Amidst this immense growth, Kuaishou is becoming a powerful tool for brands to break through new customer acquisition challenges. Now, with the upgrading of the cooperation between Kuaishou and Meituan to "Hundred Cities, Ten Thousand Stores," they are further leveraging Meituan's high-quality products as the "source" to activate Kuaishou's 700 million users.

Author/Tomato Sauce

Produced by/New Pick Business Review

Further Upgrading Cooperation between Kuaishou and Meituan: On July 12th, following the initial cooperation trial three years ago, Kuaishou and Meituan announced their renewal and a comprehensive upgrade in both depth and breadth of cooperation. It is reported that spatially, the scope of their cooperation will expand to "Hundred Cities, Ten Thousand Stores" nationwide over the next three years.

Moreover, the mode of cooperation will not be limited to the single dimension of "products." Meituan's supply to Kuaishou will expand from group-buying products to a coupling of various marketing forms such as voucher products, membership goods, and flash sale items. Both parties will also engage in more foundational and systematic product development to ensure a smooth user experience.

Regarding the reasons for this upgraded cooperation, both parties answered: new customers and abundant supply. Simply put, customers come from Kuaishou, and products come from Meituan. As a newcomer to the local life services sector, Kuaishou has once again entered the spotlight through its cooperation with Meituan, the industry leader.

I. Meituan Eyes Kuaishou's 700 Million Users

American scholar Lincoln Paine once said, "Although 70% of the Earth's surface is covered by water, historical narratives have always been land-centric." Slightly adapting this quote, "Although most of China's territory belongs to lower-tier cities, business stories have always been narrated by the elite classes in big cities." This conclusion also applies to the current retail market.

However, the slowing growth environment is forcing industry practitioners to change this perspective. While land may be diverse, it cannot compare to the wonders of the depths of the ocean. People are more inclined to believe in the spending power of third-tier and lower cities rather than continuing to bet on the purchasing power of elites in first- and second-tier cities. Clearly, Meituan stands among this crowd.

Meituan understands this very well. First, the new-tier market is like a boundless giant with immense potential. Second, Kuaishou, dominated by third-tier and lower-tier users who are heavy on social interactions and content creation, can bring a huge increase to Meituan.

Data proves this point. In June of this year, the GMV of Meituan merchants on the Kuaishou platform increased by over 38 times year-on-year, and order volume increased by over 10 times. Taking Zhao Yiming Snacks, a leading player in the snack bulk sales segment, as an example, since entering the Kuaishou ecosystem through Meituan in April this year, it has accumulated over 400,000 new customers within two months, with incremental GMV exceeding 25 million.

In June, which has just passed, the incremental customer flow brought by Kuaishou to Zhao Yiming Snacks comprised more than 42% of new customers, with at least one new customer for every three transactions. It is worth mentioning that Zhao Yiming's stores are already spread across the country, and new customers are even more difficult to obtain under the diminishing marginal effect of incremental growth.

Amidst this immense growth, Kuaishou is becoming a powerful tool for brands to break through new customer acquisition challenges. Now, with the upgrading of the cooperation between Kuaishou and Meituan to "Hundred Cities, Ten Thousand Stores," they are further leveraging Meituan's high-quality products as the "source" to activate Kuaishou's 700 million users.

As the two giants join forces, "browsing and grouping" will become another new normal in the Kuaishou economy, continuously showcasing to the outside world the "blue ocean miracle" created by Kuaishou's local life services amidst the fiercely competitive stock stage nationwide.

In Q4 2023, the number of users placing orders for local life services on Kuaishou increased by 23 times year-on-year, and GMV increased by 25 times. The characteristics of Kuaishou's users are evident: they are "rich and leisurely." In Q4 2023, the average monthly shopping amount per user who placed orders on the Kuaishou platform exceeded 1,000 yuan, and the average daily usage time of active daily users exceeded 2 hours.

Behind the blue ocean of Kuaishou's local life services lies the potential brought by its 700 million users. McKinsey has predicted that by 2030, China's personal consumption scale will grow to 65.3 trillion yuan, with over 66% of this growth coming from third-tier and lower cities.

And users in third-tier and lower cities are precisely the mainstream audience of Kuaishou, making it easy for merchants entering Kuaishou's local life services ecosystem to reach new customer traffic, such as the sought-after incremental groups like "town ladies," "hometown landlords," and "county aristocrats" who are the most "city" and whom brands most want to reach in recent years.

The spending power of the new-tier market is not inferior to the purchasing power of first- and second-tier users. According to the "2024 Kuaishou Spring Festival Group Buying Consumption Data Report," users from small cities account for over 60% of Kuaishou's local life services buyers, with "town ladies" accounting for nearly 20%. In terms of payment GMV, "hometown landlords" are roughly equal to 1.26 times that of "urban white-collar workers."

