Kuaishou Local Life continues the golden rule of Internet entrepreneurship
When the mobile Internet was just emerging in China, there was a golden rule of entrepreneurship circulating in the Internet circle: "All industries are worth redoing".
Today, in the era of stock, this set of rules has also continued. Nowadays, almost every Internet platform wants to redo the local life business.
Recently, Kuaishou held a local life ecology conference with the theme of "All group purchases are worth redoing in Kuaishou".
At the meeting, Xiao Gu, senior vice president of Kuaishou and head of the local life business department, said that as an incremental platform with 700 million old iron users, all group purchases are worth redoing in Kuaishou.
Source: Internet
For the local life business, Kuaishou founder and CEO Cheng Yixiao also has a high sustenance. Cheng Yixiao believes that 2023 is the first year of Kuaishou's local life business in the true sense, and many breakthroughs have been achieved "from 0 to 1".
Cheng Yixiao said, "As a high-quality content supply, the local life business not only contributes to GMV, but also can better meet user needs, contribute user value to the platform, and improve user stickiness, which is one of the new businesses that we value very much." ”
Of course, Kuaishou local life is doing well. According to the data, in 2023, the GMV of Kuaishou's local life will increase by 25 times, the number of buyers will increase by 23 times, and the number of users in new tier cities will increase by 545%. The average monthly shopping amount of Lao Tie users who place orders on the Kuaishou platform exceeds 1,000 yuan, and the average daily usage time of active daily active users exceeds 2 hours.
The Kuaishou Local Life Division was only established in October 2022, and Kuaishou Local Life has made great strides in a short period of time.
In February 2023, Kuaishou opened the city verification of local life business in Shanghai, Harbin, and Qingdao. In one month in Qingdao, Kuaishou's local life business has achieved good results, including more than 5 million GMV and 200,000 monthly sales.
Compared with January 2023, Kuaishou Local Life's consumer user scale increased by 498% in June, payment GMV increased by 848%, influencer monetization scale increased by 212%, and premium influencer scale increased by 816%.
Since February 2023, the scale of pilot operating cities has been expanded, with 16 key operating cities, including nearly 50 cities serving agents.
It can be seen that in the past year, Kuaishou has made considerable progress in promoting the local life business, which has also made Kuaishou more determined to sprint in the field of local life.
At the same time, Kuaishou announced that in 2024, it plans to invest in billion-level platform subsidies and 100 billion traffic in group purchase marketing, and support 1,000 million-GMV brands. It is believed that the local life war of Internet companies will become more and more lively in the future.
What is the situation of local life?
Judging from the current local life situation, in addition to Meituan and Ele.me, there are also content platforms such as Douyin, Kuaishou, and Xiaohongshu, all of which want a piece of the pie.
According to iiMedia Research, the size of China's local life service market was 19.5 trillion yuan in 2020, and this figure will grow to 35.3 trillion yuan by 2025, with a compound annual growth rate of 12.6%.
In such a trillion-level market, the overall online penetration rate is only 12.7%, and it can still maintain a growth rate of more than 20% in the next 3 to 4 years.
Although the trillion-level market is indeed a piece of fat, the local life market is also difficult to bite, and everyone wants to take a bite, so it is even more difficult to start.
For example, in January this year, Pinduoduo's Duoduo Grocery announced that it would stop its local life business. In mid-December last year, Duoduo Grocery had just started the investment promotion of the local life to store business, and from the details of the investment promotion announced at that time, the local life business of Duoduo Grocery included in-store catering coupons, in-store hotel coupons, attraction ticket coupons, movie tickets, etc.
Source: Screenshot from Weibo
According to the original plan, the local life project of Duoduo Grocery will be launched nationwide after the Spring Festival in February this year. However, in the last week of 2023, investment promotion personnel in some areas received instructions that the project was suspended and that they would wait for notice when it would restart.
