Merchants who have successfully run group buying on Douyin are now taking advantage of Kuaishou

Local life has gradually become one of the key areas of focus for large companies. For example, Kuaishou has also started to engage in local life. So how are Kuaishou's local life group purchase orders currently completed? If Kuaishou wants to gain greater competitiveness in this field, what actions and preparations does it need to make? Let's take a look at the author's interpretation.

After Douyin launched the food delivery pilot program, the local life sector was filled with smoke.

WeChat is testing food delivery services in Shenzhen and Guangzhou; Meituan is re-testing food delivery live streaming and has set up an entrance to the "food delivery live streaming" channel within the Meituan App; Pinduoduo is making efforts through Kuaituan... Now, Douyin's old rival Kuaishou has finally made its move.

According to the report, Kuaishou has selected Shijiazhuang and other cities as key cities for local life business investment. In these cities, Kuaishou will carry out strong operations, try to run the local life business, and then replicate it in other cities.

Previously, Kuaishou was relatively cautious about entering the local life industry.

In the earnings call last November, Cheng Yixiao clearly stated that one of the strategies of Kuaishou's local life business is to "strictly control the investment level", and the selection of several key cities for strong operations is a continuation of this strategy. At present, Internet companies generally rely on cost reduction and efficiency improvement to squeeze out profits and cash flow, and cautious trial and error is in line with the current situation.

However, competitors have made moves one after another, which has suddenly accelerated the competition in the local life sector. Judging from recent actions, Kuaishou is also accelerating the layout of its local life business.

At the end of February, according to Yibang Power Network, in addition to cooperating with Meituan and others, Kuaishou Local Life is suspected to be testing new transaction links, and has invited some chain brands such as catering and tea that have not yet settled in to join in a small range.

At this moment, Kuaishou is trying to seize the local life market through commodity subsidies. Alphabet List found that some local life group purchase commodities currently sold on Kuaishou are much cheaper than those sold on Meituan, and are all labeled with the words "Kuaishou Subsidy".

Taking Universal Studios as an example, the official price of tickets on March 11 was 528 yuan, the price on Meituan was 512 yuan, and the price of "adult single-day weekend single ticket" subsidized by Kuaishou was 409 yuan.

Due to its late start, the scale of Kuaishou's local life business is quite different from that of Douyin. Obviously, Kuaishou is still in the stage of expanding its market scale and building its ecosystem.

01

A large portion of Kuaishou Local Life’s group buying orders are completed through third-party platforms.

At the end of 2021, Kuaishou reached a cooperation with Meituan, and Kuaishou launched the Meituan Mini Program. For merchants who have settled in Kuaishou through the Meituan Mini Program, clicking on the products in their "Local Life" group purchase will jump to the Meituan Mini Program for transactions.

For Kuaishou, which started relatively late, cooperating with Meituan is a shortcut to quickly fill the platform with local life merchants. However, if Kuaishou is really determined to do local life business, it has to get involved itself and establish a closed loop. This is also a universal rule for platform-based companies.

Relying on third-party platforms to deploy local life business, users need to jump to the mini program of third-party brands to purchase group-buying products. When using a mini program for the first time, the platform will prompt authorization information, which will affect the user experience to a certain extent. Displaying other brands on the transaction page is not conducive to the mental cultivation of Kuaishou's local life brands, and there are also problems such as product control.

In this case, it is inevitable for Kuaishou to launch its own transaction link. A few months ago, Kuaishou began to test the new transaction link. This does not mean that it wants to part ways with Meituan. From the above analysis, Kuaishou's local life has more reasons to improve its infrastructure construction.

From another perspective, compared to Douyin, Kuaishou's local life business is still in the market expansion stage. At this stage, Meituan can help Kuaishou to supplement the B-side merchant supply and product supply in a short time and at a low cost to cultivate market awareness. Similarly, Kuaishou can also feed back Meituan's traffic.

Kuaishou Store in the field of local life - This is how we can understand the new transaction link that Kuaishou Local Life is testing. Under this link, when users purchase group-buying products, they can complete the transaction directly without having to jump to the mini-program of a third-party merchant. In addition, the evaluation of the product is also retained in Kuaishou's own system.

Completing Kuaishou’s endogenous closed-loop transaction chain means that Kuaishou’s local life infrastructure is becoming more complete.

