaway adjusted its business strategy, focusing its takeaway business on packages priced above 60 yuan. This move may be to avoid direct competition with Meituan and Ele.me takeaway platforms.

This also means that Douyin Takeaway is currently focusing on a differentiated competitive strategy. In July, Douyin Life Service announced that it had introduced a regional agency model in six cities, including Beijing, Shanghai, Chengdu, Guangzhou, Changsha, and Linyi, to accelerate the development of its takeaway business.

A few months later, news spread in the market that Douyin had given up on food delivery. According to reports at the time, Zhan Yifu, CEO of Douyin service provider Cang Teng Media, revealed that Douyin had given up its plan to do food delivery business itself, and the relevant business team had been merged into the store business. According to him, Douyin had tried to develop the food delivery business in three ways, namely building its own team, cooperating with third parties such as Ele.me, and looking for service providers as agents.

In this regard, the person in charge of Douyin Life Service denied that it had "abandoned" the food delivery business. The person in charge also said that based on the previous three-city pilot, Douyin's group purchase and delivery business was fully launched in Beijing, Shanghai, Chengdu, Guangzhou, Changsha, and Linyi in July, and the regional agency model was introduced. The second batch of cities will also be expanded in September. Regional agents will work with Douyin Life Service Direct BD (Business Development) to help more merchants settle in and do a good job in group purchase and delivery business.

In September of that year, Douyin Life Service announced that it would further expand its group buying and delivery business to 24 cities including Shenzhen, Fuzhou, and Wuhan based on the six cities including Beijing, Shanghai, and Chengdu, and introduce group buying and delivery regional agents locally.

However, since then, there has been little official news about the progress of Douyin's food delivery business. At the end of that year, there was news in the market that Douyin's food delivery business had been massively reduced. At the time, it was reported that some regional agents reported that Douyin's food delivery business would no longer be negotiated for renewal in some areas: after the contract expires on December 31, 2023, many agents will lose their qualifications. The scope of cities where renewals are stopped is very wide, and only five cities, Chengdu, Shanghai, Changsha, Shenzhen, and Fuzhou, may be retained, and other regions will stop recruiting investors.

In fact, China's online food delivery market is huge, and its service scope has expanded from traditional food delivery to many categories of goods in the retail industry, and has formed an emerging instant retail model. From the perspective of the market structure, it is a consensus that Meituan currently occupies a leading position in the food delivery field.

It is worth mentioning that while Douyin is shrinking its food delivery business, Meituan's instant delivery daily orders have reached a historical peak, becoming a recent industry hotspot. According to the latest research report released by China Merchants Securities, Meituan's instant delivery orders have exceeded 90 million. As of 21:29 on August 7, Meituan's instant retail daily orders exceeded 90 million orders, a historical peak of 81 million orders, which was created on the Chinese Valentine's Day in 2023.

Editor: Chen Lixiang

Proofread by: Tao Qian

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