Tech unicorn ByteDance is ramping up its challenge to Meituan , operator of China’s dominant food delivery provider, through its short video-sharing platform Douyin, the sister app of TikTok , in a move that will expand the country’s e-commerce market for local services. Douyin, which started its local services foray in 2018, is now providing a service covering “local eateries, drinking, fun and entertainment” to its 600 million daily active users (DAUs), showing popular destinations in a city in the form of video clips and offering discounted prices under its “group chasing” strategy. The service has a dedicated channel for many Chinese cities on the platform, offering users with coupons and admission tickets to restaurants and hotels. Douyin encourages users to upload videos that endorse places they like, which its algorithm promotes to their target audience. It has also tested a new mapping feature for users to locate various dining and entertainment establishments, according to local media 36Kr. These recent moves by ByteDance – a company founded in 2012 by internet entrepreneur Zhang Yiming – form part of its ongoing effort to diversify operations and sources of revenue. This initiative includes the launch of its own mobile payment service Douyin Pay , strategic expansion into the video games industry , an education drive and online retail push . The Beijing-based company’s local services drive means it must go after offline merchants to join its platform. At the barbecue restaurant Little Couple in Beijing, there are now two QR codes displayed – one for Meituan and one for Douyin – on each table for customers to buy coupons and set meals. The restaurant’s manager, Ryan Dang, said a team from Douyin walked into the establishment one day to pitch its service and explain how displaying Douyin’s QR code could help bring more customers. “I said yes because one more channel [for marketing] means an additional business opportunity,” Dang said. In the first week of that arrangement, Douyin-generated sales that were much smaller than the restaurant’s business with Meituan, according to Dang. He indicated that only five or six tables bought coupons or set meals through Douyin. By contrast, Meituan brought about 10 orders a day that totalled roughly 1,800 yuan (US$277). Still, Dang said the restaurant will give Douyin some more time to pick up – considering Meituan charges a commission of about 3 per cent, while Douyin is currently free. Analysts said Douyin’s commission-free approach is understandable because it must offer special incentives to both merchants and consumers to get a foothold in the local services market. “It is a common strategy for local services providers to expand under a ‘low-commission, high-incentive’ way at an early stage,” said Zhang Weilin, an analyst at the LeadLeo Research Institute. “But such incentives may disappear when the hype is over.” ByteDance, which has not published operational data about its local services business unit, declined to comment. A representative from Meituan did not immediately respond to a request for comment. Is ByteDance poised to eat everyone’s lunch in China’s internet world? ByteDance had initially set a target of 20 billion yuan in gross merchandise value (GMV) from sales of coupons this year, according to a report by Chinese tech media LatePost . It said ByteDance did not even make 40 million yuan in March. While Meituan has not published its specific GMV for “on-site consumption in stores, hotels and tourist attractions”, the company said it generated 21.3 billion yuan in revenue from that market segment in 2020. Meituan’s GMV for that segment, according to the LatePost report, was more than 200 billion yuan in 2019. The local services business unit of ByteDance has more than 10,000 employees, according to LatePost . By comparison, Meituan – founded by its chief executive Wang Xing in 2010 – had 69,205 full-time staff at the end of 2020, on top of 9.5 million delivery personnel, according to its latest annual report. Ele.me , China’s second largest food delivery platform, is Meituan’s main competition at present. Ele.me is owned by Alibaba Group Holding , the parent company of the South China Morning Post . Meituan raises almost US$10 billion amid hunger for its bonds and stock sale While ByteDance has no delivery team for local services, the company is banking on its large number of DAUs, algorithm and key opinion leaders (KOLs) to drive business expansion. Meituan, by comparison, had 70 million DAUs at the end of 2019. Douyin has launched a campaign to connect its KOLs with restaurants. Its app now has a “shop explorer league” of more than 6,000 video content creators that promote restaurants to their fans. Each explorer should have more than 10,000 followers and publish videos with the location of establishments, according to the company’s rules. Explorers are entitled to rewards if their video campaigns lead to transactions. George Li, a 27-year-old public relations professional in Beijing, works part-time as a Douyin explorer, with more than 290,000 followers. Li said the role not only allows him to “taste the best food in the world”, but also brings him an extra monthly income of more than 10,000 yuan. Li, who makes food review content every day, said he takes an 8 per cent commission on each restaurant order made through his video, plus a 200-yuan reward for visiting a place and making a video campaign about it. “Douyin’s advantage is its huge traffic,” he said. “Promoting food through video also provides a more vivid experience [to consumers] than just pictures.” The brewing rivalry between ByteDance and Meituan has raised particular interest in China because their two founders were born and raised in the same small city of Longyan in southwestern Fujian province. With their homes less than 20 kilometres apart, Meituan’s Wang and Zhang of ByteDance have known each for about 15 years. After working in the same start-up, they moved to different sectors in China’s vast internet market to establish their own businesses. Their businesses are now on a collision course amid the continued growth of China’s internet industry. ByteDance confirmed late on Friday that it had no immediate listing plans , quashing rampant market speculation about such a move. The way Douyin promotes its local services, with coupons and low-commission fees, is essentially the same strategy that Meituan pursued previously, according to Zhang of LeadLeo. “There isn’t much of a breakthrough in terms of marketing and operation,” she said. “But the approach of short video platforms and Meituan is different,” she said. “Meituan recommends restaurants only when users feel the need to open the app and search for food. Douyin and Kuaishou just feed users with recommendations [when users watch videos on their platforms].” China’s TikTok woos merchants to take on Alibaba, Pinduoduo For Douyin, it will take time to build up its own delivery infrastructure and persuade more restaurants to join the platform. Douyin is expected to solve unspecified needs, according to a recent report by market intelligence firm CaasData. “For example, when you’re in a new city, waiting for your car at the airport, you watch Douyin to kill time,” the report said. “That’s when Douyin may feed you with some relevant foodie content [on the new city].” In January, Douyin head Kelly Zhang said the future of the short video-sharing platform was expected to evolve from entertainment and social media into “a lifestyle”.