Shulou(Shulou.com)12/24 Report--

Introduction: the influence of the family drops again and again, and the talented people of small and medium-sized businesses get the maximum dividend.

Author: Yan Fei

Source: alphabet list

On Wednesday, Kuaishou released its third-quarter 2023 results. During the reporting period, Kuaishou's revenue reached 27.95 billion yuan, an increase of 20.8% over the same period last year, and its adjusted net profit was 3.17 billion yuan, much higher than the consensus estimate of 2.66 billion yuan in the Bloomberg market.

Kuaishou's revenue mainly comes from online marketing, live streaming and e-commerce. Last quarter, the performance of Kuaishou e-commerce was particularly outstanding: GMV (total merchandise trading volume) increased by 30.4% year-on-year to 290.2 billion yuan, while revenue from other services dominated by e-commerce increased by 36.6% to 3.54 billion yuan, significantly higher than the growth rate of the company as a whole and the e-commerce industry.

In the absence of a network-wide boost such as 618 and double 11, the third quarter is often seen as an off-season for the ecommerce industry, with mediocre growth on platforms: last quarter, Alitaotian's revenue grew 4 per cent year-on-year, while JD.com 's growth was less than 2 per cent. By contrast, Kuaishou ecommerce grew 30 per cent year-on-year in the off-season with a GMV volume of nearly trillions for the whole year.

In the past double 11, the achievements of Kuaishou e-commerce are also impressive: GMV, order volume, daily peak and so on have all reached new highs. The number of orders increased by nearly 50% over the whole cycle, the number of goods sold by mobile sales increased by more than 50%, the GMV of small and medium-sized businesses increased by 75% compared with the same period last year, and the brand GMV increased by 155%. From the data point of view, compared to the steady state of direct broadcasting with goods, the growth of brands and pan-shelves which have greatly exceeded the market is the bright spot of Kuaishou double 11.

What is more interesting is that from the data captured by the third-party data platform Feigua, Xinxuan, the best-known family of fast-hand e-commerce, although Singles Day this year has Simba selling mousse mattresses but the link value of 1 billion +, but the entire Xinxuan family GMV is about 7 billion yuan, compared with 9 billion yuan in 2022, down 22%. According to people close to Kuaishou e-commerce, the overall election this year has indeed dropped a lot, while the overall growth of Kuaishou e-commerce is more than 50%.

The negative growth of-22% in Xinxuan and the growth of more than 50% in the Kuaishou e-commerce market shows that the "de-familiarization" of Kuaishou e-commerce for many years has achieved results, and the waist and tail merchants have begun to top, and the overall ecology is more reasonable.

In addition to decapitation, low prices are another core change in Kuaishou e-commerce this year's double 11.

Since the beginning of this year, the competition of domestic e-commerce has focused on price. In the double 11 and other major promotion nodes, major platforms have played low-price cards, with greater efforts to subsidize goods, and the introduction of more white-brand merchants and cheap supply.

Echoing this, Kuaishou e-commerce listed "good goods at low prices" as one of the three major business weather vane in the first half of this year. In early August, it launched the "Big Brand Dabu" channel, which provides subsidies to key brands and pulls commodity prices down to the level of great promotion during daily periods. This double 11 period, iPhone 15 such easy to compare the price of the "hard currency", Kuaishou even achieved less than pinduoduo's "10 billion subsidy".

But Kuaishou doesn't seem to want a large area of direct involvement in low-cost hand-to-hand combat. It puts more energy and resources on improving business efficiency and supporting the growth of brands, small and medium-sized businesses and talented people.

These measures have achieved good results. Judging from the financial results, in the third quarter, the proportion of brand goods of Kuaishou, including fast brands, increased further compared with the same period last year, and the self-broadcast GMV of well-known brands increased by more than 100% year on year, and the growth rate also increased quarter by quarter. During the Singles' Day period, brand GMV increased by 155% compared with the same period last year, with nearly 2500 brands growing by 100% year-on-year.

In terms of small and medium-sized businesses and talent, Kuaishou is using the flow adjustment of the whole scene as the key weapon to enhance the dominant position of both in the platform ecology.

Insufficient flow has always been the biggest pain point for small and medium-sized businesses and talent, and it is also a difficult problem that Kuaishou has made great efforts to solve this year. In January this year, it launched the "Sichuan flow Plan" to open up the underlying ecology of merchant self-broadcast and talent distribution, and improve the efficiency of customer reach, fan precipitation and traffic reuse, so as to promote store entry and repurchase, and reduce customer acquisition costs.

