Author | Wen Yehao

Editor | Wu Xianzhi

"Has Kuaishou abandoned local life services? I claimed a store five days ago, but there's been no progress. Is this business line disbanded?" Such queries have recently surfaced on the social media profiles of Kuaishou's local life services employees.

The answer is unequivocally no. During significant events like the third-quarter earnings report and Double 11, Kuaishou continues to emphasize local life services. However, compared to the first half of the year, the frequency of these mentions has waned.

Gone are the days when the internet was a hotbed of opportunism. Nowadays, whenever an opportunity presents itself, both related and unrelated players rush in, be it AI or local life services.

Eager to enhance their commercialization, platforms like Kuaishou and Xiaohongshu initially targeted e-commerce. However, e-commerce covers a broad spectrum, while more segmented demands necessitate local supply. Whether it's a mom-and-pop store or a foot massage parlor, offline entities can accurately cater to specific groups' unique needs.

According to iResearch Consulting, China's domestic local services market is projected to exceed RMB 35 trillion by 2025, with a compound annual growth rate of 12.6%. Local life services have gradually become another competitive frontier for players beyond e-commerce.

Among them, Kuaishou's journey is noteworthy. Although its scale doesn't compare to direct competitors like Meituan and Douyin, over the years, from local recruitment to blind dating markets, testing delivery services, and deepening cooperation with Meituan, Kuaishou has methodically rolled out strategies.

As Michael Porter noted, "The core of a competitive strategy is not to eliminate competition but to create an unreplicable competitive advantage." Compared to the giants, although Kuaishou has unique aspects, issues like lack of infrastructure, a weak local gene, and uneven regional development limit it, gradually making it a supporting player in this local life battle.

Kuaishou Steps into Local Life

While businesses like blue-collar recruitment and matchmaking, often dubbed "old iron" deals, are iconic, they are traditionally offline. The needs of "old irons" are straightforward, requiring no flashy packaging. Thus, Kuaishou's approach is simple—gathering followers through live streams and directing online traffic to offline services.

For vertical service sectors like recruitment and matchmaking, Kuaishou's use of live streams is indeed a cost-effective strategy. However, relying solely on live streams is insufficient for larger scenes like group buying and food delivery.

Last year, Kuaishou launched a local life mini-program integrating group buying and food delivery services. However, the pace was tentative, with incomplete merchant coverage and traffic distribution. Since this year, Kuaishou's local life services seem to have accelerated.

Data shows that during this year's Double 11, Kuaishou's local life GMV surged 600% year-on-year, with the average daily number of paying users increasing by over 50%. This impressive growth is partly due to last year's low base. Considering Kuaishou's local business was relatively immature then, the high growth rate reflects that base rather than substantial breakthroughs.

Currently, Kuaishou faces the common "localization dilemma" among internet companies. As an internet player, Kuaishou excels in traffic, user engagement, and content conversion. However, serving local merchants and customers presents "water and soil unsuitability."

This year, Kuaishou user Yiyang saw a local stewed food takeout ad. The appetizing picture tempted him to place an order immediately. However, frustration ensued—the merchant didn't answer calls or messages, and the delivery was over 20 minutes late. More absurdly, the advertised merchant name didn't match the delivery receipt. When Yiyang contacted customer service, they responded with vague jargon.

This isn't isolated. A Kuaishou merchant complained that flash sales brought numerous orders, but when they tried to withdraw funds, their account was restricted. Customer service demanded surveillance video to prove voucher redemptions, but the merchant only had entrance cameras, not inside. Their appeal was rejected due to mismatched redemption times. "Customers browse items; they don't redeem vouchers immediately. We also offer delivery, but Kuaishou nitpicks, blocking our withdrawals," the merchant lamented.

An insider noted that few service providers join Kuaishou due to perceived low consumer spending power and the platform's unclear focus, requiring further observation.

Internet players pursue scale, efficiency, and low costs for rapid growth. However, local services demand a heavier approach. Merchant verification, credit management, and product delivery require local team support. Thus, spreading localization contradicts internet platforms' instincts—"elegant" solutions can't fix "messy" problems.

Building a local team isn't difficult; the challenge lies in converting local stores and integrating local supply. Currently, most local stores are firmly under Meituan's control.

