In a move to cement its position in China’s thriving local services market, Beijing-based Kuaishou Technology, the company behind China’s second-largest short-video app, recently revealed a series of initiatives. As China undergoes an uneven economic resurgence, the tech giant is vying for a sizable stake in this lucrative market segment, which has emerged as a beacon of growth opportunity amid a landscape where other business avenues are reaching saturation.
Tapping into Influencer Power
Kuaishou’s strategic decision to tap into its vast influencer ecosystem stands out as its key competitive advantage. The company has allocated tens of millions of yuan to incentivize influencers to promote group-buying deals on its platform. This announcement, made at a corporate event in Shanghai, is part of Kuaishou’s ambitious “Flying Bird” project. The overarching goal is to magnify the sales of its local services by leveraging the influence and reach of its short-video creators.
But the company’s support doesn’t end with financial incentives. Kuaishou aims to provide a holistic ecosystem for influencers to thrive. This includes commission incentives, streamlined online traffic routing, comprehensive training sessions, and state-of-the-art online tools crafted to enhance sales management.
Kuaishou’s Local Services: A Look at the Numbers
The potency of Kuaishou’s strategies becomes evident when evaluating the staggering growth metrics. Transactional users and the gross merchandise value associated with Kuaishou’s local services rocketed by 498% and 848% respectively in the first half of 2023 alone. While the company remains tight-lipped about the exact numbers, the percentages shared at the company event in Shanghai paint a picture of rapid ascent in this sector.
A Crowded Marketplace with New Entrants
The local services market, already brimming with competitors, is about to get even more saturated. Tencent’s WeChat Video Channel and the Shanghai-origin lifestyle social media app, Xiaohongshu, have also begun their incursion into this domain. This influx of companies into the local services arena exemplifies the sector’s potential and underscores its attractiveness as a growth market.
Local services are becoming the new growth epicenter for Chinese tech behemoths, especially as some of their primary revenue streams are nearing a plateau. This shift in focus is palpable across industry players.
The Evolution of Live-Streaming E-Commerce
Interestingly, the live-streaming e-commerce verticals of both Kuaishou and its competitor, Douyin, seem to have reached their zenith. Li Chengdong, the founder and principal analyst at Dolphin, a market consultancy firm, offers an insightful perspective on this shift. He suggests that the saturation in live-streaming e-commerce has nudged these companies to explore the burgeoning local services market. A significant accelerant for this transition has been the easing of Covid-19 restrictions in China.
Predictions for the Local Services Market
Projections by the research firm iiMedia encapsulate the immense potential of China’s local services industry. The market is forecasted to touch a staggering 2.5 trillion yuan by 2025. And as more players join the fray, the industry is anticipated to morph into a fierce multi-platform battleground.
The emergence of short-video apps like Kuaishou and Douyin as formidable players in this arena poses a direct challenge to established giants like Meituan. According to Li Chengdong, the competitive edge for these short-video platforms lies in their expansive reach, particularly in smaller towns and cities. He points out, “While Meituan’s stronghold is predominantly in first- to fourth-tier cities, it doesn’t have the same influence in smaller counties where there’s minimal demand for services like food delivery. In stark contrast, Kuaishou and Douyin enjoy immense popularity even in these smaller locales.”
Conclusion
Kuaishou Technology’s strategic pivot towards local services in China underscores the sector’s growth potential. With a blend of strategic investments, leveraging influencer reach, and cutting-edge technological support, Kuaishou is positioning itself as a force to be reckoned with in this domain. However, with numerous tech giants eyeing the same pie, the local services market in China is set to witness heightened competition, innovation, and potentially, a reshuffling of market dominators. Only time will tell how these dynamics will shape the future of local services in China and which companies will emerge as the leaders in this race.
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