Since Su Hua stepped down as CEO, Kuaishou's performance has been improving under Cheng Yixiao's leadership.

In 2021, Cheng Yixiao took over as CEO and in 2023 as Chairman, taking more comprehensive control of Kuaishou and driving overall performance improvement.

Especially, from September 2022 to November 2023, Cheng Yixiao personally took over Kuaishou E-commerce and delivered impressive results.

As 618 approaches, major e-commerce platforms are pulling out all the stops to compete for traffic. Compared to previous years, this year's 618 is clearly a longer battle, with more intense competition between platforms.

Among them, Kuaishou E-commerce has performed well overall. According to reports from China Securities Network, during the period from May 20th to May 25th, the number of active merchants on Kuaishou platform increased by 32% year-on-year, and the number of new active merchants increased by 25% year-on-year. In other words, more and more new merchants are actively participating in Kuaishou's 618 promotion to seize business opportunities.

In fact, judging from the financial report data, Kuaishou's performance has been quite good over the past year.

According to Kuaishou's financial report, in 2023, Kuaishou's total revenue reached 113.4 billion yuan, an increase of 20.5%, and its net profit was 10.3 billion yuan, successfully achieving profitability. In the first quarter of 2024, Kuaishou's total revenue was 29.408 billion yuan, an increase of 16.6% year-on-year. Net profit continued to maintain a profitable state, reaching 4.12 billion yuan.

Obviously, compared to previous years, Kuaishou is more profitable and mainly attributes its profits to e-commerce business.

However, Kuaishou is not complacent. On the one hand, it faces strong competitors like WeChat Video and Douyin. On the other hand, top e-commerce players represented by Xinba are also very restless. Under both internal and external pressures, Kuaishou's position as the second-largest e-commerce live streaming platform is becoming increasingly unstable.

For Kuaishou E-commerce, simply monetizing is far from enough. Telling a new story is the real challenge.

1. Traffic peaks, and the second-largest position is difficult to maintain

As the saying goes, a good cat is one that can catch mice, regardless of its color. As Internet traffic enters the era of stock, major platforms are also caught in traffic anxiety.

However, platforms like WeChat, Taobao, and Douyin, due to their considerable daily and monthly active user base, are not significantly affected even if their growth rate slows down. In contrast, Kuaishou's daily active users are less than 400 million, only half or even less than its competitors, inevitably having a greater impact.

At that time, relying on "local flavor" videos, Kuaishou easily ate up the dividends of the sinking market, accumulated a large number of sinking users, and became a leader in the short video field.

However, due to the deep-rooted "local flavor" label, the platform's image was deeply affected, laying hidden dangers for its subsequent development. As the country's regulation of short video platforms becomes more standardized and stringent, in addition to bearing greater regulatory pressure, Kuaishou is also difficult to capture the minds of high-end users, leading to repeated failures in penetrating first- and second-tier cities. It can only watch helplessly as Douyin easily grabs the market with its Lite version and sits comfortably at the top of the short video field.

According to relevant statistical data, Douyin's daily active users have exceeded 800 million, while Kuaishou's are 400 million, a significant gap between the two.

At the same time, in the short video market, Kuaishou also faces the pursuit of the industry dark horse "WeChat Video." According to data from the Sight Research Institute, WeChat Video's daily active users have already exceeded 500 million.

In this situation, to increase traffic, Kuaishou has pulled out all the stops. Kuaishou once invited Jackie Chan to start an exclusive live broadcast on the platform in the form of a "campfire singing session." Previously, Kuaishou had successfully persuaded Jackie Chan to start his first global live broadcast on the platform to celebrate his 60th anniversary of debut, with a cumulative audience of up to 220 million.

Although big-name stars can temporarily boost the platform's daily active users, it is difficult for them to truly seek new increments for Kuaishou.

According to Kuaishou's 2024 Q1 financial report, during the reporting period, Kuaishou's actual monthly active users were 697 million, a decrease of 0.4% month-on-month, showing a trend of loss, compared to 700.4 million in Q4 2023.

The stagnation of Kuaishou's traffic growth has also significantly affected its e-commerce operations. As everyone knows, the rapid development of Kuaishou E-commerce is partly attributed to the platform's huge traffic transfusion, and even gave rise to top live streamers like Xinba. Therefore, when it is difficult to find new increments on the platform, the competitive pressure on Kuaishou E-commerce is obviously greater.

Even more worrying for Kuaishou is that WeChat Video's e-commerce is also closing in. Statistics show that WeChat and WeChat's monthly active users have reached 1.343 billion in 2023, almost twice that of Kuaishou. Although currently, video number e-commerce is still relatively niche and small in size. However, Tencent is intentionally connecting video numbers and WeChat advertising systems, widely promoting video number live broadcast rooms within the circle of friends.

Moreover, users have a natural trust relationship with WeChat, which is very conducive to the development of video number e-commerce. In the past, micro-merchants based on personal/community private domains once earned a lot.

