Duoduo Maicai, who has always been good at fighting protracted battles, has suspended local life business. Recently, the community group buying business of Pinduoduo, Duoduo Maicai Local Life Project, was suspended in December 2023.
According to the original plan, the local lifestyle project of Duoduo Maicai is expected to be launched nationwide after the Spring Festival in February 2024, led by Zhao Jiazhen, Co CEO of Pinduoduo. The investment attraction of this project includes restaurant tickets, hotel tickets, scenic spot tickets, movie tickets, etc. It will focus on the third tier cities where Meituan and Tiktok are weak.
Time Finance learned from internal personnel of Pinduoduo that currently, only the local life business of Duoduo Maicai is closed, and the Duoduo Maicai project is still operating normally.
A purchasing staff member from Duoduo before buying groceries told Time Finance that many regional managers have turned to the Temu team, leaving only a small portion of streamlined organizations to continue operating community group buying business. However, Time Finance found in Boss's direct recruitment search that Pinduoduo is still recruiting local life BD, whose job mainly includes conducting inspections, evaluations, and negotiations for cooperation with catering, leisure and entertainment, and hotel businesses.
Pinduoduo focuses on local life?
After three years of melee, the competition for community group buying has temporarily come to an end. The former old three groups, Tongcheng Life, Shihui Group, and Xingsheng Youxuan, have successively put an end to their activities. Duoduo Maicai and Meituan Youxuan eventually became top players.
The cost of entanglement to this day is also evident. According to media reports, the community group buying businesses of both companies have not yet been profitable, and Duoduo Maicai's current loss rate is in single digits. Meituan Youxuan is also facing profit pressure.
The latest financial report shows that the revenue of Meituan's new business division, including Meituan Optimal Selection, was 18.8 billion yuan, an increase of 15.3% year-on-year, but operating losses still exceeded 5 billion yuan. As the competition in the community group buying market enters a stable period, Duoduo Maicai and Meituan Youxuan are gradually adjusting their direction. Some employees of Duoduo Maicai have turned to Pinduoduo's new business, including local living and e-commerce going abroad; Meituan Youxuan has been upgraded to Xiaoxiang Supermarket, with an increased focus on the real-time retail track.
The retreat of Duoduo Maicai does not mean that Pinduoduo is completely absent from local life. Pinduoduo has already laid out its store business in a low-key manner. In March 2023, Pinduoduo's Kuai Tuan Tuan officially recruited local lifestyle service providers. Group buying merchants are concentrated in first tier cities such as Shanghai and Beijing, with a focus on catering, as well as accommodation, entertainment, beauty salons, lifestyle services, and more.
Li Wei, the leader of the Shanghai Kuai Tuan Tuan, has set up a group buying column for in store business on the homepage, and within two to three months, the number of followers for a single link has reached nearly a thousand orders.
"The low price has brought a certain amount of traffic, but the available packages are also relatively limited, and many merchants are also watching. There are less than 10 merchants participating in the nearby business district," Li Wei told Time Finance.
"In the past year, Pinduoduo has invested heavily in cross-border e-commerce marketing expenses. Now, if we try our best to attack unfamiliar fields, it would be more risky to implement," said local life practitioner Chen Wei to Time Finance.
Frequent intrusion of outsiders into local life
Local life is undoubtedly a tempting cake. According to data from iResearch Consulting, it is expected that the size of China's local life service market will grow to 35.3 trillion yuan by 2025.
After the end of the Hundred Regiments War, Meituan remained the dominant force in local life for a long time. Outsiders have been coveting this market for a long time, constantly entering local life, and the competitive situation has changed.
Tiktok and Meituan frequently fight against each other, and the competition between the two sides becomes fiercer. The official report shows that in 2023, the total transaction volume of Tiktok Life Service Platform will increase by 256%, covering more than 370 cities, and the number of cooperative stores will exceed 2 million, a sevenfold increase over GMV in 2021; Xiaohongshu has also begun to be eager for local life. In late April last year, it conducted an internal test of the group buying function and announced the launch of the Exploring Store Cooperation Center within three months. The first cities to open up the Exploring Store Cooperation Internal Test include Beijing, Shanghai, Guangzhou, and Shenzhen; Kwai local life and the same journey travel have reached cooperation. While the latter provides travel products for Kwai local life, Kwai platform traffic reaches more people; Even Gaode Map has taken a share of the pie and launched the "Gaode Instant Delivery" service.
Faced with centralized pursuit from various forces, Meituan launched a continuous defense war. In April, Meituan launched live food delivery, and in early July, the live broadcast rose to a first level entrance, with a GMV of 500-60 million yuan for the month. After six months of starting live food delivery, Meituan Live's monthly GMV has reached the level of 2 billion yuan.
A catering merchant told Time Finance that Meituan Live has a prominent effect in terms of conversion rate and user acquisition. "Consumers who enter Meituan Live often have clear takeout needs, so the transaction rate of products will be relatively high.".
Wang Bin, a member of Meituan Ditui, feels that the company has returned to the fighting state, and Tiktok is the biggest threat in the hands of many competitors. The team needs to align the latest developments of Tiktok's local life every day.
Wang Bin told Time Finance that the biggest change for them in 2023 is the shift in performance indicators from the number of renewed merchants to the transaction volume data of merchants. According to him, if merchants participate in live streaming and achieve the specified transaction volume, the platform's commission fees will also correspondingly decrease, while also providing merchants with traffic and advertising space.
"Throughout 2023, the company was more concerned about whether merchants could live more comfortably on the platform. In the new live streaming scene, the overall transaction volume of profitable merchants increased by 20% -30%." Wang Bin told Time Finance.
"Tiktok group purchase is more suitable for undertaking the single volume explosion in a short period of time. If businesses want to operate for a long time, they must pay attention to the operation of multiple local life platforms. Public comments have reached the acme in the search category, while Tiktok group purchase is promoted by video, which is a territory that businesses cannot lose." Chen Wei told Time Finance.
With numerous experts and intense competition, it is difficult to determine the winner of the local living market in the short term, and the direction is still full of variables. Although Duoduo Buying Vegetables is temporarily not on the card table, the battle of local life will continue.