How can ByteDance’s food delivery play succeed?

China Watch is a regular segment that looks at the country’s tech sector through a local lens. This edition explores ByteDance’s foray into food delivery, based on the reporting of domestic tech media site China Venture.

Every day, more than 600 million users spend nearly an hour flicking through the user-generated content on Douyin, the Chinese counterpart of short-video platform TikTok.

Douyin, whose parent company is ByteDance, now plans to deliver more than just popular content to its users. After years in development, Douyin’s food delivery service Xindong Waimai is finally commencing internal beta tests. However, this comes as China’s food delivery players are embroiled in Beijing’s latest crackdown.

Is this an ill-timed move in a duopolistic market dominated by Meituan and Ele.me? Though we don’t know the finer details yet, there are several ways that Douyin can play its hand – with the help of a few tricks up its sleeve.

From byte to bite

The food delivery feature marks Douyin’s latest push into what the Chinese business media calls “local life services.”

The term refers to online platforms that enable users to interact with brick-and-mortar shops within their vicinity. For these businesses, platforms like Meituan and Alibaba’s newly formed life services division provide free-to-use or low-cost distribution channels.

According to tech media outlet China Venture, Douyin’s foray into local life services began when it set up a team to explore the field in 2018.

Douyin’s interest resurfaced in 2020, when its experiments with various location-based campaigns and in-app features caught media attention.

Among them was Xindong Restaurants, a campaign that allowed Douyin to collect point-of-interest video data and curate more than 600 restaurants across six cities in China.

At the same time, Douyin made bolder moves, such as powering its in-app map services feature by partnering with Alibaba-owned Gaode Maps.

The feature enables users to quickly pinpoint their location, find physical stores, curate business and personal activities in their vicinity, and highlight popular “hotspots.”

Douyin also teamed up with Meituan and Ele.me via a same-city takeaway mini program, which let the short-video platform’s users make in-app orders with businesses registered on both food delivery apps.

It wasn’t until July this year that Douyin formally entered the food delivery market. Internal beta testing for Xindong Waimai will transform the app from merely generating traffic to directly converting customers. At the same time, BytedDance has also established a dedicated team to oversee the fledgling business.

Food delivery frenemies?

As Xindong Waimai prepares to take off, Douyin can play several hands: It could become an aggregator platform and collaborate with incumbents, or it could drown out the competition with its huge digital traffic.
The first option would play strongly to Douyin’s strengths. “Users average around 90 minutes on Douyin, and its precise algorithms make it easy to discover users who are interested in restaurants,” says an unnamed analyst who spoke to China Venture.

Will Douyin upstage Meituan?

Riding on favorable winds?