By Dong Erqian

Edited by Yang Xuran

As early as the end of 2021, Kuaishou announced at its Ecological Development Conference that it would establish a strategic cooperation with Meituan for interconnection. The specific implementation strategy includes Meituan launching mini-programs on Kuaishou, providing product displays, online transactions, and after-sales services as a store on the platform.

At that time, traditional local life platforms like Meituan encountered new challenges—a host of new entrants were eyeing the market aggressively.

Also that year, the monthly usage duration of short video platforms reached 40 billion hours, surpassing instant messaging products for the first time, becoming the category that occupies the longest time in the mobile internet ecosystem.

At the press conference announcing the cooperation, the representative from Meituan's first words on stage were envy of Kuaishou's traffic, "Seeing Kuaishou talk about daily active users and traffic, every number is bigger than ours, quite enviable."

Kuaishou, on the other hand, wanted access to high-quality products from Meituan. The executive expressed it directly: "Meituan has been deeply rooted in the local life industry for many years, connecting a vast number of merchants while having deep experience in supply, fulfillment, service, and other system capabilities. The cooperation between the two parties will undoubtedly produce a "1+1>2" synergistic effect."

The effects of the cooperation have now been verified in some aspects. Data shows that in June of this year, the GMV of Meituan merchants on the Kuaishou platform increased by more than 38 times year-on-year, and the number of orders increased by more than 10 times year-on-year.

According to sources close to Kuaishou, due to the cooperation exceeding expectations, before the expiration of the Kuaishou-Meituan cooperation, the senior executives of both parties have met multiple times to discuss the project's goals and values, ultimately deciding to continue deepening the cooperation nationwide.

On July 12 this year, Kuaishou and Meituan announced a comprehensive upgrade of their strategic cooperation. In the next three years, the scope of their cooperation will expand to "hundred cities and ten thousand stores" nationwide.

Behind this lies the expectations of these two leading companies for the future of the local life market. Of course, there is an even bigger judgment.

In 2023, total retail sales of consumer goods nationwide reached 47.15 trillion yuan, an increase of 7.2% year-on-year; among them, retail sales of services grew by 20% over the previous year, 14.2 percentage points higher than the growth rate of commodity consumption, far exceeding the overall retail sales growth rate.

The massive imagination space of China's local life service market makes it an incremental track in itself. Incrementality means business opportunities and确定性机遇. Large-scale incremental demand cannot be overlooked by any major platform.

01

Impact

Far from reaching the stage of stock competition.

Almost all internet companies with recognizable names have ventured into local life in the past two years. A direct reason is that this is one of the few tracks where there is still incremental growth.

Three years ago, Meituan provided its basic judgment on the market size at that time, stating that the current online local life market size was 1 trillion yuan. According to estimates from iResearch Consulting, China's local life market size is expected to grow to 35.3 trillion yuan by 2025.

The most crucial increment comes from the new-tier markets. According to McKinsey's prediction, by 2030, over 66% of China's personal consumption growth will come from third-tier and lower cities. In the second half of 2023, major platforms issued recruitment notices, seeking agents in new-tier markets to expand their teams and capture the minds of new-tier users through a series of low-cost marketing tactics such as group buying flash sales, "Divine Price Day," and "Group Meals."

Meituan summarized in its financial report that during the "May Day" holiday this year, the number of visitors to small towns and low-tier cities, which are niche destinations, increased significantly during the holiday, with county-level local life service consumption growing by 37% year-on-year.

Previous cases such as Mixue Bingcheng, Zhaoyiming, and even Pinduoduo have proven that the feasibility of business models based on new-tier markets is sufficient. They can even grow in profits and scale by taking root downward and then counterattack first- and second-tier cities.

As a major internet platform in new-tier markets, Kuaishou has a vast user base, which is its natural advantage in developing local life services and what Meituan most envies. It is not surprising that the two parties can reach and upgrade their cooperation.

02

Increment

A huge incremental demand that merchants cannot ignore.

Penetrating new-tier markets requires strong content capabilities. For example, in counties, having 100,000 followers is enough to become a consumption trendsetter. Achieving precise coverage and personalized recommendations through content and algorithms is Kuaishou's strength. With 700 million users, Kuaishou is a huge incremental "demand pool" that merchants cannot ignore amidst the deterministic growth opportunities in new-tier market service consumption.

