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ByteDance Wants to Build an Everything App to Rival WeChat

The company behind TikTok aims to provide food delivery, travel bookings and whatever else people want.

Illustration: Nick Little for Bloomberg Businessweek

As a middle-age restaurant owner who was neither interested in scrolling through viral videos nor likely to create such videos herself, Zhou Meiying never found a lot of use for Douyin, China’s most popular short-form video app. That changed last year, when the Chinese government shuttered Beijing’s restaurants to combat Covid-19. Zhou, 44, began streaming videos of herself preparing her specialty, braised pork knuckles, along with a link that allowed viewers to place orders for delivery. She now gets hundreds of orders each day through the app. “If it weren’t for Douyin, I wouldn’t even be able to pay salaries,” Zhou says. “It’s a new leg we stand on. That’s how we survived.”

The formula is a big deal for Zhou, and a significant development for ByteDance Ltd., the company that runs both Douyin and TikTok, which is available only outside China. ByteDance has primarily focused its operations on its social media apps, with most of its $80 billion annual revenue coming from what they generate in advertising. Last year it began offering food and grocery delivery in big cities such as Beijing and Shanghai. When Douyin shows a user, say, a cheeseburger or a slushy, it includes a link to place a delivery order or a coupon that can be redeemed in person. Users can also search for cinemas, bars and beauty salons inside the app.

Zhou livestreaming on Douyin from her restaurant.Photographer: Andrea Verdelli for Bloomberg Businessweek

The so-called everything app model is popular in China thanks to WeChat, which incorporates elements of WhatsApp, Instagram, PayPal and other services into a single service. None of WeChat’s rivals have come close to providing such a sprawling range, but the success of Douyin’s food delivery experiment raises the possibility that ByteDance could become the first.

ByteDance has spent years laying the foundation for its own everything service. It has branched into video games and online shopping. It has also put increasing focus on real-world commerce through food orders, flight bookings and hotel reservations. Last year, Douyin’s 700 million users increased their spending on these on-demand services sevenfold, the company says, though it doesn’t disclose a specific number. GuoSheng Securities Co. estimates that by 2025, Douyin could facilitate 300 billion yuan ($42.1 billion) in on-demand transactions, generating more than 17 billion yuan in revenue from its commissions.

If it succeeds in doing this, ByteDance would mature into a more significant rival to China’s biggest internet conglomerates, such as WeChat owner Tencent Holdings Ltd., and Alibaba Group Holding Ltd., which offers a wide range of e-commerce and financial services but doesn’t compete in social. “Douyin is this giant amusement park that has something to offer for everyone,” says Dave Xie, a principal at consulting firm Oliver Wyman. “When you get tired of the rides, you will inevitably want to shop or eat. It’s all about occupying your time.” It could also eventually help ByteDance to bring the everything model to other markets through TikTok, assuming it eventually figures out the delicate politics of operating in US and European markets. Spokespeople from ByteDance didn’t respond to requests for comment.

The company sees its recommendation algorithms as its main advantage. On Douyin and TikTok, these systems are dedicated to putting videos in front of users that will keep them scrolling. Presumably they’d also be good at steering customers to the merchandise and services they’re most likely to buy. Users who spend their time watching winter-sport videos, for instance, could be matched with posts embedded with product links for snowboards, ski resort tickets and budget flights to Hokkaido.

Douyin’s everything play began in 2020 during the early days of the pandemic, when it turned on the switch for in-app purchases. Its model, which consisted of enabling influencers to hawk shampoo and lipstick through livestreams, struck a chord with young people during China’s prolonged lockdowns. The company sold about $26 billion in merchandise in its first year in e-commerce, achieving what Alibaba took six years to accomplish. TikTok is now intent on adapting this model to the US and its 150 million users there.

As it expanded into e-commerce, Douyin got more serious about its food business. In June 2022, it began charging service fees for coupons, after having spent two years promoting them among cafes and restaurants. The coupon business is more complicated than livestream shopping, given the need to determine what people might eat based on their online activity and location. It also puts ByteDance in direct competition with the local food-delivery leader Meituan, which in 2021 generated about a fifth of its $28 billion revenue from its coupon business.

