Video accounts "open the floodgates" for local life, and do not want to cross the river by following Meituan and Douyin

Video accounts have explored local life and are fully open to users. Let’s take a look at the author’s analysis of this.

Video accounts, a new player in local life, have decided to take another step forward.

At the end of April, Video Account released relevant policies for local life merchants to enter Video Account Stores. This means that Video Account has fully opened up to local life merchants to enter, ending the nearly one-year testing phase.

In the past year, in the local life service market, Douyin and Meituan have been fighting fiercely, Xiaohongshu, Kuaishou and others have been strengthening their layout, but the presence of local life in video accounts is not strong. Except for the announcement of the launch of the local life component at the closed-door sharing session of WeChat Open Class in March last year, video accounts have not mentioned their attitude towards local life in public.

The full opening of local life merchants means that Video Account has increased its investment. Douyin's local life sales in the first quarter of this year exceeded 100 billion yuan, which is a model for reference. However, Video Account, which is also a short video platform, does not seem to want to follow the path of Douyin.

1. From internal testing to full release

Video accounts have been exploring local life 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.

It was not until around August that Video Account began to introduce third-party service providers, such as Delicious Different, Enjoy Inventory, Tanchi 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, quickly allowing Video Account's local life section to cover Beijing, Shanghai, Shenzhen, Guangzhou, Foshan, Shantou, Chengdu, Xi'an and other cities.

The video account does not exclude Meituan from joining. Meituan has built an account matrix including "Bao Tuantuan", "Meituan Surrounding Tours" and "Meituan Outbound Tours" on the video account.

The leading video account service provider "First Time" has been involved in the service since the beta test of the local life section of the video account. Xia Heng, the founder of "First Time", told Tech Planet that in July and August last year, "First Time" helped Meituan, Ele.me and other companies to operate live broadcast rooms on the video account.

In the early testing phase, the various transaction links explored by Video Account Local Life were relatively cumbersome in the verification process. For example, Video Account tried to use the mini program + transaction component interface model to open up the transaction link. After the user clicks the link, he will jump to the merchant's own mini program to conduct the transaction.

Then the video account added a new transaction link, and the entire transaction link including transaction, verification and evaluation was completed through the video account store. Users can directly purchase group purchase products after entering the merchant's store. This makes transactions simpler and faster, and is more conducive to improving the verification rate.

At present, the local life business of Video Account is more based on the product of Video Account Store.

During the internal testing period, Video Account tried to cover all categories as much as possible, including catering, hotel and travel, beauty, education, home appliance repair, housekeeping and cleaning, etc. However, when it was fully opened to the public, Video Account only selected two major categories: catering and hotel and travel.

Under the first-level category of catering, there are six second-level categories: full meals, fast food, beverages, baked snacks, snacks and fresh fruits, while in the hotel and travel industry there are only three second-level categories: accommodation, scenic spots and passenger transport.

Beauty is a high-gross-profit category in local life, but Video Account has not been opened first. Xia Heng said that this may be related to the strategy of Video Account. What needs to be done now is the construction of infrastructure and ecology. "Video Account needs to be the category with the largest consumption volume and the highest activity, not the most profitable one."

Catering is a symbolic category of local life, and the hotel and travel category is a category with good data in the internal testing phase. Xia Heng told Tech Planet that during the operation of Kaiyuan Hotel last year, each live broadcast could reach 50,000 to 100,000, which is better than the data of other platforms' official live broadcast rooms.

In Xia Heng's opinion, after the internal beta test, the video account local life has basically figured out a way to enter the 2.0 stage, and each link is smoother than the early internal beta test. However, some third-party local life service providers told Tech Planet that during the internal beta test, their data performance on the video account was not particularly ideal, "the transaction volume could not be achieved, and the video account was no longer used."

2. No one wants to learn from the video account?

Apart from releasing a series of announcements about local life, Video Account has not announced any major moves in local life.

Douyin has rapidly gained volume in local life business by relying on its huge traffic and low-price strategy. This is due to Douyin's strong leadership and strong operational thinking.

Video Account has not yet adopted a corresponding attraction strategy on the merchant side or the user side. A source said that Video Account has not yet set clear performance targets for local life business. As of press time, Video Account has not yet responded to this.

On the merchant side, Video Account currently only has a policy of reducing the technical service fee rate. In 2024, Video Account will reduce the technical service fee rate for the local life industry category to 0.6%. The original rate for the catering, hotel and travel category was between 2.5% and 5%.

