The US group wants traffic, Kuaishou wants to cash out, and the long-overdue marriage between Kuaishou and the US group seems logical.
On December 27, Kuaishou (01024. HK) announced a strategic partnership on connectivity with 03690.HK.
Based on the Kuaishou open platform, the two sides will open up content scene marketing, online transactions and offline fulfillment service capabilities. The cooperation will enter the trial operation stage on New Year's Day and Spring Festival consumption season in 2022.
At present, users can already access the Meituan Mini Program through the Kuaishou APP, support group purchase, and temporarily do not support takeaway. In the Douyin APP, meituan did not cut into the transaction link, and a series of official accounts were only used for brand display. If the user wants to place an order, he needs to download the APP separately.
It can be seen that meituan's operating strategies on the two short video platforms are obviously different.
Before the cooperation between the two sides, Douyin had gathered R&D and POI teams in 2018 to launch local life services, and officially entered the local life field in 2019 and launched a group purchase service. In July this year, it also extended its tentacles to the supply side and launched the "Heartbeat Takeaway".
The short board of the supply side has always been a problem that Douyin and Kuaishou have to face when entering the local life industry, and Douyin's move has undoubtedly sounded an alarm bell for Kuaishou. If Douyin makes up for the shortcomings, will Kuaishou still have a chance to live in the local battlefield?
Similarly, if Douyin gathers the two "dragon balls" of traffic and supply-side performance, the US group will face an unprecedented "dragon", and its impact will even be greater than the harassment tactics of the old rival Hungry.
"The enemy of the enemy is the friend", according to this logic, this long-overdue cooperation seems logical. The northeast old iron and the hard-working Fujian people have found a common appeal.
Meituan needs to stabilize the basic disk
If it is said that more than a year ago, meituan and douyin did not violate the river water, then now the competition between the two is inevitable: douyin has launched an impact on the meituan from the two directions of traffic and supply.
In September 2020, the official announcement of Douyin exceeded 600 million. Until the third quarter of this year, Kuaishou's daily active activity only reached half of douyin's September 2020.
Douyin's latest big move in the field of local life is that it internally tested its own takeaway business "Heartbeat Takeaway" in July this year. In August this year, Douyin officially cooperated with McDonald's to launch a live broadcast of the "McDonald's Jitter Gold Store" account.
During the 818 Wonderful Good Things Festival, the GMV reached 700,000 in the live broadcast room in 10 days, the audience liked nearly 20 million, and the number of fans exceeded 710,000.
It is worth noting that the overseas version of Douyin," "Tik Tok," has also started a takeaway business. This shows that ByteDance really wants to find new growth points: even if it is "unfamiliar with life" overseas, it is necessary to launch a takeaway business. This also tells us how important it is to live locally inside the byte.
In the local life competition, the leading position of the US group is still stable, and the competition for "Hungry" can only protect itself, and even if the fledgling douyin comes with its own buff, it is not easy to surpass the US group.
However, there has been a subtle change in the interior of the US group, and the fortress is often breached from the inside.
In the third quarter, the number of transactions in Meituan's catering takeaway business declined. Chen Shaohui, CFO of Meituan, attributed the influencing factors to the epidemic and the macro environment. "The year-on-year growth rate of the catering industry in the third quarter fell to about 4%, and the growth rate of the two-year growth rate fell by an average of 1%, and the growth rate of the catering industry will continue to slow down in the next few quarters."
If you stretch out the time scale, you will find some details with less granularity.
In the third quarter of 2018, the number of transactions in Meituan's catering takeaway business was 2.27 billion, an increase of 32.6% year-on-year.
In the third quarter of 2019, the growth rate was only single digits (8.76%), compared with 24.93% in the third quarter of this year. This shows that the impact of the macro environment on the number of food and beverage takeaway transactions has long begun and will be long-term.
At the same time, Meituan needs sufficient bullets to develop new business.
In the third quarter, Meituan's net loss was as high as 9.99 billion. Since the fourth quarter of last year, the scale and speed of its net loss have shown a rising trend, growing from 5.9% to 20.5%.
At this time, the catering takeaway business, which contributes half of the revenue, is an indispensable source of funds. No matter from which point of view, Meituan's catering takeaway business cannot be lost.
Revenue from the food and beverage delivery business is known to be equal to the number of transactions × the average order. In the case of little overall fluctuation in the average order value, increasing the number of transactions to stabilize the basic disk will be the key operating direction of Meituan.
In terms of users, Meituan and the entire catering industry online need a strong promoter to promote the development of the next stage. One fact that is quite different from our daily perception is that the online penetration rate of China's catering and takeaway industry is not high.
According to the "China Takeaway Industry Development Report in 2019 and the First Half of 2020" jointly released by the China Hotel Association and the Meituan Research Institute, it is expected that by 2020, online catering will account for just over 20% of the entire catering industry.
In horizontal comparison, the penetration rate of China's e-commerce industry has reached 37%.
The new scene of short video is conducive to improving the online penetration rate of the catering and takeaway industry. The Kuaishou can deliver ammunition to the US regiment from two aspects.
On the one hand, Meituan needs the traffic of Kuaishou and the consumption capacity of laotie.
As of the third quarter, Kuaishou's monthly active activity has reached 570 million, which is a rare traffic treasure. At the same time, the live broadcast business has become the second largest source of revenue for Kuaishou, with a single quarter revenue of nearly 8 billion yuan, which shows that Kuaishou Laotie has strong consumption power.