As Zhao Yiming Snacks Brand Director Zhe Lin said, among the platforms they have already entered, Kuaishou's users have relatively low overlap with other internet platforms, and most are located in third-tier and lower cities. Through Kuaishou, brands can reach incremental customers that are difficult to reach on other platforms.

During the Spring Festival, Huailesi, Mixue Bingcheng, KFC, Tasding, and Luckin Coffee became the brand merchants that gained the most new customers on Kuaishou. Among them, Huailesi gained 158,000 new customers on Kuaishou during the Spring Festival, while Pizza Hut, which entered the Kuaishou ecosystem through Meituan, became the "brightest dark horse" in Spring Festival catering consumption, gaining incremental GMV of over 19.46 million in less than 20 days and attracting over 230,000 new customers in its first month of entry.

It is worth mentioning that for brands that find the right marketing approach, the completion of marketing tools accelerates the explosion of new customers for merchants. During this year's Dragon Boat Festival holiday, Mixue Bingcheng experienced another burst of growth on Kuaishou – with the help of the investment product Magnetic Local Push, Mixue Bingcheng gained 35,000 new customers within 2 days, and the account accumulated over 40,000 new followers.

II. "Marketing Cost Reduction" vs. "Integration of Cultivation and Harvest": Leveraging the Kuaishou Economy

When the "cold start" period meets "hot traffic," brands can quickly ignite Kuaishou users' consumption enthusiasm without a lengthy startup period. As Zhao Yiming Snacks Brand Director Zhe Lin said, "In the past, new store openings often required a long cold start period, but we don't need that now because we can quickly cover nearby people through preheating on short videos like Kuaishou and local push investments."

At the same time, due to the "spatiotemporal dislocation," Kuaishou in its blue ocean stage can provide relatively low-cost marketing and operational solutions for Meituan merchants and other ecosystem operators, eliminating the need to invest unlimited funds to compete for limited user attention.

"In just two months, the brand has accumulated over 640,000 followers on Kuaishou, with over 25 million incremental GMV and over 400,000 new customers, all achieved even before the brand's self-broadcasting and franchisee store matrix have fully come into play," said Zhe Lin.

Moreover, brands have found that Kuaishou is suitable for both rapid transaction conversion and long-term brand marketing.

A detailed breakdown of Zhao Yiming Snacks' operational path reveals that on the one hand, Zhao Yiming Snacks focuses on long-term brand promotion goals, selecting influencers who match the content, such as drama-style KOLs or celebrities, to improve content quality, increase exposure, reach more interested audiences, and disseminate marketing materials through Kuaishou short videos and brand live broadcasts, laying the foundation for the long-term operation of brand accounts. On the other hand, for transaction-oriented goals, they choose store exploration-type influencers who are more marketing-oriented and leverage the brand's voucher subsidies combined with platform resource support to enhance product price competitiveness and promote new customer conversion.

The unique platform support in the blue ocean stage is an even bigger attraction, such as reduced advertising costs and the provision of free promotional resources or training support. It is reported that in 2024, Kuaishou will invest billions of yuan in platform subsidies and hundreds of billions of traffic for local life services, supporting 1,000 brands with millions of GMV.

III. Meeting Supply Sources with Active Traffic: "1+1 is Greater Than 2"

With the upgraded cooperation between Kuaishou and Meituan, it can be foreseen that supply and demand will be further matched.

On the one hand, there is a more precise recommendation algorithm that efficiently matches high-quality products with "Kuaishou users." Kuaishou's recommendation algorithm can accurately push local life service merchants' services to potential target customers based on user personas, improving marketing effectiveness and increasing customer conversion rates to stores.

On the other hand, more accurate market insights allow merchants to not only quickly gain momentum but also further understand market trends, deeply occupy consumers' brand mindshare, and reverse-engineer production processes to optimize products and services. Through the higher content dimensions of live broadcasts and short videos, all merchants, including Meituan merchants, can gain a deeper understanding of target audiences, including their age, gender, geographical distribution, interests, and hobbies, and promptly grasp the popular trends and changes in the local life services sector, thereby adjusting business strategies in advance, optimizing products and services, and seizing market opportunities.

It is worth mentioning that Kuaishou's acquaintance culture is precisely "professionally aligned" in the local life services sector. When Meituan's high-quality products meet the Kuaishou economy, it will trigger a "ripple effect" of spontaneous user dissemination and diffusion. On the Kuaishou platform, users have gradually become accustomed to easily sharing and recommending local life services. This social dissemination can rapidly expand the influence and popularity of Meituan merchants, attract more customer traffic, maximize the effect of social dissemination, and bring continuous growth vitality to brands.

This echoes Ernest Hemingway's Iceberg Theory: only one-eighth of an iceberg floating on the sea surface can be seen, while the remaining seven-eighths are hidden underwater.