Text丨Chen Kaile Editor丨Shi Lei
Qingdao, located in the southeast corner of the Jiaodong Peninsula and bordering the Yellow Sea to the east, is known for its seafood, beer and sailing events. Normally, the seaside city doesn't come alive until mid to early August, when Sailing Week begins.
But in mid-to-late March, Qingdao welcomed a group of special guests early. On March 21, Kuaishou held the "Kuaishou Local Life-Cohesion Ecological Conference" in Qingdao. In addition to Xiaogu, who is in charge of the local life business, Wang Jianwei, who is in charge of the e-commerce and commercialization business, and a number of Kuaishou executives appeared, a total of more than 1,000 merchants, influencers and Kuaishou service providers also gathered here.
As one of the first six cities to enter and run the single-city model of Kuaishou Local Life, Qingdao's valuable experience enabled Kuaishou to quickly cover all first-tier and 15 new line (third-tier and below) cities in the following six months, and Qingdao has also witnessed how the Kuaishou local life team has grown from less than 100 people at the beginning to 8900 people today.
When Douyin and Meituan are fiercely fighting in first- and second-tier cities, the 700 million old iron users in the Kuaishou ecosystem have become a new growth engine for group buying merchants. This group of young and middle-aged people in counties and townships with abundant economy, abundant time, and attention to cost performance have built a trillion-dollar local life service market in the sinking market.
01
Group buying merchants
Find growth in 700 million old iron users
Tangshan, Hebei Province, less than 600 kilometers away from Qingdao, has a permanent population of more than 7.7 million, but more than 5 million are distributed in counties and towns, far away from urban areas.
The Tangshan Nanhu Lantern Festival has been held for four consecutive sessions before the epidemic and has a certain influence in the local area. In-depth coverage of more than 5 million potential users in cities, counties and townships, since last year, the organizers of Tangshan Nanhu Lantern have begun to lay out in Kuaishou: warm-up in mid-December, put tickets on the shelves in January of the following year, cooperate with the distribution of videos to create topics, and at the same time launch special early bird tickets to attract traffic. Soon, the South Lake Lantern Festival sold 20% of the overall tickets in Kuaishou. The person in charge of the project said that Kuaishou covered users including Tangshan County and Township, which was a proper increment.
Whoever catches the incremental users will catch the growth!
Kuaishou has the most sinking users in China. Of the nearly 700 million monthly active people, 60% were born and live in new-tier cities (third-tier cities and below) far away from Beijing, Shanghai, Guangzhou and Shenzhen. Under the age of 30, the "backbone" group between the ages of 30 and 50 is the core, accounting for 40% respectively. They are not bothered by 996, they have a lot of free time to watch short videos and live broadcasts, although their income is not as good as that of first- and second-tier young people, but after paying off the mortgage, they still have nearly 2,000 yuan per month for consumption.
This group of people has a lot of money and time, and when urban youth are willing to pay for their own consumption, they pay more attention to cost performance and are keen to "gather wool". Before Kuaishou, if this group of people wanted to eat, drink and have fun every day, they could only queue up, order, and settle in offline stores, which formed a huge local life market.
With the Kuaishou layout, this hidden market was finally revealed. In the first half of 2023, Kuaishou will enter six cities including Qingdao, Harbin, and Shijiazhuang for the first time. Taking Qingdao as an example, Kuaishou Kaicheng achieved 5 million GMV in a month, attracting more than 300 local merchants to settle in 50 days. Overall, in the fourth quarter of 2023, Kuaishou's local life GMV surged 25 times year-on-year, and the average daily payment user scale surged 40 times year-on-year.
Harbin has a permanent population of more than 9 million, and in February 2023, Kang Yongfu opened the first 1,000-storey store here. This bakery is far away from the downtown area of Harbin and is not in a good location. But in March of the same year, Kang Yongfu settled in Kuaishou, not only through the distribution of talents, but also through short videos and live broadcasts, and the six-inch mille-feuille cake of more than 100 yuan quickly became a hit. Last winter (October ~ December), there was a mille-feuille that actually paid nearly 9 million yuan in GMV, which was the TOP1 best-selling list of Kuaishou Harbin bread and desserts.