On the other hand, there is a geographical misalignment in the distribution of users between Meituan and Kuaishou, and the cooperation between the two helps Meituan to pull new ones from the sinking market.
Taking takeaway as an example, the number of users in the first- and second-tier cities in the industry accounted for 67.8%, while the number of users in Kuaishou third-tier and below cities accounted for more than 55%.
Therefore, in the case of changes inside and outside the industry, Meituan has the dual need to increase the number of transactions and user growth.
Kuaishou needs to speak for itself
Kuaishou's appeal and meituan's appeal are partly overlapping.
Prior to working with Meituan, Kuaishou had already launched a local life service feature in 2019.
Kuaishou knew that the performance ability of the supply side was its own shortcoming, so At that time, Kuaishou issued a series of attractive support policies. Merchants can open stores for free without deposit and security deposit, and Kuaishou officially provides incentive policies free of charge to support its high-quality traffic resources.
In July 2020, Kuaishou launched the "Local Life" entrance in the "More Functions" section of the APP. It can be seen that Kuaishou has no small ambitions for local life.
Whether it is Douyin, Kuaishou, or Ali, the local life market is worth their heavy troops. According to iResearch data, the size of China's local life service market will be 19.5 trillion yuan in 2020 and will grow to 35.3 trillion yuan by 2025.
However, in Kuaishou's revenue structure, local life did not play the expected role.
Taking the third quarter of this year as an example, the revenue composition of Kuaishou is "online marketing + live broadcast + other" three sets. Among them, the online marketing business is growing steadily, and other businesses, including e-commerce, account for only 9.1%.
The battle for local life did not make much of a splash, which was undoubtedly worse for Kuaishou.
Since its listing in February this year, Kuaishou's performance in the capital market has been in a downturn. On the first day of listing, its market value reached HK$1.23 trillion, and now only HK$305 billion remains, down 75.2%.
The reason is that the capital market has previously overestimated the prospects of Kuaishou, and Kuaishou has not used solid performance to justify itself after its listing. This is especially evident after Kuaishou released its third-quarter financial report.
Kuaishou's three quarterly reports are excellent compared to the previous ones. However, its stock price rose by about 5% on the second day of the third-quarter earnings report, and then continued the previous downward trend, which is currently only HK$72.55.
This shows that the capital market is still holding a wait-and-see attitude. The core of this is, can the high growth of users in the third quarter of Kuaishou be sustained? When will the losses caused by high user growth narrow?
In the third quarter, the Kuaishou APP and the Kuaishou Express Edition both made efforts to push the MAU of Kuaishou to 572.9 million, setting a new high and sweeping away the previous decline.
But if you look at the trend between MAU, DAU and losses, you will find that the situation is not optimistic. Since the first quarter of this year, the loss growth rate of Kuaishou has begun to soar, reaching 401.4% in the third quarter, far exceeding the growth of MAU and DAU in the same period.
Kuaishou only answered some of the questions raised by the capital market: the growth of users has returned, but the days of profitability are getting farther and farther away.
Considering that the market position of the US group has been solidified, and Kuaishou has not yet sat firmly in the country. Kuaishou's appeal for this cooperation focuses more on the user side, improves user stickiness by providing users with richer consumption scenarios, and consolidates the user base.
The Internet is back on its own
Another point that has to be taken into account in this cooperation is the impact of the policy side. For the Internet industry, the impact from the policy side has never been as "valued" as in the past year.
The merger of tiger teeth and fighting fish is denied as a landmark event. This kind of merger, which has been staged many times in the Internet industry (Didi merger fast, Meituan merger with Dianping, 58 merger and catch-up), has been affected by the policy for the first time.
The State Administration for Market Regulation made it clear in the announcement that the decision was based on the consideration of "standardized, healthy and sustainable development of the online game and game live broadcast market".
Therefore, the cooperation between Meituan and Kuaishou gives people the first impression of "interconnection". This shows that after 2021, the impact of policies on the Internet has penetrated deeply into corporate decision-making.
In addition to the policy changes, the cooperation between Meituan and Kuaishou is also closely related to the development trend of the Internet industry, and it can even be said that this move is exactly what the two follow. Before the tightening of regulatory policies, the industry had already encountered development bottlenecks on the user side and the business side.
Internet platforms have natural advantages, with the continuous increase of users, Internet platforms can quickly harvest traffic at a small cost, and then monetize. Now, there is not much room left for user growth in the entire Internet industry.
According to CNNIC (China Internet Network Information Center), as of June 2019, the size of China's Internet users was 854 million, growing to 939 million in June 2020 and 1.011 billion in June this year. Growth slowed to 7.67% from 9.9% in June 2020. Before 2011, a growth rate of more than 20% of china's Internet users was the norm.
This means that Internet companies have to face the facts: say goodbye to rough growth and find increments from the stock. The difficulty and competitive pressure can be imagined.
On the business side, the characteristics of China's Internet industry are that model entrepreneurship is the mainstream, and 99% of the markets you can see in e-commerce, group buying, search and so on are the same.
After more than two decades of development, there are fewer and fewer new opportunities in the model, and the difficulty of innovation at the bottom is very high, which makes the big and small giants fall into business anxiety. Even Didi is doing community group buying, which is a true portrayal of this situation.
Many factors tell the Internet industry participants a somewhat cruel fact: the bottleneck of the development of the Internet industry.
However, the cooperation between the two also tells the industry inside and outside that although there have been unprecedented changes in the industry environment, there has never been a lack of opportunities, but a lack of eyes to find opportunities.