Douyin drives into ride-hailing business by aggregating multiple players - PingW...

Douyin drives into ride-hailing business by aggregating multiple players

Douyin drives into ride-hailing business by aggregating multiple players

Zijing Fu

posted on December 27, 2022 0:38 pmEditor : Rebbeca Ren

Meituan and Huawei have also entered the industry by offering aggregation platforms for smaller players.

As T3 Chuxing, a ride-hailing service with 1.531 million daily active users in China, launched its mini-program on Douyin, TikTok’s sister app, talks about Douyin tapping into the ride-hailing industry has been circulating.

People are right to be excited — Douyin’s mini-program access has been opened for ride-hailing service providers since 2019, yet it is the first time that a heavyweight player like T3 has settled in.

However, Douyin is not planning on building its own ride-hailing service. Like WeChat and Huawei, who both launched ride-hailing functions this year, the short video platform is approaching the service as an aggregator, not an operator.

Currently, in order to hail a ride, users need to first scroll to the “mini-program” section in Douyin, then search for the desired service provider, enter the mini-program of that provider, and place orders. The function is buried rather deeply, which means ride-hailing on Douyin is still at its primary stages.

Last July, the Chinese government ordered Didi, the leading ride-hailing platform, to be removed from app stores and suspend new user registrations, citing “serious” problems related to the collection and use of customer data. So far, the app has not been restored.

With Didi temporarily out of the game, industry second-tier players along with new players who have long coveted the industry have jumped at the chance to cut a slice of cake from the former unstoppable giant.

Douyin, which boasts over 700 million daily active users, has emerged as a major source of traffic for ride-hailing providers.

In addition to T3, other ride-hailing providers such as CaoCao and RuQi have opened their own promotional accounts within the Douyin app, and placed ads to direct users to the download page, or coupons to purchase in bulk.

According to data disclosed by the Ministry of Transport, as of September 30, 2022, a total of 286 companies providing “online ride-hailing” services have obtained business licenses, an increase of 9 from June 30.

As more startups enter the ride-hailing space, large internet platforms like Douyin also see an opportunity to test the waters: Instead of going it alone, it’s more flexible to act the role of an aggregator and work with smaller players to diversify revenue streams.

In September this year, Meituan Taxi officially joined hands with Tencent Travel, and the latter currently aggregates a bunch of third-party travel service providers such as Didi, Cao Cao, and Yangguang. Around the same time Huawei launched its own “Petal travel”, which aggregated Shouyue, Shenzhou, T3 and other service ride-hailing providers, and operates in many major cities such as Beijing, Shanghai, Shenzhen, and Guangzhou.

Aggregators such as Douyin, Tencent Travel, and Petal Travel, are unlikely to rattle the whole industry, or challenge Didi’s dominance, but they will offer a fighting chance for smaller ride-hailing providers who target niche scenarios.

For example, Qiancheng, a ride service provider based in Guizhou, China and operates through a mini-program on Douyin, offers tailored services for tourists, and takes them to tourist attraction sites, which are usually located in rural areas. Ride-hailing providers such as Qiancheng can lean on the huge traffic pool within Douyin, and especially the recommendation algorithms to precisely attract users.

According to a Mobile Travel Market Data Report released by Chinese research agency Wangjingshe, the “online ride-hailing” market was 319 billion yuan in 2021, an increase of 18.54% year over year, with a user base of 452 million, an increase of 23.83% year over year.

The online taxi or ride-hailing sector has growth potential both in terms of scale and industry personnel, and even though the industry landscape — which is rather mature and solid now — won’t be changed easily, aggregators such as Douyin will help diversify the market.

In the meantime, with once-blazing growth becoming a thing of the past, the social media upstart has to find more ways to drive revenue. As Rubo Liang, CEO of Douyin's parent company ByteDance, mentioned at a recent staff meeting on Dec. 21, the company missed the target it set for itself in early 2022, and revenue growth has slowed.

Adding an online car-hailing function to Douyin is undoubtedly worth a try, because it can not only improve the app's retention rate and user stickiness, but also make Douyin closer to a “super app”, and ultimately drive revenue growth.

Cover image by Eugene Chystiakov on Unsplash