Douyin to expand food delivery service to more Chinese cities

ByteDance-owned video-sharing platform Douyin, China’s equivalent of TikTok, plans to offer its “group-buying delivery” service in more cities, but has no timeline for a national rollout, TechNode has learned.

Why it matters: The gradual entry into the food delivery sector of Douyin, the most popular short-form video app in China with nearly 700 million daily active users, poses a serious challenge in an industry which has been dominated for years by Meituan and Alibaba’s Ele.me.

• “We would consider expanding the [“group-buying” packages] feature to more cities in the future depending on the testing results, and there is no detailed timeline yet,” a spokesperson from Douyin’s life services unit told TechNode on Wednesday.

Details: In contrast to the food delivery services offered by its established competitors, Douyin’s “group-buying delivery” service enables merchants to promote and sell food packages that are generally for two or three people, via short videos or livestreams. Packages are then delivered to paying customers within a selected time frame.

• The feature was tested last December in three cities – Beijing, Shanghai, and Chengdu – before the launch of a self-registration service for local merchants in January.
• Merchants can use the third-party courier platforms that Douyin cooperates with, including SF Express’s SFTC, JD-backed Dada, and Shansong, or choose to deliver themselves.
• The group-buying packages fall under the short video platform’s local life services unit, which encompasses the food and restaurant, in-store business, and hotel and tourism segments. The emerging unit expects total sales to reach RMB 150 billion ($22.2 billion) in 2023, twice its actual GMV of RMB 77 billion in 2022, tech media outlet 36Kr reported earlier this year.
• Only merchants with physical stores can take up the feature in Douyin, which is available at a cost of 2.5%, and 5% to 10% in service fees to the platform and service providers respectively, local media outlet Jiemian reported on Tuesday. If the merchant uses a delivery service in cooperation with the platform, they have to pay about RMB 8 per order.

Context: China’s takeaway market has continued to grow in size in recent years, with Meituan dominating the industry to date. According to a report conducted by Zhiyan Consulting, Meituan took a 69% share of China’s food delivery market in 2020, while Ele.me accounted for 26%.

• Douyin tested a food delivery mini-program called “Xindong Waimai” in 2021, partnering with well-known brands such as HeyTea and KFC, but the platform was never officially launched.