Douyin’s life services business, covering in-store dining, in-store services, and hotel and travel, racked up about RMB 320 billion (USD 44.8 billion) in sales from January to August 2024, surpassing its full-year performance for 2023, sources told 36Kr.
After Pu Yanzi took over as head of Douyin’s commercialization division last November, she set an aggressive 2024 sales target of RMB 600 billion (USD 84 billion)—nearly double the previous year. For comparison, Meituan’s in-store services hit RMB 700 billion (USD 98 billion) in 2023, with a goal of topping RMB 1 trillion (USD 140 billion) this year, a 50% increase.
Pu’s appointment also marked a pivot toward greater commercialization of Douyin’s life services business. Upon stepping into the role, she wasted no time overhauling the company’s structure and strategy.
Her first move was to reorganize the business from industry-based segments—such as in-store dining, hotel and travel, and general in-store services—into regional divisions for southern, northern, and central China, respectively. She also created a department for national key accounts (NKAs), focusing on major chain businesses. To support this, she brought in several key leaders from ByteDance’s commercialization team. The company also streamlined its personnel in the first half of the year.
In April, Douyin moved its food delivery service under Douyin E-commerce to sharpen its focus on in-store services. But by August, the food delivery business was back under the division overseeing life services.
Similarly, Meituan implemented its biggest organizational restructuring in six years, consolidating its home delivery and in-store service groups under senior vice president Wang Puzhong.
In July, Douyin increased the commission rate for its accommodation business from 4.5% to 8%. According to briefing material seen by 36Kr, this increase was driven by the summer peak season for hotels and long-term cooperation agreements with several hotel chains, making the hike feasible. The dining industry, lacking such partnerships, saw no similar changes.
Unlike last year’s aggressive approach, Douyin’s life services business has been pulling back on subsidies in 2024. Reductions in both traffic and product subsidies have trickled down to consumers, who noticed that Douyin’s group buying vouchers are no longer cheaper than Meituan.
With the drop in price advantages, sales growth has slowed. According to 36Kr, Douyin’s life services business recorded sales of less than RMB 100 billion (USD 14 billion) in the first quarter and around RMB 110 billion (USD 15.4 billion) in the second quarter, representing only a 10% quarter-on-quarter increase. However, buoyed by the summer holiday season, July and August sales were nearly flat compared to the second quarter.
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For merchants, Douyin’s overall commission rate is lower than Meituan, but Douyin demands higher operational capacity from its business partners. Its traffic algorithm differs from Meituan, forcing merchants to adopt distinct strategies on each platform. The founder of a roast meat restaurant chain told 36Kr that Douyin is apt for brand promotion and customer acquisition, while Meituan is more effective for driving sales.
After last year’s meteoric rise, the gap between Douyin and Meituan has stabilized, and Meituan no longer sees Douyin as a looming threat. Although commercialization remains a priority this year, boosting sales growth continues to be a major challenge for Douyin’s life services business.
Douyin declined to comment on the figures mentioned.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Li Xiaoxia for 36Kr.