Douyin expanding food delivery in more cities! Is Meituan’s throne still stable?

$Meituan(03690)$ 

ByteDance announced on Tuesday that Douyin, the Chinese version of TikTok, plans to expand its food delivery service trial in Beijing, Shanghai, and Chengdu to more cities in China. If the plan goes ahead, Douyin could potentially emerge as a strong competitor in a market dominated by Meituan!

Douyin users in the trial cities can already order takeout by using a feature added to the app's channels. The expansion plan suggests the new food delivery service may be more successful than a similar service called "Xindong Waimai" that ByteDance tested in 2021.

Previously in August 2022, Douyin also joined forces with Alibaba's food delivery subsidiary Ele.me, launching the service on its app through a mini program. Currently, the service is only offered by merchants in Nanjing, Jiangsu Province in East China. According to a local tech media outlet, the gross merchandise value (GMV) of Douyin's local life services division surpassed 22 billion yuan ($3.24 billion) in H1 2022, surpassing the target of 20 billion yuan set for 2021. The aim for Douyin's local life services in 2023 is 150 billion yuan, double the GMV of the previous year.

At present, the specifics of the collaboration between Douyin and Ele.me, such as investment plans, sales strategies, and revenue sharing, have not been disclosed. However, it is clear that Douyin's partnership with Ele.me will trigger a new round of competition with Meituan. The two companies complement each other, with Douyin filling the gap in Ele.me's delivery capabilities, particularly in the realm of food delivery.

Meituan’s share price saw its biggest drop today in two months after announcing its plan to hire up to 10,000 employees this quarter, an aggressive move to counter competition from Douyin. This kinda confirm investor’s suspicion on the threat that Douyin have on Meituan. If Douyin is successful in entering the food delivery market, they would become the most dangerous opponent of Meituan!

@Daily_Discussion @TigerStars 


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