Written by | He Furong Wu Xianzhi
Edit | Wang Pan
On December 27, Kuaishou and Meituan announced that they have reached a strategic cooperation on connectivity.
In terms of cooperation content, Meituan will launch the Meituan Mini Program on the Kuaishou Open Platform, so as to provide merchants on Meituan with complete service capabilities such as packages, vouchers, reservations and other commodity displays, as well as online transactions and after-sales service. It is reported that the main pilot catering category will continue to launch life service categories such as hotels, homestays, scenic spots, leisure and entertainment in the future.
Meituan believes that an important thing offline is to evolve high-intervention products into low-interventional products and reduce the threshold for consumer decision-making. For example, through the standardized information of the Internet such as evaluation, star rating, and list, the decision-making threshold of some industries, categories, services, and commodities is lowered, making it a low intervention, thereby driving the consumer demand of the entire industry.
From a macro point of view, in the new environment, the business model of "big and complete" in the past mobile Internet is turning to "specialized and refined". One manifestation is that platform-based applications have changed from "horizontal and long" to open cooperation. With connectivity, the cost of capital, compliance, and cycles to develop new businesses through collaboration is obviously much lower than fighting alone.
New opportunities for local life
Meituan's third-quarter financial report shows that the number of annual trading users of the platform in the past 12 months reached 670 million, an increase of 40 million in a single quarter. Maintaining the basics and seeking sustained growth is not an easy task.
Under the trend of consumer content, the rise of content platforms such as Xiaohongshu, Douyin, and Kuaishou shows that KOLs can tap the consumption potential very well.
In the field of local life, Dianping's evaluations, star rating data and content accumulated by user reputation have long become important factors affecting users' purchasing decisions, and consumers often rely on past user consumption evaluations when choosing dining targets, hotels and travel services. In 2015, Meituan merged with Dianping, further consolidating Meituan's accumulation in the field of local life.
Based on past data, Meituan launched lists such as the must-eat list, the must-play list, and the must-live list, and the basis for decision-making was further enriched. The local life platform links a large number of merchants and consumers, and how to guide consumers to make purchase decisions has become more and more important, which is reflected in the platform's services.
"Content" is one of the infrastructures for a platform to create a community atmosphere and enhance consumer stickiness.
In the past few years, Meituan has laid its own content advantage in the field of graphics and text. With the short video, the content planting plate under the rich short video scene has become a new incremental market in the local life field.
According to the 48th Statistical Report on the Development of China's Internet Network released by the China Internet Network Information Center (CNNIC), as of June 2021, the number of short video users in China was 888 million, an increase of 14.4 million over December 2020, accounting for 87.8% of the total number of netizens. Among the younger generation of consumers, short videos are exerting a stronger potential for communication.
In the new media environment, new user needs and scenarios are also generated, and merchants and platforms must seize the opportunity point.
Some consumers have developed the habit of watching video-based content. The content of local life-related eating, drinking and entertainment and other sections is also more in line with the expression of video, and users can experience goods and services more immersively by watching videos, so video grass has become another form of content supplement on the basis of the original graphic grass, and the effect in some areas is even better than that of graphics.
In addition, with the continuous improvement of content scenarios, more potential needs of consumers have been continuously explored, which also shows the diversification of user consumption scenarios in the new media environment.
Traditional shelf-type e-commerce is more about matching, and the starting point of demand is mostly from the active search behavior of consumers. With the diversification of content forms, the grass farming economy will become a new increment in the second half.
Meituan and Kuaishou have reached a cooperation to open up and interconnect data technology and service capabilities, which is equivalent to a complete consumption path for short video users from content to transaction to performance, and will also open up a new incremental market for local life service merchants.
From the perspective of merchants, it is also the trend to adapt to the way of video expression and supplement user sources. In the new market environment, merchants not only need to meet the needs of consumers to obtain information in a variety of ways, but also need to seek increments for brands through new marketing models. Short videos can provide a more intuitive and immersive grass planting experience, which is more conducive to capturing young users, which is especially important for brands to grasp consumer trends.
Whether it is platforms, merchants, or consumers, they are in a critical period of consumption change.
With the diversification of user consumption decision-making paths, the marketing needs of merchants also need to change. The cooperation between Kuaishou and Meituan platforms is also based on the transformation of users and business needs.
1+1>2？
Like e-commerce, it seems not surprising that short video platforms have entered the local life field.
For content platforms, the advantage is on the traffic side. According to Kuaishou's financial report, its average daily active activity in Q3 2021 was 320 million, an increase of 11.9% over Q2. What the platform has to do is to open up the internal commercialization path, enrich the ecology and from content creation to commercialization.
