Douyin and Meituan have successively changed their leaders. Is there no permanent winner in the local life sector?

@新熵 Original

Author 丨 Gu Nian Editor 丨 Yi Ye

"This is not a short-term battle, but a brutal and grueling trench warfare." Meituan Vice President Zhang Chuan made this judgment about the competition in the local life market in January this year, and it now seems to have become the consensus among the major players in this battlefield.

As the battle in the local life sector evolves from rapid annihilation to long-term competition, how to wage a protracted war under the general environment of cost reduction and efficiency improvement has become a common challenge for all players.

However, for now, Douyin, Meituan, and Ele.me have all chosen the same solution to this problem—changing leadership and reorganizing teams.

Some analysts believe that market competition is a combination of three elements: manpower, material resources, and financial resources. When material and financial resources cannot be increased or even need to be reduced, leadership changes in manpower adjustments are often the most effective means.

First, in November last year, Douyin's local life business announced adjustments. Douyin's commercialization head Pu Yanzi would concurrently serve as the head of the life services business, while the original life services business head Zhu Shiyu was transferred to oversee the first-tier department "Growth and Commercial Solutions."

Following this, in February, Meituan announced adjustments. The home delivery and in-store business groups were integrated under the leadership of former home delivery president Wang Puzhong, while in-store president Zhang Chuan shifted to oversee businesses such as Dianping, charging stations, and others.

In March, Alibaba Group announced that Eddie Wu, chairman of the local life group and CEO of Ele.me, would step down. Wu Zeming, CTO of the local life group, would serve as chairman of Ele.me, and Han Liu, head of Fengniao delivery, would become CEO of Ele.me.

In April, with the release of an email by Meituan founder Wang Xing, Wang Puzhong was appointed CEO of Core Local Commerce. By this point, the three major players in the local life sector—Douyin, Meituan, and Ele.me—had all completed the first step of "changing leadership and reorganizing teams."

Many outsiders summarize the leadership changes as promoting team rejuvenation. However, for companies, age is just a superficial factor. The core consideration in choosing new leaders remains who can lead the team to victory.

From this perspective, the local life sector, now fully under new leadership, seems unlikely to produce an undefeated champion.

Defensive Leadership Changes

"Go to the front lines, go to the scene!" Just after offering this battle philosophy against Douyin in his New Year's message, a series of organizational adjustments marked the end of Zhang Chuan's career in Meituan's in-store business.

In February, Meituan adjusted multiple businesses, primarily integrating the home delivery business group, in-store business group, Meituan platform, and basic R&D, all reporting to Meituan Senior Vice President Wang Puzhong. In-store business group president Zhang Chuan shifted to oversee businesses such as Dianping, SaaS, bike-sharing, and charging stations.

Following the pattern of organizational adjustments—business first, personnel second—Wang Xing's internal email on April 18 added the final touch to Meituan's largest structural change since 2017.

The email reaffirmed the integration of the home delivery and in-store business groups, merging them with the basic R&D platform into "Core Local Commerce," and announced Wang Puzhong's appointment as CEO of this division.

From Meituan vice president in February to CEO of Core Local Commerce in April, Wang Puzhong completed a glamorous transformation in two months, becoming one of two CEOs in Meituan's management structure alongside Wang Xing—a first in Meituan's history. Previously, all business group heads held the title of president.

The formation of Meituan's first-ever dual-CEO structure also marked the end of the "One King, Two Generals" pattern that had lasted for six years since 2017.

One of the "generals," Zhang Chuan, once managed Meituan's in-store business, which had long been the foundation of the company's operating profits. However, in Q4 2022, the advertising revenue representing Meituan's in-store business was outpaced by the commission revenue representing home delivery by 18 percentage points.

The home delivery business overtaking in-store was partly due to the growing scale and categories of home delivery, primarily food delivery. But the bigger reason was Douyin's continuous encroachment on the group-buying market.

Public records show that before 2023, Meituan was not highly alert to Douyin's competition, believing that Douyin's live streaming initially brought mediocre conversion rates and that local life was a "tough job" with seemingly high barriers.