In addition to Douyin's booming e-commerce operations, it is no longer easy for Kuaishou E-commerce to continue earning money effortlessly. There is even a possibility that under the double squeeze of traffic and trust, its second-largest position may not be guaranteed.

2. Short dramas are also difficult to tell a new story

Facing the traffic crisis, Kuaishou naturally will not sit idly by and began to look to the short drama track, hoping to find new opportunities.

For Kuaishou, short dramas are actually within its comfort zone. After all, the essence of short dramas is still short videos, only with stronger storylines. Therefore, leveraging the advantages of short video platforms, Kuaishou easily entered the short drama track and gained more initiative.

At the end of December last year, Kuaishou launched an independent short drama APP called Xifan and emphasized words like "free enjoyment" on the APP details page, attracting a large number of price-sensitive audiences.

Although emphasizing free viewing, Kuaishou short dramas actually pay more attention to brand marketing, realizing commercialization through this.

In terms of the model, Kuaishou short dramas not only focus on "content exposure and seeding" but also care about "brand forwarding and unseeding." By creating a short drama marketing full-chain matrix that allows viewers to "watch, seed, interact, search, and convert," Kuaishou successfully occupies consumers' minds, bringing brand loyalty and increasing repeat purchase rates.

In terms of format, Kuaishou creates a combination of "short drama +" content activity plays, including brand sponsorship, brand customization, hot drama follow-up investment, advance screenings, etc., allowing content and traffic to go hand in hand, achieving brand voice diffusion.

The rapid development of the short drama business has driven a large number of users to consume on the platform, which has also attracted a large number of new merchants to flood in. Merchants' demand for traffic exposure has provided strong growth momentum for Kuaishou advertising.

Financial report data shows that in 2023, Kuaishou's advertising revenue reached a new high of 60.3 billion yuan, an increase of 23% year-on-year.

However, in the long run, it is unrealistic for Kuaishou E-commerce to rely solely on short dramas to tell a new story.

Over the past year, although short dramas have been exceptionally popular, they have also sparked a lot of market controversy.

Many short dramas suffer from issues such as poorly made content and violation of public order and good customs, prompting more stringent regulation by relevant departments.

On November 15, 2023, the State Administration of Radio, Film, and Television officially announced a one-month special short drama rectification campaign, with over 2,000 short dramas with violations being banned from the market or taken off the shelves. In addition, various localities have successively issued documents prohibiting short dramas that have not passed the filing from being launched on online platforms.

As regulation becomes more stringent, it becomes very difficult for Kuaishou E-commerce to rely on short dramas to bring more business growth.

3. Increasing "trust" to break through the bottleneck

Although Kuaishou's monthly active users are declining, the activity of the remaining existing users on the platform has increased significantly.

Financial report data shows that Kuaishou's daily active users spend an average of 129.5 minutes on the platform daily, an increase of 4% month-on-month, setting a new high in the average daily active user metric.

Since it is difficult to find new traffic, Kuaishou has to work hard to retain old users and increase user stickiness. To this end, Kuaishou has further adjusted its e-commerce strategy.

At the 2024 Kuaishou E-commerce Gravity Conference, Wang Jianwei, Senior Vice President of Kuaishou, specifically emphasized a user-first strategy, calling on merchants and the platform to adjust their operations based on user needs.

For example, Kuaishou will weight the matching of people and goods in traffic distribution, allowing quality products and highly rated merchants to receive more traffic. In this way, it can effectively promote the entry of more reliable merchants and allow consumers to purchase truly cost-effective products.

In addition, Kuaishou is also actively improving service quality, introducing functions such as "multi-item discounts" and "pay after use," and continuously optimizing processes such as product shipping and return logistics.

In fact, as early as the 2022 Kuaishou E-commerce Gravity Conference, Kuaishou had already proposed a strategic plan to build trust and create new growth dividends.

Obviously, Kuaishou hopes to enhance consumer trust and increase repurchase rates through a series of measures.

However, whether these measures will be effective remains to be seen.

After all, although Kuaishou E-commerce has always mentioned trust, there are still many consumers who do not trust the platform on the Heimao Complaint Platform.

In the past 30 days, Kuaishou has generated 2,388 complaints on the Heimao Complaint Platform, with 2,388 replies and 587 completed.

The complaints mainly focus on issues such as false advertising, quality problems with purchased products, and deception of consumers, all of which erode consumer trust.

Nowadays, in addition to specialized e-commerce platforms like Taobao and Pinduoduo, platforms like Douyin and Xiaohongshu are also transforming towards e-commerce, leaving Kuaishou with not many opportunities in the market.

Especially since many consumers have already formed consumption habits on other platforms, if Kuaishou's products are not sufficiently cost-effective and of corresponding quality, it is difficult to motivate consumers to place orders actively.

Fortunately, Kuaishou understands the problem and is actively making changes. However, for its e-commerce business to truly support half of Kuaishou's sky, it needs to take real actions beyond just shouting slogans.