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The Local Lifestyle Battlefield: Douyin's Second Offensive

Source | Bohu Finance (bohuFN)

Author | All too well

Not long ago, QuestMobile disclosed data showing that Douyin’s standalone group-buying platform, Dou Save Save, surpassed 7.96 million daily active users within just two months of its launch, with a monthly active user base reaching 22.42 million. By comparison, Dianping’s monthly active users stand at 158 million.

Dou Save Save is evidently a well-planned offensive. On one hand, it launched just in time for the holiday season, cleverly leveraging this peak period to boost daily active users; on the other hand, Douyin has provided substantial support. Data shows that the number of overlapping users between Dou Save Save and Douyin exceeds 20.88 million, accounting for more than 90% of its own user base.

The development of Douyin's lifestyle services has been clearly divided into two periods, with the spin-off of DouShengSheng as the boundary.

Similar to the surprise attack on e-commerce operations, Douyin carved out a niche in the local lifestyle market through 'services finding users,' leveraging its traffic entry points, hefty subsidies, and content advantages. Douyin attracted a large number of brands to join and successfully popularized once-niche markets like billiards, car maintenance, and gas refills. Meituan felt under siege, quickly pushing live streams and videos to prominent positions.

But local lifestyle is a heavy operation, saving is the basic principle, fulfillment is a quagmire, and supply depends on long-term accumulation and maintenance. While Douyin has traffic, unlike e-commerce, consumers can place orders immediately on Douyin but cannot instantly consume at physical stores. This time lag has led to consistently lower order redemption rates compared to Meituan.

Thus, you can witness the spectacle where utility-driven platforms like WeChat and Taobao are embedding services into their ecosystems, striving to create super apps. Meanwhile, Douyin, as a content platform, has changed its previous strategy, continuously spinning off monetization businesses: first with Douyin Mall, and this year, by separating its mature local lifestyle services into an independent app, 'DouShengSheng.'

01 Launching DouShengSheng was only a matter of time.

Alibaba deeply integrated Ele.me, Gaode, and other services with Taobao to create a super app because these businesses rely on the main site’s traffic and have seen their growth plateau, making it difficult for them to operate independently. Rather than spreading resources thin, it’s better to focus efforts.

So why did Douyin choose to spin off? Because doing well in business can also be a source of concern.

In January 2021, Douyin's lifestyle services officially launched and quickly transitioned from experimental to core operations within just a few years.

According to an exclusive report by Lei Feng News, TikTok's local life services' total payment GMV for 2025 exceeded 850 billion yuan, with an annual transaction volume increase of 59% year-on-year.

According to data disclosed by Douyin Local Life, by the end of 2025, the cumulative number of active stores on the platform reached 15.198 million, with 3.99 million new merchants joining. Within a year, 4.58 million small and medium-sized businesses operated on the platform, and over 22,000 of these businesses achieved annual sales exceeding one million yuan on Douyin.

Relying on Douyin's traffic pool and recommendation algorithms, a closed loop of 'content—traffic—conversion' is formed through short video promotions, live-streamed sales, and influencer store visits.

Data shows that by 2025, about 80% of Douyin's local life users will actively search for discount information, contributing to approximately 55% of the total transaction volume. Users have developed a habit of actively seeking out discounts, prompting Douyin to create a standalone app specifically for 'finding deals.'

However, alongside this surge in activity, challenges have emerged.

First, the redemption rate is relatively low.

The main way local life services generate revenue is through commissions, which are typically realized only upon redemption. Douyin operates a content-driven business model where users, captivated by videos, may impulsively place orders after being attracted by the content. Although this creates unplanned consumption, impulsive purchases are immediate while visiting stores to redeem requires additional motivation. This transaction process remains somewhat lengthy.

According to reports, Douyin's redemption rate in 2025 was only around 50%, far lower than Meituan’s 80%-90% range.

Therefore, the interface of Dou Save Save is extremely simple, removing short videos and live streams, aiming to ensure users open the app with clear purchase intentions, make more rational decisions, and strengthen their willingness to visit stores.

Second, there is insufficient participation from small and medium-sized businesses.

The content seeding model entails creating and managing content, naturally driving up costs. Merchants must pay platform commissions, video production fees, and sometimes even influencer slot fees, making the overall cost often exceed that of traditional search models. Last year, to meet its annual GMV targets, Douyin’s centralized distribution rules directed traffic primarily toward large chain brands, leaving most small and medium-sized merchants as mere 'also-rans.' Moreover, users drawn by discounted packages tend to be price-sensitive and exhibit low loyalty, further deterring many smaller businesses.

Third, the conflict between the main site's content and commerce functions has intensified.

Douyin’s core strength lies in algorithmic recommendations and its addictive short-video stream. The primary reason users open Douyin is for entertainment. However, when e-commerce and local life services were integrated into the main platform, issues began to arise. The author casually opened Douyin's recommendation page (around 5:30 PM on April 17th):

The second content I swiped was Lei Jun's live stream; the sixth was a durian live stream; the ninth was a live stream from a Taobao women’s clothing store; and the tenth was a group-buying promotion for 'Dreaming Back to the Dream of the Red Chamber' in Guangzhou. In this situation, it's hard to say that it won't affect the user experience.

This is Douyin's current dilemma: the clash between the content flow and the transaction flow. Aggressively pushing ads will inevitably impact the user experience, but not promoting ads will certainly hinder growth.