In September, Kuaishou also released the "supporting Plan", which optimizes the mechanism for merchants and talent (referring to the key events of live broadcast with goods), providing more traffic boost before, during and after the scene, which not only drives the growth of GMV in the field, but also promotes the daily exposure and GMV after the event.

In addition, Kuaishou also opens up more pan-shelf e-commerce scenes in addition to live streaming, such as shopping malls, search, recommendations, and so on. This helps merchants improve traffic conversion efficiency and get more orders outside the studio.

Kuaishou's series of actions around traffic reuse, live broadcast, and global operation have brought more pull to small and medium-sized businesses and talent than head merchants and anchors. After getting the tilt support of the platform, waist merchants are growing into the mainstay of fast-hand e-commerce ecology.

In the industry-wide price sinking wave, Kuaishou e-commerce is "reverse growth". It puts brand merchants and small and medium-sized businesses, talent in the core position, in the brand goods as a whole up at the same time, to promote the middle waist merchants and talent faster development. This strategy seems to run counter to the industry, but it allows Kuaishou e-commerce to maintain rapid growth even though the industry has only single-digit growth.

This also shows that Kuaishou has gradually found a suitable path for itself. After a long run-in between its content ecology and commercial ecology, it has moved from mutual compatibility to the stage of being a flywheel, providing a basis for opening a broader business picture.

A

One of the challenges that Kuaishou e-commerce cannot avoid is how to deal with the low-price competition of the whole industry.

In order to drive down the overall price of goods in the station, the mainstream solution of the major e-commerce platforms is to introduce more third-party merchants and provide more low-cost SKU. For example, Alibaba shifted its focus from Tmall to Taobao, while JD.com claimed to treat proprietary and POP (third-party) merchants equally.

Kuaishou e-commerce is promoting the ecological expansion of merchants and talented people by enhancing the attractiveness of the "business environment".

The ever-expanding number of users is the foundation for Kuaishou e-commerce to attract merchants. According to the financial report, from the first quarter of 2020 to the third quarter of 2023, Kuaishou's MAU (monthly active users) increased from 495 million to 685 million, and DAU (daily active users) increased from 253 million to 387 million. Last quarter, Kuaishou DAU increased by 11 million.

At the same time, the consumer mentality of Kuaishou users also continues to strengthen. In the third quarter, Kuaishou e-commerce buyers approached 120 million, a net increase of about 10 million over the second quarter. The strong demand of hundreds of millions of buyers has attracted businesses large and small, and the average mobile sales increased by about 50% year-on-year last quarter.

The influx of merchants in different fields has brought a richer supply of brand goods and a wider price range to Kuaishou e-commerce. But Kuaishou still needs to use more means to push the entire e-commerce ecology towards "good things at low prices".

Kuaishou e-commerce does not follow the example of other platforms for large-scale direct subsidies, but hopes to change the operating costs of different volume merchants by adjusting flow valves and trends, promote the cost reduction and efficiency of the entire e-commerce ecology, and create more profits. let merchants have more room for price reduction.

In the operating cost of Kuaishou merchants, the flow fee is the most rigid part. Head merchants can still rely on the brand effect and fan base to obtain a more stable natural flow; but the popularity of small and medium-sized businesses and the number of fans are limited, so they must divert from the public domain to the private domain and complete the transformation of the transaction. Compared with head merchants, they are more hungry for traffic and need the support of the platform more.

Kuaishou e-commerce has taken a series of actions to "accurate drip irrigation" for small and medium-sized businesses and talented people, such as the river flow program launched at the beginning of this year and the shake plan in the third quarter. More and more business experts participate in it, and explore a set of management methodology that is more suitable for fast-hand soil.

Take the pro-shake plan as an example, its basic logic is that the platform accurately injects traffic into the marketplace during the whole stage, supplemented by subsidies and marketing support, to help them improve the GMV and conversion efficiency of the marketplace, and promote the growth of the number and stickiness of fans, so as to boost their daily business.

Children's clothing brand "Snoopy Bermanka Store" entered Kuaishou in August this year, currently has about 130000 fans, is a typical middle-waist merchant. It selected several lightweight down jackets before Singles' Day as the main product of this promotion. Relevant officials expect the first wave of transaction outbreaks to occur at the end of October.

However, with the help of the yawing program, the double 11 preheating short video of the Snoopy Bermanka store was far more exposed than expected. The studio announced a "burst" on October 20, with a daily GMV of more than 450000 yuan, a two-fold increase than usual, of which the proportion of GMV led by the Yoyo program was close to 1 GMV.

