Meituan-Kuaishou cooperation upgraded to "100 cities, 10,000 stores"

The cooperation upgrade between Kuaishou and Meituan is like a huge iceberg, beneath the surface of which lies a deeper market dynamic and consumption potential. By accurately matching supply and demand, this cooperation not only brings in new customers for the brand, but also greatly improves user experience and market efficiency. This article will explore in depth how Kuaishou and Meituan work together to overcome the dilemma of new customers, and what this cooperation will reveal about the future development of the retail market.

In addition to the huge increase in volume, Kuaishou is becoming a sharp weapon for brands to break the dilemma of new customers. Now, with the cooperation between Kuaishou and Meituan upgraded to "100 cities and 10,000 stores", Meituan will further use its good products as the "source" to activate Kuaishou's 700 million loyal customers.

Kuaishou and Meituan's cooperation has been upgraded: On July 12, following the first trial of cooperation three years ago, Kuaishou and Meituan announced a renewal and a comprehensive upgrade in the depth and breadth of cooperation. It is reported that in terms of space, the scope of the cooperation between the two will be expanded to "100 cities and 10,000 stores" across the country in the next three years.

In terms of cooperation mode, it will not only stay in the single dimension of "commodities". The supply provided by Meituan to Kuaishou will expand from group buying products to the coupling of various marketing forms such as voucher products, membership products, and flash sales products. Both parties will also carry out more basic and systematic product construction to ensure a smooth user experience.

As for the reasons for the upgrade of this cooperation, both parties gave the following answers: new customers and large supply. In simple terms, customers come from Kuaishou and goods come from Meituan. The new entrant Kuaishou Local Life has also entered the field of vision again through cooperation with Meituan, the industry big brother.

01 Meituan takes a fancy to Kuaishou’s 700 million loyal customers

American scholar Lincoln Payne once said: "Although 70% of the earth's surface is covered by water, historical narratives have always been land-centric." If we slightly adapt this sentence, "Although the vast majority of China's regions are low-tier cities, the business story has always been told by the elite class in big cities." This conclusion also applies to the current retail market.

However, the slowing growth environment is forcing industry practitioners to change this view. Although the land is colorful, it is not as interesting as the depths of the sea. People are more inclined to believe in the consumption power of third-tier and lower cities rather than continue to bet on the purchasing power of first- and second-tier elites. Obviously, Meituan is among the crowd.

Meituan has thought this through very clearly. First, the new tier market is like a boundless giant with huge potential; second, Kuaishou, which has third-tier and lower-tier users as the mainstream, focuses on social interaction, and has content capabilities, can bring huge growth to Meituan.

The data proves this. In June this year, the GMV of Meituan merchants on the Kuaishou platform increased by more than 38 times year-on-year, and the order volume increased by more than 10 times year-on-year. Take Zhao Yiming Snacks, a leading player in the snack mass-marketing track, as an example. Since entering the Kuaishou ecosystem through Meituan in April this year, it has accumulated more than 400,000 new customers in two months, and the incremental GMV has exceeded 25 million.

In June, new customers accounted for more than 42% of the incremental customer traffic brought to Zhao Yiming Snacks by Kuaishou, and at least one new customer was involved in every three transactions. It is worth mentioning that Zhao Yiming's stores are now spread all over the country, and with the decreasing incremental marginal effect, new customers are even harder to come by.

In addition to the huge increase in volume, Kuaishou is becoming a sharp weapon for brands to break the dilemma of new customers. Now, with the cooperation between Kuaishou and Meituan upgraded to "100 cities and 10,000 stores", Meituan will further use its good products as the "source" to activate Kuaishou's 700 million loyal customers.

With the two giants joining forces, "shopping and group shopping" will become another new normal in the Laotie economy, allowing the outside world to continue to see the "blue ocean miracle" created by Kuaishou's local life in the fiercely competitive stock stage across the country.

In Q4 2023, the number of users placing orders for local life services on Kuaishou increased by 23 times year-on-year, and GMV increased by 25 times year-on-year. Laotie users are obviously "rich and free". In Q4 2023, 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 users exceeded 2 hours.

Behind Kuaishou's local life blue ocean is the potential brought by 700 million loyal users. McKinsey once predicted that by 2030, China's personal consumption scale will grow to 65.3 trillion yuan, with more than 66% of the growth coming from third-tier and lower cities.

Users in third-tier and lower cities are precisely the mainstream population of Kuaishou, which allows businesses entering Kuaishou's local life ecosystem to easily reach new customer traffic, such as the "small town ladies", "hometown landlords", "county aristocrats" and other "most urban" and incremental groups that brands most want to reach in the past two years.

The consumption power of the new market is not worse than that of first- and second-tier users. According to the "2024 Laotie Spring Festival Group Purchase Consumption Data Report", among the local life purchasers of Kuaishou, users from small cities account for more than 60%, and "small city ladies" account for nearly 20%. In terms of payment GMV, "hometown landlords" are about 1.26 times "urban white-collar workers".