Therefore, the emergence of Dou Shengsheng was only a matter of time. ByteDance is no longer satisfied with relying on Douyin to drive traffic for profit; instead, it wants to create an independent lifestyle service platform. In the past, ByteDance's problem was having high traffic but a long transaction path—users would first watch videos to discover products, then place orders, and finally visit stores, involving too many steps. Dou Shengsheng cuts out entertainment content entirely, allowing users to open the app specifically to shop, shortening the path and naturally increasing conversion efficiency.

So, can Dou Shengsheng succeed?

Phase 02: Catching Up

In April, Douyin's lifestyle services completed its second major organizational restructuring after Pu Yanzi took office.

In 2023, Pu Yanzi succeeded Zhu Shiyu as the head of commercialization at Douyin Group and concurrently assumed responsibility for the lifestyle services business.

A new leader often makes bold moves, and she has been both aggressive and fierce.

Shortly after taking office, she launched a sweeping reform, transforming the original 'industry-based system' into a 'regional-based system.' The country was divided into three regions—north, central, and south—plus an NKA department responsible for top chain brands. The goal was to concentrate national industry resources into regional markets, getting closer to merchants, responding faster, and quickly capturing market share.

Within two years, the number of active stores grew from less than 5 million to over 15 million, rapidly filling out the supply base.

However, the 'contract responsibility system' model has brought side effects, with team resources naturally tilting towards large merchants who can quickly contribute GMV. Many small and medium-sized merchants, after joining, are left unattended and become 'zombie stores.' According to iResearch's 2025 survey data, more than half of local life small and medium-sized merchants lack a professional short video operation team.

Meanwhile, although the GMV growth rate in 2025 still reached 59%, internal pressure has become clearly visible: the bonus from top-tier merchants in first- and second-tier cities is reaching its peak, making it unsustainable to rely solely on existing resources. The anxiety over growth has forced Douyin to turn its attention to the broader base of tens of millions of small and micro businesses.

Therefore, the core of this adjustment lies in 'teaching according to aptitude.'

Using monthly GMV of 50,000 yuan as the dividing line, the merchant management system is split into two major departments: online and offline.

The online department focuses resources on cultivating medium and large merchants (KA, self-service, hotels and travel), deepening services; the offline department specializes in small and medium-sized merchants, managing them based on three major regions, with performance indicators shifting from GMV to registration rate, retention rate, and redemption rate, forcing teams to truly activate those small and medium-sized businesses.

If the focus before was on scale, now the emphasis is on becoming healthier.

The second aspect is competition over categories.

LatePost reported that Douyin’s e-commerce studies the market size and market share of various industries, selecting several large-scale industries with low market share for itself and defining them as 'special categories,' concentrating resources to support them. Douyin E-commerce's goal is to catch up with and surpass each industry's share, eventually maintaining a leading position.

A similar situation occurred in Douyin's local life services. For example, the hotel and travel business has been elevated to the same level as the entire KA (key accounts) and self-service business.

Hotel and travel is one such category. China’s online travel market size reaches the trillion-yuan level, within which hotel and travel's contribution to Douyin remains very limited.

According to a Guosen Securities survey, in-store dining and integrated services contribute over 70% of the GTV, while travel and hospitality accounts for less than 30%. The latter has the lowest gross margin and smallest transaction volume among the three sectors. The redemption rate for travel and hospitality has also been consistently at the bottom; the redemption rate for Douyin's travel group-buying is less than 50%, whereas similar products on Ctrip have a redemption rate as high as 90%.

However, travel and hospitality still holds irreplaceable value: high average order value, strong brand effect, and serves as an important benchmark for measuring a platform’s overall strength.

In 2025, Ctrip's annual revenue reached 62.4 billion yuan with a net profit of 33.4 billion yuan, achieving a net profit margin exceeding 50%, earning it the title 'Maotai of the travel sector.' Hotel accommodation contributed 26.1 billion yuan in revenue for the year, growing 21% year-over-year, making it Ctrip's most stable cash cow. Meituan’s travel business is also a critical profit source for its core local commerce operations.

In contrast, Douyin currently has a very low market share in travel, with GMV before redemption being approximately 20% of Ctrip’s.

Competitors are reaping substantial profits from the travel sector, and Douyin cannot afford to ignore this opportunity. By separating travel into its own category, Douyin aims to focus resources on addressing weaknesses in fulfillment and redemption, laying the groundwork for future market share competition.

Wang Xing once said that group buying is a more perfect business model because, compared to brand advertising or search, it can be directly linked to results. However, local life services are not just a good business but also a heavy one, involving more than just content and traffic—it requires ground promotion, subsidies, and algorithms.

A surprise attack can quickly yield results, but it won't be the decisive battle; now is the time for trench warfare.

Reference source:

1. Shi Tianhao observation: Douyin incubates in-store savings service DouShengSheng, will Meituan face pressure again?

2. New Stance Pro: Douyin fires second shot at Meituan: From differentiated competition to aggressively seizing territory

3. Lei Feng Network: Douyin’s life services shift gears: GMV surpasses 850 billion yuan, slowing down offensive pace in the new year

4. Hyper-focus: Major restructuring of Douyin's e-commerce framework, Pu Yanzi launches 'second battle'

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