In addition to the vast emerging markets, merchants can also operate in Kuaishou at a very low cost. The rising cost of customer acquisition in the first- and second-tier markets is the result of multi-platform competition and user grabbing. However, the vast new line market covered by Kuaishou is centered on users who are "rich and free" in third- to fifth-tier cities, especially in the northern region, where Meituan and Douyin have not yet taken root, and the concentration of new customers in group buying is high, so merchants can avoid the pressure of customer acquisition costs due to rising platform competition.
In April 2023, Meituan Kuaishou had about 139 million overlapping users, accounting for only 35.3% of Meituan's users. The overlap of users on Douyin Kuaishou is also declining. In May 2022, there were 103 million high-sticky users on the main Kuaishou website overlapping with Douyin, accounting for 26.1% of Kuaishou users, and this proportion dropped to 22.2% a year later.
In the highly competitive environment of platforms, group buying merchants often face challenges. In recent years, some catering businesses operating in first- and second-tier cities have had to make a "either-or" decision for various reasons, and some products have even been temporarily removed from the shelves. However, this also reflects the fierce competition in the market and the careful consideration of businesses for their own development from another perspective.
At the same time, those merchants in the new line market have been able to develop steadily in the competition due to the relatively stable market environment. These markets provide a favorable environment for local businesses to focus on improving their product quality and service levels without worrying too much about the impact of external competition. It can be said that the new line market provides a shelter for local businesses to develop to a certain extent, enabling them to maintain their competitiveness in a highly competitive market environment.
02
How the trust relationship is secretly formed in the era of short videos
Live broadcasts and short videos can carry more content, but they only stimulate unplanned demand, and the outstanding performance is that the verification of group purchase coupons is not high. Ebang Power learned that in the early days, the write-off rate of catering products on ordinary short video platforms was 50%, and the write-off rate of some wine and tourism products was even lower. Planned needs such as meals are still firmly controlled by graphic platforms. It is rumored in the industry that the write-off rate of catering products on a graphic platform reaches 95% within 5 minutes, and the most likely explanation for this is that users are still accustomed to paying on the platform after consumption under a strong mind.
Today, the write-off rate of Tangshan Nanhu Lantern Festival in Kuaishou has reached 62%, more than ten percentage points higher than that of other platforms. Hua Siyi, a chain brand that is positioned as a popular flower shop, usually has a write-off rate of 40% in Kuaishou channels. To Kang Yongfu's delight, in addition to high write-off, nearly half of the users will search for thousands of layers in Kuaishou, and then place an order for repurchase.
From content planting to active user search, from unplanned requirements to planned needs, these changes mean that the user mind of Kuaishou's local life is rapidly being established.
The question then arises, in addition to Kuaishou, there are many short video players, and they also intend to lay out local life, how can Kuaishou quickly build a mental fortress for users in the situation of players watching?
Trust is at the heart of local life.
Before the advent of online reviews, the quality of a restaurant's taste and service depended on the spread of offline word-of-mouth by users. Before entering the restaurant, we used to observe the number of diners in the restaurant, and pursued the concept of "food with few people must be poor". It wasn't until Dianping, which was born in the era of graphics and texts, that it gradually built up users' trust in online service platforms with billions of real user reviews over more than ten years. For example, the word-of-mouth score of reviews will directly affect the business quality of merchants.
With the advent of the short video era, in Kuaishou, the construction of trust may not be so troublesome. Before entering the local life business, the company had already shown a sticky side of users. On March 20, Kuaishou's just-released financial report for the fourth quarter of 2023 showed that in the current quarter, the average monthly shopping amount of Laotie users who placed orders on the Kuaishou platform exceeded 1,000 yuan, and the average daily usage time of active daily active users exceeded 2 hours.
In August 2023, Kuaishou launched the "Flying Bird Project" for the first time. So far, the program has launched three phases, and group buying merchants can sell products to users through local influencers. Ebang Power observed that most of the people who participated in the "Flying Bird Plan" were middle-waist talents, and there were not many head talents. These middle-waist talents are densely distributed in the counties and towns under the new tier cities, and their fans range from hundreds to tens of thousands. It is these influencers who have become a bridge of trust between merchants and users.
In Kuaishou, a fan of a blogger may also be a mother in the surrounding community, and a recent college graduate is also easy to become an opinion leader among alumni. The same social role not only becomes the emotional bond between the blogger and the fans, but also makes it easy for the blogger to know the fans' favorites.