The landmark event for Douyin in launching its local life business was the first test of the POI (Point Of Interest) function, which helps merchants display relevant information such as store addresses, contact numbers, business hours, group purchase packages, etc. by adding geographic location information to videos.

Based on the POI function, the platform helps merchants accurately reach target users and allocate local accurate traffic based on the distance between people and stores. Douyin continuously pushes group purchase videos to users within a few kilometers of the store. Only with huge and accurate traffic can a single store achieve explosive sales.

However, the POI function has not yet been opened on the video account. Currently, when publishing video content on the video account, merchants or influencers can add store addresses, but only the map location is displayed, and no store-related information is associated. In the view of local life practitioners, from an industry perspective, this is not considered an open POI function, but just a location marker.

This means that the traffic distribution mechanism of Video Account is not optimized for local life. At present, Video Account does not intend to give too much precise traffic to local life. Some local life practitioners said that the development of POI function requires more technical support. For the current Video Account, it is not yet time to change the traffic distribution mechanism of the entire ecosystem for local life business.

This is why video accounts focus more on chain brand stores. During the internal testing phase, Luckin Coffee, Kudi, and Burger King all have thousands of stores across the country, and the absolute accuracy of traffic is not required to be particularly high. If it is an individual single-store merchant, without an accurate push mechanism, the traffic conversion rate will be very low.

In the recent announcement, the catering category does not support single-store settlement for the time being, and is more targeted at merchants with multiple chain stores. On the other hand, the reason why single-store settlement is not open is that the current size of the local life team of Video Account cannot support the docking of a large number of single-store merchants.

A source said that in terms of organizational structure, Video Account Local Life has not yet established an independent department, and it belongs to the Video Account Live Streaming and Sales section. During the internal testing phase, the employees in charge of Local Life mainly came from Video Account. At present, some employees come from the two major teams of WeChat Pay and Tencent Advertising. The overall staff size is not large, and these employees are not full-time employees of Local Life. As of press time, Video Account has not yet responded to the above information.

Video Account does not seem to want to copy the path that Douyin has taken in exploring local life. When it comes to local life, WeChat seems to still want to use its own product thinking.

3. How big are the opportunities for Video Account?

"No business is not interested in Video Accounts," Xia Heng said, but people just don't know how to operate Video Accounts. "The gameplay and experience of Douyin are not applicable to Video Accounts. It is ineffective to just invest in traffic and expand the scale right from the start. Video Accounts rely more on content and goods."

At present, video accounts are one of the few places with incremental traffic. The potential released by video accounts in live streaming will also allow merchants to enter the local life track.

However, for large brand merchants, video accounts have not yet demonstrated their explosive power in local life.

Brands that have tried it during the internal testing phase no longer plan to continue investing in video accounts. Although the data during the internal testing phase is already quite good in the video account, with a live broadcast selling around 300,000. But in the eyes of brands, building a team of anchors is costly, and the input-output ratio of the video account is not ideal. Its agency service provider told Tech Planet that merchants who already have a team may be suitable for video accounts because they no longer need additional fees.

At present, the infrastructure of local life of video accounts is not perfect enough. The biggest problem may be that the traffic distribution mechanism itself does not lean towards local life. People close to video accounts said that the video account team has too many things to do, and local life is not a high priority business at present.

Compared with other platforms, the advantage of video accounts is the differentiated ecosystem. And if you want to get a piece of the pie in local life, you need to differentiate yourself.

In Xia Heng's view, the logic of video accounts is to use the content ecosystem to stimulate users in the original mini-programs and public account ecosystems. The functions originally implemented by mini-programs are now partially undertaken by video account stores, and short videos and live broadcasts are used to attract customers. The differentiated advantage of video accounts lies in the private domain. "Private domain traffic of merchants and brands is accumulated in public accounts, mini-programs, communities and other components. Now it is more convenient to reach private domain users through short video content to increase repeat purchases."

Although backed by Tencent, Video Account, which has always adopted a small team operating style, is far inferior to Meituan and Douyin in terms of human resources and resources investment in local life businesses.

Video accounts’ exploration of local life is more like “crossing the river by feeling the stones”. The full opening of settlement marks that Video accounts’ local life business has entered a new stage, and Video accounts may continue to make mistakes in the future.

Author: Xi Rui WeChat public account: Tech Planet