Xiaogu, Senior Vice President of Kuaishou and Head of the Local Life Business Unit, said that a large number of brands are now moving downward because the upward direction is already saturated, and brands are competing downwards. Kuaishou users happen to fit the business expansion direction of merchants. "Our greatest value to group-buying merchants is to provide incremental users," and "these incremental users are unreachable by merchants on other channels."

For example, since entering the Kuaishou ecosystem through Meituan in April this year, Zhao Yiming Snacks has accumulated more than 400,000 new customers and incremental GMV exceeding 25 million yuan in just two months. In June, new customers accounted for more than 42% of the incremental traffic brought by Kuaishou to Zhao Yiming Snacks, with at least one new customer for every three transactions on average.

As Zhao Yiming Snacks Brand Director Zuo Lin said, "Among the platforms we have entered, Kuaishou users have relatively low overlap with other internet platforms, and most are located in third-tier and lower cities."

Compared to other internet platforms, Kuaishou has more "new-tier market characteristics." Buying and selling behaviors in new-tier markets are often based on emotional bonds and acquaintance relationships. Many giants do not understand third-tier and lower markets, mainly because they do not understand the "acquaintance economy" within these markets. As early as 2021, Kuaishou proposed the concept of trust, emphasizing users' trust in the platform and anchors.

The logic of trust is reflected in the operational level, where Kuaishou's verification rate is higher than other platforms. Liu Xuefeng, the project leader of Tangshan Nanhu Kailuan Tourist Attraction, said that Kuaishou's verification rate is very high, ranking first in the entire network. "During the Spring Festival, our highest verification rate reached 78%, and during the entire 38-day communication cycle of the project, the average verification rate could also reach 64%. This verification level is definitely much higher than other platforms."

Xiaogu described it as follows: "The difficulty in local life services is whether users will go after buying. Thanks to the trust gene of the entire Kuaishou platform and old iron users, we find that old iron users 'must go and see after buying coupons'."

03

Efficiency

Releasing more commercial value.

From projects such as Zhao Yiming and Tangshan Nanhu Scenic Area, Juchao found that Kuaishou, based on its content marketing capabilities accumulated over the past decade, provides a marketing field for local life merchants, significantly improving the overall industry efficiency of local life.

For example, in the past, the opening of a new Zhao Yiming store often required a long cold start period, but that is no longer necessary. Before opening, Zhao Yiming will use platforms like Kuaishou to do short video preheating and local push advertising to cover nearby people. In addition, Zhao Yiming will also offer advance vouchers or flash sales products, which can directly bring many new customers to the store.

For Kuaishou, developing local life services also helps release more commercial value for itself.

Generally speaking, the commercial value of an app can be decomposed into user stickiness value and user transaction value. Simply put, an app that allows users to visit frequently and is willing to spend money on it can be considered a higher-value app.

By providing services closely related to daily life, users can spend more time on Kuaishou and participate more deeply, thereby consolidating Kuaishou's position in new-tier markets. For example, if users can clearly find local consumption discounts and services on Kuaishou, it will solidify their habit of opening Kuaishou every day.

Deeply mining user value based on user needs can also enhance Kuaishou's commercial monetization capabilities. After all, in today's new-tier markets, users' consumption potential can be described as enormous. Kuaishou's local life business provides an effective way for itself and many other partner enterprises to tap into these potentials.

Cheng Yixiao, founder and CEO of Kuaishou, has a clear understanding of these trends. In his view, the local life business is inherently a high-quality content supply, which not only contributes to GMV but also better meets user needs. "Contributing user value and enhancing user stickiness to the platform is one of our most valued new businesses."

04

Written at the end 

Meituan advocates "Eat Better, Live Better," while Kuaishou embraces "Embracing Every Kind of Life." It is not difficult to find that the value propositions of both parties coincide, focusing on "life."

More specifically, this "life" refers to the life of ordinary people, the life details that allow everyone to experience a sense of happiness and presence.

Mr. Wang, a state-owned enterprise employee in Fangshan, Beijing, let his mother, who had never drunk coffee in her life, taste her first cup of coffee by group-buying coupons on Kuaishou;

Ms. Wu, a female crane driver in Changchun, Jilin, enjoyed her first seafood buffet by using a group-buying coupon on Kuaishou;

Mr. Ma in Taiyuan discovered high-quality attractions near his home on Kuaishou, bringing his family a new weekend travel experience.

Behind the simple words "life" lie countless joys and sorrows of countless people, as well as the foundation on which all merchants rely for survival.

Putting aside those metaphysical grand words, perhaps this is the state and effect that Kuaishou hopes to achieve in local life.