With 1.3 billion users as a base, can Video Account become the "catfish" of local life?

After one year in the local life market, Video Account is still in its infancy. The author analyzes the current situation and problems of Video Account in developing local life services, pointing out that Video Account has not focused its commercialization on the local life part, and it still has a long way to go to break through the siege in the local life field.

Video accounts have made new moves in the field of local life.

Recently, Video Account officially released "Video Account Store - [Store Opening] Guidelines - Local Life Industry", inviting catering and hotel and tourism businesses to settle in Video Account Stores, which means that Video Account is gradually opening up the rights for businesses to settle in.

Since Video Account began to attach importance to commercialization, its every move has attracted much attention. From live streaming to local life, Video Account is always inevitably compared with other platforms. At present, how is Video Account progressing in the field of local life? Can Video Account do well in this business?

1. After one year in the local life market, video accounts are still in their infancy

Video accounts first entered the local life market in March last year. At a closed-door sharing session of the WeChat Open Class, the person in charge of Video accounts revealed that the local life component will be officially launched in May. Merchants will sell redemption coupons on Video accounts, which can be used for in-store verification/self-pickup or door-to-door delivery in the same city.

At that time, a person close to WeChat said that the scale of the local life business of Video Account was limited, and the interface capabilities of the local life components were tested in a very small range to better support the business needs of some brand merchants, and it was not a strategic layout. Leading chain restaurant brands such as Luckin Coffee and Burger King began group buying internal testing last year.

At present, Luckin Coffee’s layout on the video account is basically complete. On the homepage of Luckin Coffee’s video account, there is not only an official flagship store, but also a coffee ordering mini program and a live broadcast room. The group buying products in the live broadcast room are basically synchronized with other platforms, and raffles are held every day. The operation of the video account has become normalized.

Image source: Video account screenshot

Compared with Luckin Coffee, Burger King's video account operation is slightly insufficient. There are three modules on its video account homepage: membership, self-service ordering, and home delivery. However, the self-service ordering and home delivery functions are not available. Clicking them will prompt "Current function is not supported yet." On the membership page, the only function users can use is to receive meal coupons and then go to the store to redeem them.

Image source: Video account screenshot

It is understood that the results of the internal testing of brand merchants on video account group buying last year were not ideal. In August, video accounts launched internal testing of third-party service providers and influencers, and video account group buying gradually improved.

These third-party service providers include Meituan, Delicious No Waiting, Enjoy Inventory, Lianlian Surrounding Tours, Greedy Mall, Chenji Store, Taozui Shanghai, Dongli Retirement Club, etc. At present, Meituan has established an account matrix on Video Account, among which "Bao Tuantuan", "Meituan Surrounding Tours", "Meituan Outbound Tours" and other live broadcast rooms have been broadcast from time to time. However, there are only a few third-party service providers officially recognized by Video Account, and their permissions on Video Account are also limited.

Clour observed that most of these third-party service providers are content marketing companies in the local life field. They have catering business resources, content production capabilities, and deep accumulation in public accounts. The WeChat ecosystem is their main business base , such as Taozui Shanghai, Chenji Store, and Tanchi Mall.

At present, these third-party service providers have merchants in Beijing, Shanghai, Shenzhen, Guangzhou, Foshan, Shantou, Chengdu, Xi'an and other cities connected, mainly catering group purchase. For example, in the video store of the Greedy Mall, there are many packages such as the Cantonese restaurant "Xiaochalou｜108 yuan signature meal for two", "Mo Dachuan Chongqing Hotpot｜79 yuan for 100 yuan vouchers", and "Tanwo Coconut Chicken｜50 yuan for 100 yuan vouchers".

Image source: Video account screenshot

In the recent video account local life store opening guide, the video account only opened two first-level categories, namely catering and hotel travel. Under the first-level catering category, there are six second-level categories: formal meals, fast food, beverages, baked snacks, leisure food and fresh fruits, while under the hotel travel category, there are only three second-level categories: accommodation, scenic spots and passenger transportation.

The catering category does not support single stores to enter, and is more targeted at chain stores with multiple stores. The hotel and travel category allows single-store hotels to enter, but the entry qualification standards require corporate entity qualifications including business licenses and legal person ID information. Scenic spots are marked as "only open to 4A-level and above scenic spots."

From the relatively strict entry standards, it can be seen that Video Account is still relatively cautious in the field of local life, and has no intention of drastically expanding local life business. From the perspective of the industry, Video Account local life is still in its infancy.

2. It is not easy to do a good job in local life business

As we all know, local life is hard work. If you want to achieve a certain scale, you need a huge merchant base, and the platform needs to invest a lot of manpower and material resources. Take Douyin as an example. According to LatePost, Douyin’s life service sales team alone has 5,000 people.

In comparison, the investment in Video Account seems insignificant. According to Shijie.com, at the beginning of 2023, tourism products were briefly popular on Video Account. At that time, Video Account had only one local life staff member, and small shops under the entire category were suspended from entering. Only branded OTA platforms such as Ctrip and Tongcheng were allowed to enter, and they were required to be responsible and cover the bottom line.

Although Video Account has started to focus on local life business this year, it still follows the previous style of operating with a small team. According to recent news, the entire WeChat team has about 4,000 people, and the Video Account team is even smaller. Zhang Xiaolong announced at the 2021 WeChat Open Class that the team has 100 to 200 people. There has been an increase in recent years, but the market speculates that it will not exceed 1,000.

