With the addition of video accounts, the wave of local life has become even bigger

Since last year, businesses have received invitations to test the local life business of Video Account. Now, Video Account is accelerating its layout, and the competition in the local life track has become more and more fierce. So, how much gold can Video Account dig in the local life field? Let's take a look at the analysis in this article.

The local life track is in the spotlight again. At the end of April, Video Account officially announced that merchants in the local life industry can apply to enter the Video Account store of the "local life" business type.

Since last year, businesses have received invitations to beta test the local life business of Video Account. Now, Video Account has finally been fully launched. This also means that Video Account has fully opened up to local life businesses, ending the nearly one-year testing phase.

Tencent Video Account Announcement

In fact, the local life track has always been highly competitive. Douyin and Meituan have divided the world into two parts, and Xiaohongshu and Kuaishou have also been constantly making their plans. In comparison, Video Account has always been slightly lacking in this regard.

Ma Huateng once felt the crisis. At the beginning of 2023, Ma Huateng called Video Account "the hope of the entire Tencent". At the beginning of 2024, he once again affirmed Video Account, saying that after more than a year of development, Video Account has indeed lived up to expectations, "giving us a solid grip again in the face of the failure of short videos in the past."

He said: "As Tencent's platform with the most daily active users and the strongest ecosystem, WeChat has a history of 12 years." How to rejuvenate and become Tencent's new hope lies in the video account. Some industry insiders predict that after years of development of local life, the Internet has entered a stage of competition for existing users. At this time, the entry of the video account may not only be to get a share of it, but also a new hope for Tencent to face the competition for Internet stock? Faced with fierce competition in the industry, what are the responses and opportunities for the video account?

1. Video accounts are going to make money in the local life field

Video accounts have been exploring their layout in the local life track for a year.

In May last year, Video Account began testing local life services on a small scale, with only some large brands joining in. A source said that in the early stages of the internal test, the test data of Video Account was average, with only 30 to 40 brand merchants participating in the test.

Tencent Video Account Announcement

It was not until around August that Video Account began to introduce third-party service providers, such as Delicious No Waiting, Enjoy Inventory, Greedy Mall, Chenji Store, etc. The merchant resources and content production capabilities of these service providers have taken Video Account's local life business a step forward, and quickly expanded Video Account's local life to cities such as Beijing, Shanghai, Shenzhen, Guangzhou, Foshan, Shantou, Chengdu, and Xi'an.

But in fact, the effect of this video account's trial of local life is still average. A video account head service provider said that they had broadcast on the video account for the super head platform to promote group purchase coupons, but the best performance was only more than 300,000 yuan. The reason is that the traffic distribution of the video account is inaccurate. They tried to buy "city fixed-point traffic", but found that the number of viewers of the video account directly dropped by two-thirds.

The turning point was the intervention of the WeChat payment team. Starting from the end of 2023, the WeChat payment team intervened in the commercialization process of the video account, developed transaction components, etc., and provided a strong backup force for the commercialization process of the video account.

Based on this, at the end of April 2024, Video Account will fully open up to local life merchants. According to the local life merchant entry policy released by Video Account, it includes two first-level categories, catering and hotel and travel, and 9 second-level categories such as full meals, fast food, baked snacks, accommodation, scenic spots, etc. Catering is currently limited to chain store brands, and there are many restrictions on hotel and travel. For example, scenic spots are limited to 4A and above scenic spots.

Tencent Video Account Announcement

In terms of fees, throughout 2024, local life merchants entering the video account can enjoy a 0.6% discount on technical service fees, which will then be restored to 2.5%. Compared with the 1% to 5% fee range for e-commerce, it is on the lower side. The category deposit is 20,000 yuan, and the floating deposit is paid as a certain percentage of the total transaction amount within 30 days.

This time, Video Account has focused on local life business and has achieved the following points: First, local merchants do not have to develop mini-programs separately, they can directly put products on the shelves in the Video Account store, allowing the Video Account algorithm to obtain data sedimentation to the greatest extent; second, there are exclusive traffic recommendations for local life in the traffic pool; third, one step earlier than Douyin and Meituan, the closed loop of the entire process of online coupon purchase and offline verification is realized.

A local life industry insider said that the entry of video accounts into local life is to encourage businesses to acquire customers through public domain traffic, thereby increasing advertising and other revenues.

And what will Video Account face after it enters local life?

2. The market is huge, how big is the cake belonging to the video account?

Why would Video Accounts be willing to take on huge pressure to enter the local life market? Compared with other local life platforms, what are the differences between Video Accounts?

First of all, in terms of scale, Video Account has surpassed its peers. The biggest confidence of Video Account is WeChat behind it. Tencent's financial report shows that the combined monthly active accounts of WeChat and WeChat are 1.343 billion. QuestMobile data shows that as of June 2022, the monthly active users of Video Account have reached 800 million, exceeding Douyin and Kuaishou. WeChat Open Class data shows that the GMV of Video Account in 2023 will increase by 3 times compared with 2022, and the supply quantity and order quantity will increase by 3 times and more than 244% respectively.

Secondly, Video Account can also generate private domain traffic, and social functions such as sharing in Moments, group chats, and WeChat friends are also difficult for other platforms to achieve. The traffic sources of Video Account and short video apps such as Douyin and Kuaishou are completely different. Video Account relies more on private domain recommendations rather than algorithm recommendations, and the source of traffic is forwarding and likes. Douyin and Kuaishou are completely opposite. In other words, once a merchant cannot retain users in a short period of time, the algorithm will not recommend it, and it will be difficult to continue the transaction.