As early as last year, the Kuaishou platform launched the entrance to "local life". In the middle of this year, the Kuaishou Local Life WeChat Mini Program was launched synchronously, and it has gradually become a commercialization town.
At the Kuaishou Ecological Open Conference, Kuaishou said that it would create a "digital city" business ecology. The daily life needs behind keywords such as ichijing and fireworks coincide with those of the US group. The short video content sharing platform has accumulated a large number of content and talents related to eating, drinking and entertainment, and it already has the prerequisites for entering the local life and planting grass.
Content platforms are stronger than tapping potential markets, but it is obviously not an overnight thing to undertake the needs of users in all aspects.
According to iResearch data, the size of China's local life service market will be 19.5 trillion yuan in 2020, and this figure will grow to 35.3 trillion yuan by 2025. It can be seen that there is still a lot of room for growth in the local life market.
Wang Jianwei, senior vice president of Kuaishou, said that the cooperation between the two sides will undoubtedly produce a synergistic effect of "1+1>2", which will provide content creators with a richer mass commodity library while further helping operators achieve diversified income.
The local life service platform links offline business resources with online user needs, offline is supply, online is demand, only demand and supply can develop if demand and supply promote each other.
To link many offline businesses, it is far from being as simple as imagined, meituan has been operating in the local life field for more than ten years and has accumulated millions of offline business resources. Kuaishou has no need to repeatedly build such expensive "wheels", and it is difficult to achieve a considerable order of magnitude.
If we compare local life services to an iceberg, the products, POI information, evaluations and star ratings we see on the platform are only the tip of the iceberg, and the system capabilities stored under the iceberg are the core of ensuring service quality.
As a content platform, Kuaishou has the advantage of traffic exposure, but it lacks the service performance ability on the merchant side, and cooperating with Meituan can avoid the shortcomings of the Kuaishou platform in terms of business resources and services. The most direct value of cooperation between the two sides is to maximize the use of the superior resources of both sides and save costs.
Users only complete the first step of the entire transaction chain through content planting, and the most important thing is that the platform that needs to provide services is to ensure the quality and quantity of consumption. This may also be an important factor in the introduction of content by other players but still unable to revitalize the local life service ecology.
For merchants, the exposure of multiple platforms and multiple channels will undoubtedly drive more growth for brands, but most platforms are difficult to precipitate users for merchants. Meituan's perfect transaction performance ability and sound evaluation system are difficult for other platforms to replicate, which also determines that Meituan is regarded as a platform for long-term operation by merchants.
In addition to the new business, the most important thing is to carry out long-term and stable online stores and brand operations, which is reflected in the accumulation of private domain traffic by merchants, thereby enhancing user loyalty and repurchase rate.
The short video user group is younger and more sensitive to price, while the Meituan user is more loyal and the repurchase rate is higher, and the overlap between the two sides is not very high, and the cooperation can bring increments to both sides. This is also why when the traffic platform enters the local life field in a big way, it is difficult to form a positive impact on the US group.
"Tear down the wall" out of growth
In the context of interconnection, breaking their respective upper limits may be the main factor for Meituan and Kuaishou to come together.
The onlineization of local life is still in its infancy, and the integration with the video industry may accelerate its online rate. Huachuang Securities' earlier analysis report pointed out that the user usage rate of online video and online takeaway is the highest and lowest, the former is 93.7%, and online takeaway is only 42.3%. If it is put into the entire local life service online, it is less than 10%. This also means that the cooperation between Meituan and Kuaishou has a broad space for future growth.
From graphics to videos, from search to KOLs, user habits change, and the complexity of the consumer market requires local life to complete the corresponding transformation. The value that Kuaishou can provide to Meituan includes three points, bringing mature communities and KOLs, different media forms, and potential new business models.
There is a wide range of commercialization and service anxiety in the video industry, through interconnection, Kuaishou does not have to pay more sunk costs, and a MEITUAN can solve most of the problems.
In terms of DAU, meituan has a higher gold content, while Kuaishou has a duration advantage, and both sides can get some new users from each other.
The cooperation between the two sides reflects the attempts of various industries in new forms, and also announces the end of the long era of enterprises. The development of giants does not have to be demanding "omnipotent" big and complete, and the specialization and refinement of each taking advantage of its own strengths will bring about different changes.
If WeChat opened the external link to untie the dead knot of interconnection, then the interconnection between Meituan and Kuaishou may bring a new path to the industry to break through its own upper limit.