In response, Douyin competes via short videos and vast traffic. While Kuaishou shares similar traits, it lacks Douyin's scale and position, lacking the determination to compete vigorously. Instead, it chooses to ally with the strong.

Being a Friend to Meituan

Kuaishou's current group buying and discount section seems vibrant, but upon closer inspection, almost all products are labeled "From Meituan." Kuaishou's local life services have become a Meituan traffic "distributor" or even "possessed" by Meituan.

Kuaishou's cooperation with Meituan began in 2021, with mini-program integration seen as complementary. However, under Douyin's local life services push this year, the relationship escalated from partnership to embrace, shouting "one hundred cities, ten thousand stores."

Although Meituan is deeply rooted locally with live streaming, its tool-like role lacks content genes. Traffic-to-store conversion is a rare weakness in Meituan's local life services. For Kuaishou, lacking local genes and infrastructure, aligning with Meituan is arguably the most cost-effective solution.

However, Kuaishou isn't the only traffic player eyeing local life services. Last year, Xiaohongshu launched an exploration plan and recently expanded catering group buying. Gaode is also collaborating with Alibaba's local life services. Video Numbers introduced a local life merchant onboarding policy, laying groundwork. Traffic giants now covet every crumb.

Douyin Life Services, a store exploration giant, aims to focus more on store exploration next year. Thanks to tools like Douyin Store Explorer, this grassroots creative form has been productized.

Facing numerous traffic platforms, Meituan chose Kuaishou, possibly due to Tier-3 and Tier-4 city penetration.

For both Douyin and Meituan, high-tier city battles are crucial, but Tier-3 and Tier-4 city street fights offer more incremental value. Local life services demand both supply and demand, leading to better developments in regions with richer local entities.

However, this easily attainable piece is already divided, with little room for more competition. To reach the next level, players must tackle previously untapped areas.

Compared to Xiaohongshu, Kuaishou has stronger Tier-3 and Tier-4 city penetration. Although Xiaohongshu has expanded from major cities to third-tier ones, for Meituan, third-tier cities are already covered but not deeply penetrated.

A Kuaishou local life services provider told Guangzi Planet that current preferential regional policies target remote prefecture-level cities and counties, mainly in Yunnan, Guizhou, and Guangxi—taking Guizhou Bijie as an example, counties like Hexiang, Nayong, Zhijin, and Dafang benefit.

Kuaishou is trying to join forces with Meituan against Douyin in Tier-3 and Tier-4 cities. However, Kuaishou's user base and control over these cities vary regionally.

Conclusion

Examining Kuaishou's current local life services performance, the top 10 order volume cities are Shenyang, Beijing, Tangshan, Shijiazhuang, Changchun, Tianjin, Harbin, Guangzhou, Shanghai, and Shenzhen. While seemingly nationwide, excluding Beijing, Shanghai, Guangzhou, and Shenzhen, the rest are northern cities.

This isn't a flaw in Kuaishou's local life services but a difference in its overall customer base—the north is still Kuaishou's stronghold.

A Kuaishou review team member in a certain area told Guangzi Planet that although he considers himself half Kuaishou, reviewing live streams daily, he prefers Douyin for short videos and live shopping. According to an employee at a fish hotpot restaurant on Chengdu's Tianfu 3rd Street, in over half a year, she has never verified a Kuaishou group-buying order.

Taking a Chengdu foot massage parlor as an example, grab prices on Meituan and Douyin are around 100 yuan, while on Kuaishou, it's 219 yuan. Sales data isn't optimistic—Douyin slightly leads Meituan, but both are comparable; Kuaishou's mere 22 transactions are embarrassing.

However, in a Changchun, Jilin, bathhouse, Kuaishou is more assertive—matching Douyin in consumption frequency and leading by 50% in store reviews, giving credibility to Kuaishou's local life services.

This means Kuaishou's local life services have initially penetrated the northern market, fitting the "old iron" gene. However, in the southern market, Kuaishou still feels like an "outsider." The aforementioned service providers' preferential treatment areas reveal Kuaishou's ambition to strengthen Tier-3 and Tier-4 city presence and expand southward.