The platform's investment is closely related to the merchant experience, and will also affect the merchant's subsequent operations. Some merchants have said that compared with other platforms, the response efficiency and docking efficiency of Video Account are lower.

From the perspective of merchants, Video Account is not a very attractive choice. Compared with other short video platforms, Video Account is also a content platform based on short videos, but in terms of local content, UGC and store exploration experts have not yet formed a scale, which means that merchants who enter in the early stage need strong content production capabilities to make up for the shortcomings in traffic. Especially for some smaller mom-and-pop stores and regional stores, even if they enter the Video Account ecosystem, it is difficult to provide effective support for offline business due to the lack of traffic supply.

In addition, Video Account is not a mainstream local life platform at present, and merchant verification is also a problem. It is understood that there are currently three main verification methods for Video Account. The first is group purchase orders from merchants' self-operated Video Account stores, which temporarily use the delivery system of virtual products. Merchants click to ship (no real delivery is required), and users confirm receipt in the order center, which is considered to be completed. The second is group purchase orders from service providers' Video Account stores, which send verification codes and group purchase codes to users in the form of text messages. Merchants can complete verification by scanning the code or entering numbers through the system provided by the service provider; the third is group purchase orders that jump to the mini program, which are verified through the original system of the mini program.

In an interview with E-commerce Online, an industry insider said that these three transaction methods mean that Video Account has not yet been connected to the cash register system on the market, while the group purchase verification of platforms such as Meituan and Douyin is already mature, and it only takes two or three seconds to scan the code to place an order through the cash register system. However, the digital coupon code and virtual delivery methods used by Video Account still require store clerks to enter and check the orders one by one, which is more cumbersome to verify.

From the user's perspective, group buying on Video Account does not conform to daily usage habits, because Video Account is not a separate platform, but is embedded in the huge WeChat ecosystem. The link from searching for merchants to placing an order is long, and there will be many interference factors, which greatly affect the ordering experience.

In addition, some big-name merchants do not have a price advantage in group purchases on video accounts. Take Luckin Coffee as an example. The product links in its video account live broadcast room and Douyin live broadcast room are basically the same, and the prices are also the same. For example, "Iced Bayberry Reina Ice" is 15.9, and "Summer Green Grape Latte" is 12.9. Under the condition that other rights and interests are the same, consumers may prefer the simple ordering channel.

Image source: video account/TikTok screenshot

3. New players continue to enter the market, and video accounts will have to fight a protracted war

In the past two years, the local life sector has been full of smoke, and many new Internet players are ready to enter the market in a high-profile manner, looking for new growth in the high-frequency and rigid demand life consumption track. According to public data, in 2021, the online penetration rate of local life is only 12.7%, and the scale of the local life market will grow to 35.3 trillion yuan by 2025, and the market space is very broad.

Douyin is coming on strong, launching a fierce attack on the local life giant Meituan, with a strong growth momentum. According to public data, Douyin's local life GTV (gross transaction volume) will be nearly 200 billion yuan in 2023, which is nearly one-third of Meituan. According to the "2023 Local Life Service Report", as of April 2023, the number of overlapping users of Meituan and Douyin will exceed 300 million, and the proportion of overlapping users to Meituan users is as high as 81%.

Recently, according to "LatePost" report, 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, and the gap in scale with Meituan is narrowing.

Kuaishou is also not to be outdone. Last year, Kuaishou launched a series of support plans to encourage merchants, content service providers, and influencers to settle in, and launched an official local life applet to build its own closed-loop transaction. In just half a year, Kuaishou's local life payment GMV has increased ninefold. Kuaishou officials also plan to invest more than 400 billion traffic in the next year to support high-quality creators and help creators across the platform realize more than 100 billion in monetization. Entering 2024, Kuaishou has increased its investment in local life business, shouting the slogan "All group purchases are worth redoing on Kuaishou."

As a latecomer, Video Account has the backing of WeChat. Tencent's financial report shows that the combined monthly active accounts of WeChat and WeChat are 1.343 billion. The huge user base has laid the foundation for the commercial potential of Video Account. However, the commercialization of Video Account is slightly insufficient. In 2023, the total GMV of Video Account e-commerce is about 100 billion yuan, while the total transaction volume of Douyin local life is close to 200 billion yuan. The gap between the two is obvious.

Moreover, the main contributor to the GMV of video account e-commerce is the clothing category, especially women's clothing. According to official WeChat data, women accounted for 78% of video account purchase users in 2023, and clothing orders accounted for 38%, ranking first in the industry. This means that the local life business of video account still has a long way to go to break through the siege.

Image source: Video account screenshot

In general, the gradual opening of local life merchants to the video account shows that there is still hope for this business. However, with the heavy responsibility of "the hope of the entire Tencent", the commercialization of the video account may not focus on the difficult bone of local life. As the competition in the local life industry becomes increasingly fierce, the situation of the video account may become more embarrassing.

References:

1. Video accounts for group buying, following the example of Douyin｜E-commerce Online

2. Don’t wait! Some people have already tasted the sweetness of video account group buying｜Ebrun Power

3. To participate in local life, video accounts need a "king bomb"｜Technology at 8pm

4. Local life is on the rise again, and video accounts are rushing into the market｜Yilan Business

5. Video accounts enter Meituan’s backyard｜Spiral Lab

Author: Aries

Source: WeChat public account "TopKlout (ID: TopKlout)"