The application’s local life division, which set a gross merchandise volume (GMV) target of CNY 50 billion at the beginning of the year, is on a rampage.
The gross merchandise volume (GMV) of TikTok's local life division in the first half of the year was around CNY 22 billion. Among them, its GMV exceeded 10 billion yuan in the first quarter and was between CNY 11 to 12 billion in Q2 of 2022.
TikTok is one of ByteDance's products. Its local life division mainly serves local merchants such as restaurants, hotels, travel and entertainment businesses. It supports both take-out services and in-store purchase.
In the first half of this year, several key provinces of TikTok's local life division, such as Hubei, Henan and Chengdu, are also breaking peaks one after another. According to sources, Hubei and Henan's single-month GMV in June exceeded CNY 300 million and CNY 200 million, respectively.
In addition to GMV, the advertising revenue generated by local life is another important target for TikTok. This year's revenue target for local advertising is CNY 30 billion, double that of last year.
Affected by the pandemic, the overall market for local life business is showing a downward trend, but TikTok is growing against this trend. Domestic competitors such as Meituan (3690:HK), RED and 58.com (WUBA:NYSE) have noticed this and are worried about it.
All evidence suggests that the local life business is the third growth driver for TikTok. In June of this year, it started to draw commissions from merchants with an average service rate of 3% for each product category. Besides, the rates for marriage and parenting education are 8% and 4.5%, respectively.