Video account screenshot

At present, Video Account is friendly to new merchants and influencers. As long as someone in their private domain sees it and is willing to like it, the traffic will continue to split. In addition, in the local life infrastructure, Video Account itself has the powerful support of WeChat payment, and the connection cost is relatively low in terms of merchant accounts and offline verification capabilities of merchant coupons.

The last point is that the video account has a stronger ability to realize cash. As Tencent pays more and more attention to the video account, its growth potential is also being released. The average customer unit price of video account live streaming exceeds 200 yuan, and the customer unit price of autumn and winter clothing and beauty during the promotion period exceeds 300 yuan. Shijie has reported that the customer unit price of Douyin e-commerce in 2022 is about 60 to 80 yuan, while the customer unit price of Taobao e-commerce is around 100 yuan.

Of course, Video Account is not without weaknesses.

First, the active users of video accounts are mainly middle-aged and elderly users. Although their spending power is guaranteed, compared with young people, they are not very receptive to new consumer brands, do not like to eat takeout, and are not particularly familiar with online shopping. This may affect the sales and write-off data of dining vouchers.

Secondly, the service capabilities of video accounts may not be as good as other platforms. When the team is limited, choosing to access service providers is often more cost-effective, but it is also easy for some bad service providers to take advantage of loopholes, which will affect the platform's own reputation and services.

To connect directly to merchants, Video Account needs to carry out a lot of supply and service infrastructure, such as negotiating with merchants and helping them to settle in. These are undoubtedly very arduous tasks. Not only that, Video Account still has a lot of homework to do in terms of merchant services, evaluation mechanisms, complaint handling, delivery logistics, etc.

Tencent Video Account Announcement

At the same time, the video account is now open for entry, which means that it has officially entered the market to compete with other old players for business. How to cultivate user minds and break the user's inertial dependence on existing platforms is the primary problem for the video account.

At this year's Tencent Annual Meeting, Ma Huateng comprehensively reviewed all of Tencent's businesses, saying that Video Account will live up to expectations and will go all out to develop Video Account live e-commerce. This also means that Video Account will now simultaneously develop live e-commerce and local life, which is definitely a big challenge for Video Account.

3. Fierce competition, fierce competition among players

Why do video accounts regard local life as a new hope? Because the local life business is a blue ocean, there is still "cake" to eat. According to the "2023-2024 China Local Life Service Industry Market Monitoring Report" released by iMedia Consulting, by 2025, China's local life service market will reach 2.5 trillion yuan.

In the trillion-level local life market, more and more players are entering the market, hoping to take a piece of the "big cake", which further intensifies the competitive pressure in the industry. Therefore, the market competition that Video Account will face is undoubtedly fierce.

In this trillion-yuan market, Meituan's dominant position has been shaken, and the most aggressive one is Douyin. According to LatePost, Douyin's sales in the life service sector in the first quarter of 2024 have exceeded 100 billion yuan, an increase of more than 100% over the same period last year.

Compared with traditional local life platforms, Douyin is more likely to guide users from online browsing and interaction to offline consumption with the help of new forms such as short videos and live broadcasts. In addition, in order to further compete for market share, Douyin group buying also uses a low-price strategy to attract more users to the platform.

According to Douyin's official report, the total transaction volume of Douyin's life service platform increased by 256% in 2023, and its stores covered more than 370 cities. According to Haitong International's research report data, Douyin's local life GTV (total transaction volume) accounted for about one-third of Meituan in 2023, close to 200 billion yuan.

In addition to Douyin, short video platform Kuaishou and content platform Xiaohongshu are also accelerating their expansion in the local life field.

Earlier, Xiao Gu, senior vice president of Kuaishou and head of the local life business department, revealed that in Q4 2023, the number of users who placed orders for local life on Kuaishou increased by 23 times year-on-year, and GMV increased by 25 times year-on-year. The average monthly shopping amount of 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.

At the same time, Kuaishou also announced that it plans to invest billions in platform subsidies and hundreds of billions of traffic in group buying marketing in 2024 to support 1,000 million-GMV brands.

2023 is also the year when Xiaohongshu accelerates its local life. In April last year, Xiaohongshu opened the official local life account "Tuposhu"; in May, the group purchase function was launched; in July, the store exploration cooperation center was launched, etc. At the beginning of this year, Xiaohongshu also added a "Nearby" first-level entrance to the top bar of the APP homepage, which displays food, drink, entertainment and entertainment related notes, live broadcasts and group chat content in different areas based on geographical location in the form of a simulated map.

Screenshot of Xiaohongshu

In addition, Alibaba's Ele.me and AutoNavi are also further investing in local life. Express giants including SF Express and ZTO Express have also entered the local life market.

At present, from old dominant players such as Meituan and Ele.me to new players such as Douyin, Kuaishou, and Xiaohongshu, and to cross-border layouts of express delivery companies such as SF Express and ZTO Express, the market competition for local life is becoming increasingly fierce. In this context, the pressure faced by video accounts is definitely not small.

Author: Meng Ning, Editor: Yi Ke

Source public account: Yidu Pro (ID: yiducaijing2021), more love, deeper observation.