However, some market participants pointed out that the suspension of business does not mean that Pinduoduo will give up the local life market. Local life has a broad market space and shows a trend of rapid development, and there is no reason why Pinduoduo should not make a layout.
At present, Pinduoduo does not have the ability to threaten Meituan, the "first brother of local life", and Meituan's current number one rival has changed from Ele.me to Douyin.
In recent years, Douyin has gained momentum in local life. According to the "2023 Annual Data Report" of Douyin Life Service, the total transaction volume of Douyin Life Service Platform will increase by 256% in 2023, with stores covering 370+ cities, compared with last year, the platform's short video transaction volume will increase by 83%, and the platform's live broadcast transaction volume will increase by 5.7 times.
Source: Douyin
And Meituan is not slack in the face of this strong opponent, and the smell of gunpowder between the two sides is getting stronger and stronger.
At the beginning of this year, Zhang Chuan, president of Meituan's in-store business group, recently sent a rare internal letter. In the letter, Zhang Chuan pointed out the "operational policy" of Meituan's arrival in stores this year and the direction of change. He elaborated on the competitive environment and coping strategies of Meituan's in-store business, especially emphasizing the construction of a new flywheel with "low prices every day" as the key.
From the current point of view, Kuaishou has already obtained the ticket to local life in the local life, and the next step is to see how Kuaishou uses the sinking style to sprint in the battle of the number one players such as Douyin and Meituan Ele.me, and grab the market belonging to Kuaishou.
Where is Kuaishou's confidence
In the field of local life, compared with players such as Meituan and Douyin, does Kuaishou still have a chance as a latecomer?
From the perspective of Kuaishou's advantages in entering the local life, as a short video platform with nearly 400 million monthly active users, it can well import the traffic of the APP into the local life business.
On the other hand, just as Douyin uses a low-price strategy to expand the market size, Kuaishou also relies on this kind of play to seize the market.
The editor-in-chief observed in the Kuaishou group buying channel that most of the products in the current Kuaishou group buying channel have the words "Kuaishou subsidy", and the prices are relatively low.
Source: Screenshot from Kuaishou APP
In addition, Kuaishou mainly focuses on the sinking market, and its competitiveness is not too large, and the overlap between Kuaishou and Meituan users is low. According to data from QuestMobile, in April 2023, Meituan and Douyin overlapped with more than 300 million users, accounting for 81.0% of Meituan's users, but Meituan and Kuaishou overlapped with about 139 million users, accounting for only 35.3%.
At the same time, Kuaishou also maintains a cooperative relationship with Meituan, and as early as December 2021, Kuaishou and Meituan reached a cooperation, and Kuaishou users can purchase group purchase coupons through the Meituan Mini Program.
From the current point of view, it is right for local life to go down the road of sinking and low price. At present, there are still many merchants in third-tier cities who have not yet developed the habit of using short videos to grow grass, and Kuaishou can take the lead and rely on its own advantages in the sinking market to cultivate users' minds in advance and occupy the sinking market.
However, tapping into the trillion-dollar local living market is not a simple matter. Local life needs to be supported by offline capabilities, not only to develop and maintain merchants, but also to build a strong supply chain team to maintain business operations. In the field of local life, Kuaishou still has a lot of homework to do.
Recently, Kuaishou released its financial report for the fourth quarter and full year of 2023, which showed that Kuaishou's revenue in the fourth quarter of 2023 was 32.6 billion yuan, a year-on-year increase of 15.1%, and its adjusted net profit reached 4.36 billion yuan.
In 2023, the total revenue will reach 113.47 billion yuan, a year-on-year increase of 20.5%, and the adjusted net profit will exceed 10 billion yuan for the first time, reaching 10.27 billion yuan, turning losses into profits year-on-year. Both the adjusted net profit and the profit for the year turned around in 2023, marking the company's development into an era of full profitability.
It can be seen from the financial report that Kuaishou has the strength to live locally. At present, in the field of local life, Kuaishou also needs to make up for the number of merchants and products of local services in order to lay a solid foundation to compete for the market.
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