As Zhao Yiming Snack Shop Brand Director Yu Lin said, among the platforms it has settled in, the overlap between Kuaishou's users and other Internet platforms is relatively low, and most of them are located in third-tier cities and below: through Kuaishou, brands can reach incremental customers that are difficult to reach on other platforms.

During the Spring Festival, Wallace, Mixue Ice City, KFC, Tustin, and Luckin Coffee became the brands that gained the most new customers on Kuaishou. Among them, Wallace gained a total of 158,000 new customers on Kuaishou during the Spring Festival, and Pizza Hut, which entered the Kuaishou ecosystem through Meituan, became the "best dark horse" in catering consumption during the Spring Festival, gaining an incremental GMV of more than 19.46 million in less than 20 days, and gaining more than 230,000 new customers in the first month of entry.

It is worth mentioning that for brands that have found the right marketing methods, the addition of marketing tools has accelerated the explosion of new customers for merchants. During the Dragon Boat Festival holiday this year, Mixue Ice City ushered in another explosion on Kuaishou - with the help of the traffic investment product Magnet Local Push, Mixue Ice City gained 35,000 new customers in 2 days, and the account gained more than 40,000 followers.

02 “Marketing cost reduction” vs. “planting and harvesting in one”: leveraging the old iron economy

When the "cold start" cycle meets "hot traffic", the brand can quickly ignite the consumption enthusiasm of old friends on Kuaishou without a long start-up cycle. As Zhao Yiming Snack Shop Brand Director Yu Lin said: "In the past, opening a new store often required a long cold start cycle, but we don't need it now, because we can use Kuaishou and other platforms to preheat short videos and local promotions to quickly cover nearby people."

At the same time, thanks to the "time and space dislocation", Kuaishou in the blue ocean stage can provide relatively low-cost marketing and operation solutions for Meituan merchants and other ecological operators without having to invest unlimited funds to compete for limited user attention.

"In two months, the brand has accumulated over 640,000 followers on Kuaishou, over 25 million incremental GMV on Kuaishou, and over 400,000 new customers. This was achieved even though the brand's own broadcasting and franchisee store matrix have not been fully utilized," said Yu Lin.

Not only that, brands have discovered that Kuaishou is suitable for both rapid transaction conversions and long-term brand marketing.

If we analyze the operation path of Zhao Yiming Snacks in detail, it is not difficult to find that, on the one hand, Zhao Yiming Snacks is based on the long-term goal of product promotion and screens influencers who match the content, such as drama KOLs or celebrities to improve the quality of content, increase exposure, and reach more interested people. It also disseminates marketing materials through Kuaishou short videos and brand live broadcasts, laying the foundation for the long-term operation of the brand account; on the other hand, if the goal is transaction, it will choose store exploration influencers, who are more marketing-oriented, and through brand voucher subsidies and platform resource support, it will improve the price competitiveness of products and promote new conversions.

The platform support unique to the blue ocean stage is a greater attraction, such as reducing advertising costs, providing free promotion resources or training support, etc. It is reported that in 2024, Kuaishou Local Life will invest billions of platform subsidies and hundreds of billions of traffic to support 1,000 million GMV brands.

03 The supply source meets the flow of flowing water: "1+1 is greater than 2"

With the upgrading of cooperation between Kuaishou and Meituan, it can be foreseen that supply and demand will be further matched.

On the one hand, it is a more accurate recommendation algorithm that efficiently matches good products and "old friends": Kuaishou's recommendation algorithm can accurately push the services of local life merchants to potential target customers based on user portraits, improve marketing effectiveness, and increase customer conversion rates to stores.

On the other hand, more accurate market insights allow merchants to not only get started quickly, but also further understand market trends, deeply occupy consumers' brand minds, and reversely modify production links to optimize products and services: through the higher content dimensions of live broadcast rooms and short videos, all merchants, including Meituan merchants, can have a deeper understanding of the target audience, including their age, gender, geographical distribution, interests and hobbies, etc., and keep abreast of popular trends and changes in the local life service field, so as to adjust business strategies in advance, optimize products and services, and seize market opportunities.

It is worth mentioning that Kuaishou's acquaintance culture is a perfect match for the local life field - when Meituan's good products meet the old iron economy, it will have a "ripple expansion effect" of users' spontaneous dissemination and diffusion. On the Kuaishou platform, users gradually get used to and easily share and recommend local life services. This kind of social communication can quickly expand the influence and popularity of Meituan merchants, attract more customers, maximize the social communication effect, and bring endless growth vitality to the brand.

This is exactly in line with Hemingway's iceberg theory: the part of an iceberg floating on the sea that can be seen by people is actually only one-eighth, and the other seven-eighths are hidden under the water.

Author | Ketchup