During the whole double 11 period, the GMV of Snoopy Bermanka store exceeded 1.45 million yuan. The relevant person in charge said that the additional push of the pro-shake project and the push mechanism between Kuaishou live streaming rooms ensure the lower limit of the transaction between the live broadcasting rooms.

In addition, Kuaishou fans are sticky and easier to turn into repeat customers, thus reducing the cost of getting customers. "one obvious feeling is that Kuaishou accounts for a significantly higher proportion of transactions than other platforms."

In addition to stimulating the business GMV, the effectiveness of the shake program also extends to the day-to-day operation.

Tong Erbao sea fur (strict selection), a Kuaishou talent with 640,000 fans, said that unstable traffic has been a problem for a long time. By joining the pro-shake program, the popularity of its live room remained at 100000-150000 during the Singles' Day. After the promotion ended, its account went up by more than 30,000, and the traffic between live broadcasts did not drop significantly and remained stable.

With the tilt support of platforms such as the swing plan, waist merchants like Snoopy Bermanka and Tong Erbao Sea Fur (strict selection) are occupying a more important fast-hand e-commerce niche.

In September this year, Kuaishou held the 2023 Investor Day. Cheng Yixiao, CEO of Kuaishou, said that in the past two years, the proportion of e-commerce GMV with top talent in Kuaishou has been declining, and the growth momentum of small and medium-sized talent is even better. In that month, the average number of daily mobile sales buyers of small and medium-sized talent increased by 141% compared with January this year.

By the third quarter, waist merchants have contributed half of Kuaishou e-commerce GMV. In the last quarter, the GMV growth rate of small merchants and talent in fast hands was higher than that of head merchants and talent, and also higher than that of the entire e-commerce sector; the proportion of people with the waist and below accounted for the total GMV of talent gradually increased from more than 20 per cent at the beginning of 2021 to nearly 50 per cent in this quarter.

As we enter the fourth quarter, this trend continues. During the Singles Day holiday, the GMV of small businesses in fast hands increased by 75% compared with the same period last year, higher than the order growth rate of nearly 50% for the whole platform. It can be predicted that the discourse power of waist merchants in Kuaishou e-commerce ecology will still be further enhanced, and this is also the trend that the platform hopes to see.

B

In addition to accurate drip irrigation, Kuaishou e-commerce also put forward the concept of global operation earlier this year, prompting merchants to look for increments in pan-shelf scenes outside the studio.

At the 2023 Kuaishou e-commerce conference in May, Cheng Yixiao encouraged operators to conduct in-depth operations in Kuaishou's content and shelf fields around the three major weather vanes of low-cost good goods, high-quality content and intimate service.

Compared with live studio, short video and other content scenes, the pan-shelf scene follows the logic of "people looking for goods" and meets the high certainty and rigid needs of consumers around the clock, including recommendation, mall, search, shops and so on.

On the investor day in September, Cheng Yixiao said: "our definition of pan-shelf is the deterministic consumer demand that undertakes the spillover of the content field and serves consumers 24 hours a day." He believes that selfbroadcasts and live broadcasts of talent can not meet all the needs of consumers for up to more than ten hours a day, and consumers can get a better experience in pan-shelf scenes such as malls if they want to reorder.

For example, Kuaishou Mall can act as a new traffic entrance, bringing exposure to products other than live streaming; search can undertake users' active consumer demand; stores can precipitate repurchase by beautifying and decorating; and related product recommendations such as "guess you like" can stimulate users to buy easily after browsing the product details page or issuing an order.

In the first half of the year, Kuaishou e-commerce has built the basic framework of e-commerce in the pan-shelf scene. In the third quarter, with the further success of the pan-shelf model, Kuaishou launched the core brand subsidy channel "Big Brand Dagu" in early August, which was distributed in the mall channel, buyer's home page, search, recommendation and other scenes, and invested nearly 100 million yuan in cash in a single quarter to subsidize.

The "Big Brand Dabu" channel is one of the carriers of "good things at low prices" for fast-hand e-commerce, and it also provides businesses with a fixed position for the development of shelf e-commerce. They get the opportunity to get more exposure and orders in non-content scenarios, thus reducing the pressure on the cold start of live streaming.

Last quarter, Kuaishou over-shelf ecommerce accounted for nearly 20 per cent of total GMV. The search scene is eye-catching: the peak of daily search users with e-commerce intentions increased by 25% month-on-month to more than 100 million, and the search GMV increased by about 70% compared with the same period last year.