It is worth mentioning that the local life merchants’ entry and subsequent operation methods set by Kuaishou are very similar to those of Douyin, which will to a certain extent lower the decision threshold for merchants who have already settled in Douyin to settle in Douyin, and it will also facilitate merchants to conduct dual-living operations. From the perspective of merchants, it means that they can spend less than 1 energy to do more than 1 business.

But just setting up the framework is not enough. The rise of Douyin group buying has multiple factors. A large number of store exploration videos have appeared on the platform, the number of merchants entering Douyin has gradually increased and provided relatively rich group buying products, and the purchasing mentality of users has gradually been cultivated. The platform has entered the stage of large-scale growth, which is also the inevitable path for Kuaishou's local life business.

02

While building its own closed ecological loop, Kuaishou has also begun to support local life businesses.

An insider of Kuaishou told Alphabet List that Kuaishou chose several cities as the focus of its local life business because it believed that investing heavily in all cities would be inefficient and would also result in a waste of resources. The criteria for selecting cities were either that the city had a large population base and a large number of neglected potential markets, or that Kuaishou had a large advantage in the local market.

At the beginning of this year, Kuaishou's local life team successively entered key cities to carry out strong operations. There are two characteristics of strong operations. First, the official will provide product subsidies and traffic subsidies, and second, it will plan expert store visits.

In early February, Liangshan Haohan, a 9-year-old self-service barbecue brand in Chengdu, entered Kuaishou. The buffet, which was originally priced at 78 yuan for lunch and dinner, was priced at 58 yuan after Kuaishou subsidies.

Another amusement park that also entered Kuaishou in February was the "Sky City" amusement park in Tatan International, Qiaoxi District, Shijiazhuang. When searching for "Sky City" on Kuaishou, you can see many videos of exploring the amusement park posted by Kuaishou influencers, with a special group purchase link for "Sky City Amusement Park" added to the video. The page shows that the product enjoys "Kuaishou subsidies" and has currently "sold more than 33,000".

Behind the hundreds of Sky City store exploration videos is a matrix of short videos + live broadcasts planned by Kuaishou. On February 12, Sky City launched a ticket group purchase on Kuaishou. Kuaishou organized nearly 100 local life experts to produce more than 150 store exploration videos and arranged for the experts to live broadcast every day. The high exposure of short videos was further converted into live broadcast sales. Within a week of the launch, Sky City amusement park ticket sales exceeded 5,000, and more than 10,000 tickets were sold in less than two weeks.

It is not difficult to see that in addition to traffic and product subsidies, Kuaishou is trying to expand its local life business by increasing content supply, which is exactly the advantage of content platforms in trading products. Among them, live broadcasting is Kuaishou’s advantage, and e-commerce live broadcasting has proved that live broadcasting is the best tool for making transactions.

The head of a local life service provider once told Alphabet List that compared with short videos, live streaming has more advantages in facilitating transactions. "Short videos are a normalized sales channel, but live streaming is a hot spot."

A Kuaishou local life operation said that the team had repeatedly tested the effects of live broadcasts and short videos. "We found that the effect of live broadcasts was significantly higher than that of short videos, both in terms of traffic and number of orders."

Live broadcasting also matches group buying scenarios. Kuaishou Local Life has also become more refined in traffic distribution. For example, local life live broadcasting will distribute traffic based on geographic location, making the traffic reach more accurate.

Judging from Kuaishou's recent local life actions, it is also encouraging influencers to boost transaction volume through live broadcasting. At the top of Kuaishou's "Group Buying Discounts", there is a live broadcast selection channel that recommends local life influencers who are currently live broadcasting.

But for many influencers who started out by shooting short videos, it is not easy to do live streaming. Zizibang found that many of the local life live streaming rooms recommended by Kuaishou are selling Wallace products. This is the result of Kuaishou's operation test of hot products. "We have tested that the single-game GMV of Wallace's eight-piece meal for two and ten wings in a bucket is extremely high," said an operator inside Kuaishou.

In order to encourage influencers to start broadcasting, Kuaishou is implementing a traffic and cash subsidy policy, setting up four levels based on indicators such as live broadcast sales, number of submissions, and POI click-through rate. The higher the influencer level, the higher the subsidy.

For some merchants with whom it has in-depth cooperation, Kuaishou has increased the schedule for expert live broadcasts and upgraded the live broadcast traffic, raising the traffic allocation for store visit live broadcasts to Class A.