Amid Meituan's complacency, the competition between Douyin and Meituan played out like a frog in boiling water. Douyin's GMV for local life services soared from an unimpressive 110 billion in 2021 to 310 billion in 2023.

Awakening to the threat, Meituan launched discount group-buying and live streaming projects in 2023 for defense, directly driving Q3 sales and marketing expenses up by 56.4%, far exceeding revenue growth.

In this belated defensive rhythm, in-store president Zhang Chuan began conducting frontline research in October last year. However, the damage was already done, and Zhang Chuan's reassignment marked him as the first general sacrificed under Douyin's offensive.

Offensive Leadership Changes

Douyin also changed leadership, but unlike Meituan, which failed to mount an effective defensive counterattack as its in-store market share was eroded, Douyin's leadership change aimed at more aggressive and efficient offensives.

Sources revealed that Douyin Life Services had initially set a 2024 sales target of nearly 500 billion yuan, but after Pu Yanzi took over, it was revised to nearly 600 billion yuan, representing a nearly 100% year-on-year increase from 2023.

The more aggressive target was backed by Douyin's earlier strategy of launching local group-buying at low prices, which, despite Meituan's "live streaming + discount group-buying" defense, achieved initial success and established a foothold.

However, some catering industry insiders noted that low-priced products on Douyin only serve as exposure traffic for in-store visits, while the same low-priced products on Meituan can drive both in-store traffic and food delivery exposure.

One investment, two effects. After integrating home delivery and in-store businesses, fulfillment services and precise consumer traffic became effective tools for Meituan's in-store counterattack.

Public data shows that in Q1 2024, Douyin's pre-redemption GMV for in-store exceeded 100 billion yuan, while Meituan's was 200 billion yuan for two consecutive quarters, indicating a stabilization in market shares.

Thus, adjusting team formations and finding more effective offensive methods became the first priority for Douyin Life Services' new leader, Pu Yanzi.

Reports indicate that Douyin Life Services' original parallel departments—divided by industry into in-store dining, in-store comprehensive, and travel—will be reorganized into three regional divisions (North, Central, South) and an NKA department serving national chain merchants.

Meanwhile, core members of ByteDance's commercialization sales department will be transferred to the life services business to lead these newly established departments. Behind this series of organizational adjustments and personnel appointments, Pu Yanzi is reshaping the tools of war to suit her desired offensive rhythm.

The New Leaders' Consensus

Compared to Douyin's Pu Yanzi, who proactively reshuffled the team after taking office, Meituan's Wang Puzhong had the path to his appointment as CEO of Core Local Commerce paved by the prior integration of home delivery and in-store businesses. The next step is finding more offensive strategies.

Industry insiders suggest that the established low-price subsidies will continue, but under the same competitive strategy, Meituan's efficiency may surpass Douyin's. Meituan's current low-price subsidies are primarily paired with a live streaming shelf model, which not only defends the user mindset for in-store group-buying but also cultivates a new shopping venue via Meituan's live streaming.

However, the similar frontline backgrounds of the two new leaders may still make it difficult for them to avoid head-on competition.

Pu Yanzi joined ByteDance in December 2013, serving as deputy general manager of Toutiao's commercialization and vice president of ByteDance's commercialization sales. Her long tenure in commercialization and sales has earned her a reputation for pragmatism and solving complex problems.

Similar labels apply to Wang Puzhong—"smart, pragmatic, grounded in management, with a big-picture view of business strategy." Since joining Meituan in 2015, he has successively delivered victories in food delivery and flash sales businesses.

Finding the organization's maximum efficiency has also been a primary task for both new leaders in recent times.

Before Wang Puzhong's appointment, Meituan's integration of home delivery and in-store businesses had already improved efficiency in linking merchant partnerships on the supply side. Pu Yanzi's reshuffled Douyin Life Services team adopted a regional division approach to further enhance the sales efficiency of local life BD teams and increase the diversity of merchant supply, rather than limiting competition to dining group-buying.

After the two new leaders' consensus-driven reorganization, Douyin may face its fiercest competition since entering the local life sector in 2021, while Meituan is fighting with its back against the wall with a completely new team.

Regardless of who wins or loses, the final landscape of the local life sector may soon emerge after this close-quarters combat.