Zhang Wan from Xuzhou, Jiangsu Province, is a mother of two children. Starting in June 2023, Zhang Wan will distribute KFC and Wallace packages that children are keen on in Kuaishou, with monthly sales of more than 1 million yuan and a write-off rate of over 60%. According to Zhang Wan's observation, most of the fans are close to her age, between 31~40 years old, and nearly eighty percent of them are also women. Women are also the core user group of Kuaishou, accounting for nearly 60%, and they are also the main consumers of local life products.
Xiao Zheng, who was born in 98, is in charge of the account "Xiao Zheng Don't Eat". Among the more than 30,000 followers, many are peers under the age of 30. Xiao Zheng is keen on Honey Snow Bingcheng and Luckin, and many fans will ask Xiao Zheng about drinks around him in private messages, and occasionally chatting and becoming offline friends. Last year, this group of young people under the age of 30 contributed more than 40% of Kuaishou's local GMV.
From the era of graphics and texts to the era of short videos, on the Kuaishou platform, the affectionate call of "Lao Tie" has invisibly woven an unbreakable bond of trust between anchors and fans.
03
Service retail is coming
A new strategy for group buying merchants
There is no doubt that the domestic consumption structure is undergoing a change.
In August last year, retail sales of services were included in economic performance statistics for the first time. Prior to this, in January ~ July, the growth rate of domestic retail sales of services has been significantly faster than that of retail sales. When it comes to the local life market, iResearch predicts that the local life service market will reach 35 trillion yuan by 2025.
As the population gradually flocks from rural areas and towns to cities, they also have an urgent need for service consumption. Data show that every percentage point increase in the urbanization rate can boost consumer demand by more than 200 billion yuan. According to data from the National Development and Reform Commission, there is still room for improvement of nearly 5% in China's urbanization rate in the next six years.
Only the old iron users surging between counties, towns and cities contain trillions of consumer demand.
Between the changes, Chinese people no longer pay attention to simple commodities when they consume, but the common pursuit of goods + services. In the past, the only thing that affected a restaurant's business was whether the food was delicious or not. Nowadays, in addition to taste, cost performance, dining environment, service attitude, and the ability to acquire customers online will jointly determine a restaurant's business.
Especially in the new consumption situation, whether it is the first and second tier cities, or the new tier cities, it has become a consensus that cost performance has become the core force leading the business. Especially in first- and second-tier cities, the 66 yuan ice cream has fallen into the question of "harvesting leeks", and the price of the supermarket unicorn of the standard Sam's Club has been repeatedly reduced, while the 32 yuan ultra-low price self-service hot pot brand has grown all over Beijing.
In Kuaishou, group buying merchants, influencers and even users may not have the same interpretation of the ultimate cost performance. However, the diversified understanding also implies that under the vast ecology of Kuaishou's local life, everyone can find their own way of doing business.
Bao Ma Zhang Wan, who distributes KFC, Wallace and other chain brands, believes that the ultimate cost performance is a special price for big brands, because once a big brand reduces its price, the user perception is extremely strong. Zhang Wan even figured out a set of playing methods: sort the packages according to the price, and give priority to selling low-priced packages during the live broadcast, such as 9 yuan 9 products. "The first time to broadcast, the platform still has traffic tilt. ”
Low price and high quality are the strategy of Xin Xiaozhi, who has more than 1.8 million fans in Kuaishou and sells more than 1 million yuan per month, of which 70% of the orders come from fans. In order to ensure low prices and quality, he bypassed middlemen and cooperated directly with manufacturers.
Checafe, which provides repair, beauty, maintenance and other automotive aftermarket services, has more than 30,000 offline cooperative stores across the country, of which more than 20,000 stores have launched Kuaishou POI (Point of Interest), and received 100,000 Kuaishou orders in less than 80 days. Mr. Mo, the person in charge of the car café, believes that the cost performance is not completely determined by the price, but also includes the quality of service and category. "Car washing, car detailing, maintenance, repair, these additional services can bring additional conversion. ”
In the context of the growth of service retail and the further increase of urbanization rate, Kuaishou has found 700 million old iron users for group buying merchants in the vast counties and towns, providing an emerging incremental market for low-cost operation.
Now, this local life service revolution led by Kuaishou is not only a subversion and innovation of the traditional business model, but also a deep excavation and release of the consumption potential of the sinking market.
Generally speaking, once the window of an emerging market is opened, the platform will quickly enter the growth period. During the growth period, businesses will pour in, explore how to play, adjust business strategies, and grow rapidly.
This bonus period doesn't last forever.