Some businesses are benefiting from the new policy. After Liangshan Heroes joined Kuaishou, Kuaishou specifically invited influencers to conduct store visits and live broadcasts. In the six stores launched on Kuaishou, each store will reserve two tables per day for Kuaishou influencers to live broadcast. As a result, the number of live broadcast orders for Liangshan Heroes has exploded. Since then, short video orders have continued to increase, releasing the long-tail effect. It is understood that the new customers brought to Liangshan Heroes by Kuaishou channels currently account for 20% to 30% of all channels.

03

In February 2021, Douyin launched an internal test of a discounted group-buying function; in May, Kuaishou's local entrance was changed from a grayscale internal test to a full openness. At the end of the year, Kuaishou reached a cooperation with Meituan. At this time, Kuaishou is still in the trial stage in the local life field, and mainly relies on third-party platforms to complete the expansion of platform merchants.

In September 2022, Kuaishou integrated the local life business of the original main site and the relevant teams of the life service industry of the e-commerce division, upgraded the local life business into an independent business department, established the Local Life Division, and the importance of the local life business was enhanced.

Overall, due to its late start, the scale of Kuaishou's local life business is still in its early stages compared to Douyin; but judging from Kuaishou's recent actions, Kuaishou's local life business may also usher in a period of rapid growth.

One reason is that Kuaishou is providing traffic and cash support to local life businesses. Obviously, this can help businesses to attract more target users for local life businesses from Kuaishou's user pool.

Second, Kuaishou's local life business is moving from purely directing traffic to third-party platforms to a healthier ecosystem. The significance of Kuaishou's strong operations in some key cities lies in the fact that it enriches the supply of content and goods, and the richer the supply, the more prosperous the business.

Of course, it is not easy for Kuaishou to truly capture the local life market. Meituan has a strong foundation, while the aggressive Douyin has an earlier layout, a higher DAU, and a more aggressive layout in the local life business.

Kuaishou's opportunity lies in the fact that its user groups are different from those of Douyin. There are still unsatisfied markets in the local life field, such as snacks and fast food categories with lower customer unit prices, and affordable self-service markets. In other words, Kuaishou, which does not have a high degree of population overlap, provides local merchants who have settled in its ecosystem with an incremental market with a relatively high ROI.

Ma Jiyong is a Lanzhou ramen restaurant chain that originated in Shanghai. It has about 100 stores in Shanghai, most of which are located in office buildings and residential areas with strong demand. In February this year, Ma Jiyong officially entered Kuaishou. The original price of the classic single-person meal sold by Ma Jiyong is 40 yuan, including a bowl of beef noodles and five skewers of lamb. After Kuaishou's subsidy, the meal is priced at 27 yuan. At the same time, Kuaishou has brought together a large number of influencers to visit Ma Jiyong's stores.

In one week, Ma Jiyong sold 1,600 orders of classic meal packages, with nearly half of them coming from Shanghai. While high-tier cities have a high level of consumption, there are also rigid demand areas and sinking areas where demand has not been met; in many cities, Kuaishou's user groups also overlap with the mainstream consumer groups in the city.

Bai Shao Seafood BBQ buffet, which focuses on high-cost buffets, has opened three branches in Qingdao. Kuaishou, who is in charge of Bai Shao's local life operations, said, "Unlike high-priced buffets that tend to be more popular with younger groups, Bai Shao's BBQ buffets are positioned for family consumption, and their main target users are middle-aged groups." In Shandong, a large northern province, Kuaishou covers this main consumer group.

In February this year, Baishao Seafood BBQ entered Kuaishou. The platform and merchants jointly reduced the price of 70+ per person to 40+. Within 10 days of the launch of the activity, Baishao received more than 10,000 orders and its GMV output reached 500,000.

Many leading businesses are benefiting from Kuaishou’s entry into local life, especially for some local life businesses that have accumulated mature methodologies on Douyin.

They can replicate the experience of running group-buying products on content platforms, and then adjust specific operating methods based on the different user groups and product characteristics of the two platforms. This will increase growth for merchants and also increase growth for Kuaishou's local life business.

However, if Kuaishou wants to carve out a large piece of the local life pie, it obviously still has a lot of work to do. The key is to get more merchants to actively enter the market with competitively priced goods. Kuaishou also needs to prove that merchants can still gain new growth here after the subsidy period ends.

Author: Wang Jing; Editor: Tan Xiaohan

Source public account: Alphabet List (ID: wujicaijing), let the future be more than just big.