In August, Douyin announced that it had teamed up with Alibaba’s Ele.me app to offer food delivery for its users. (The tie-up quickly propelled a counteralliance between Meituan and Kuaishou, which is a distant second to Douyin in China’s short-form video app market.) ByteDance is also in preliminary talks with Chinese conglomerate Dalian Wanda Group Co. to acquire its digital payments unit, Bloomberg News reported in May, a deal that could help Douyin tap into millions of shoppers at Wanda’s plazas across Chinese cities.

ByteDance has more than a thousand employees working to recruit merchants. For Zhou, it took months of persistent calls and trial runs by professional streamers before she got on board. Finally, she says, “I was convinced that I need to learn how to do flash sales and attract livestream traffic and all that.” Her business now livestreams for five hours daily on Douyin—close-up shots of pig knuckles simmering in a giant pot, which are then drizzled with Zhou’s secret sauce before they’re plated while her employees linger just off-camera, shouting out the details of discount offers. This may not sound like the recipe for particularly compelling video content, but it turns out to be attractive enough for viewers who would typically stay for just minutes before they place an order. Zhou is now a true believer; she even made food packaging boxes with a QR code that links to the restaurant’s account on the app.

Simmering pork knuckles on Zhou’s Douyin stream.Photographer: Andrea Verdelli for Bloomberg Businessweek

In December, ByteDance elevated Douyin’s head of livestreaming and on-demand services, Han Shangyou, to run the whole Douyin platform in China. He reports directly to Zhang Nan, the former Douyin head who’s now in charge of ByteDance’s China operations. “Douyin is much more than its slogan of ‘record your beautiful life,’” Han told a group of Chinese merchants in September. “It has become a lifestyle.”

Meal delivery has the potential to become another reason for users to spend money through Douyin on a regular basis, but it also requires substantial investment. Although customers seem happy to order food through smartphone apps, companies around the globe have struggled to make steady profits through delivery services.

Meituan for years has sustained deep losses making arrangements to have enough scooter riders to deliver 60 million orders a day. Douyin’s delivery service operates in only a handful of cities, via partners like Ele.me and SF Holding Inc. “User traffic is definitely Douyin’s advantage, but when it comes to fulfillment and onboarding merchants, this kind of dirty work cannot be achieved in one day,” says Oliver Wyman’s Xie.

ByteDance has made less progress elsewhere in its sprawling online content empire, retrenching on projects such as games development and music streaming in China. That could hold back Douyin’s prospects as a true all-in-one platform. Meanwhile, WeChat is looking to encroach on Douyin’s main territory with its own short-video feed, called Channels. WeChat expanded the number of viewers on the service threefold in 2022 and generated more than 1 billion yuan of ad sales in the fourth quarter.

But Douyin is proving that its experience cultivating an influencer economy for its main app is translating into its other services. This has given rise to businesses such as the content studio run by Xu Mengjie, a 24-year-old in Hangzhou, in Zhejiang province. Each day, Xu and six other streamers take turns hawking coupons for spicy crayfish, boba teas and meat skewers, with her business taking a cut of each sale.

Xu, who has a master’s degree in finance, says her company can generate about a half-million yuan in monthly revenue, way more than she would’ve earned at an entry-level job in private equity. “This is a brand-new avenue with barbaric growth,” says Xu, who has 170,000 followers. “If I get in early and do this right, there can be a bright future.”

That future relies on her ability to keep on Douyin’s good side. Xu says 90% of viewers discover her sessions through their interest-based feed, meaning her business’s viability depends entirely on how Douyin’s algorithms present her content. She’s constantly monitoring her numbers and trying to anticipate how she can get the software to reward her. If sales numbers are poor, she says, the app will punish her by shrinking her access to users. “It’s actually quite tortuous,” she says.

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