As another pillar of pan-shelf e-commerce, Kuaishou Mall is also growing rapidly. It made its official debut on Singles Day last year, and its strategic position has been rising over the past year. On Singles Day this year, Kuaishou Mall got a first-class flow entrance; throughout the promotion period, Kuaishou Mall contributed about 10% of GMV, accounting for half of the pan-shelf scene.

At present, the growth rate of Kuaishou pan-shelf e-commerce leads the whole business. During the Singles' Day period, Kuaishou pan-shelf GMV increased by 160% compared with the same period last year, search transaction GMV increased by 146%, and short video GMV increased by 139%. Looking for new opportunities for pan-shelf scenes outside the studio has become a common choice for Kuaishou merchants and talent.

C

At present, the strategy and tactics of Kuaishou e-commerce are basically taking shape. For some time in the future, it will continue to move towards "good things at low prices", while the platform policy toolbox includes preferential support for small and medium-sized businesses, promoting global operation, focusing on the development of pan-shelf e-commerce, and so on.

After finding a suitable growth mode for e-commerce business, Kuaishou's next move is to strengthen the flywheel effect between flow ecology and cash flow system.

In the middle of this month, before the company released its third-quarter results, Kuaishou e-commerce changed hands: Wang Jianwei, a member of the operation and management committee, became the head of the e-commerce division and also served as the head of the commercial division, reporting to the chairman and CEO Cheng Yixiao, who was no longer in charge of e-commerce.

Cheng Yichao said at the internal communication meeting that this adjustment is not only conducive to more efficient coordination between upstream and downstream business, but also frees up more energy to look at new industrial opportunities from the company level, as well as from the overall point of view, to see how to better coordinate between the flow ecology and the cash system.

Prior to this, Kuaishou has built a growth flywheel of traffic ecology through the coupling of content and social interaction. The growing high-quality content of the platform brings more users, and the social system with trust as the core precipitates users into fans, stimulates interactive vitality, and then promotes content consumption. The two complement each other to keep core indicators such as Kuaishou's users, content and social networking growing.

This group of flywheels also broadens the scene and needs of users to open Kuaishou, and cultivates the mind of on-site trading. On this basis, Kuaishou gradually built three major business sectors: advertising, e-commerce and live broadcast.

Today, the Kuaishou commercial flywheel composed of three plates has been formed. Since the beginning of this year, Kuaishou has put more and more emphasis on the coordination of content traffic and commercial traffic, and the platform traffic distribution takes into account both transaction efficiency and content attractiveness, which is precisely to promote the flow flywheel and the commercial flywheel to drive each other.

In order to achieve this goal, on the one hand, the platform needs to continue to do a good job in content ecology, improve user stickiness, expand the traffic base, and provide better support for the cash-out business; on the other hand, it also needs to make content consumption and trading more homogenous, the higher the ceiling, the higher the commercialization efficiency.

The homogeneity of this kind of content consumption and transaction is reflected in the Chuanliu plan and the supporting plan that Kuaishou focuses on this year.

The essence of the Chuanliu plan is to introduce more consumers who are willing to spend through the content provided by the talent. After screening the content, these consumers are more interested in the brands and goods. On the other hand, the Fuyao plan gives priority to injecting traffic into the high-quality short videos produced by the merchants when "heating" the whole process of the merchants' live broadcast, which is also the integration of content consumption and transaction guidance.

The flywheel effect between flow and commercialization carries the expectation that Kuaishou e-commerce will jump again.

In the third quarter earnings call, Cheng Yichao said that China's e-commerce has not yet entered the zero-sum game, the ceiling will continue to rise, in the process, Kuaishou e-commerce can continue to create and meet the needs of the public. On the other hand, with the continuous improvement of the platform infrastructure, rules and business environment, brands and merchants have more willingness to cooperate deeply with Kuaishou, thus bringing more supply. In addition, fields such as pan-shelf also have room for sustained growth.

In Cheng Yixiao's view, the future growth drivers of Kuaishou e-commerce mainly include higher user purchase frequency, higher MPU (monthly payment subscriber) penetration, increasing brand categories, and so on. It is not difficult to see that Kuaishou e-commerce hopes to drive growth from both sides of supply and demand, that is, flow ecology and commercial ecology at the same time.

The operating results in the third quarter show that the flywheel system, which includes users, merchants, talent and platforms, works well. At the corporate level, the commercial flywheel of Kuaishou e-commerce has also initially formed a coupling with the flow ecology. Whether the two sets of flywheels can pull each other more efficiently will be a key challenge for Kuaishou in the next few years.

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