"LatePost" exclusively learned that Kuaishou CEO Cheng Yixiao will serve as the first person in charge of Kuaishou e-commerce from mid-September and personally lead the team of the e-commerce business department. Xiao Gu, senior vice president of Kuaishou and former head of the e-commerce business department, will be transferred to the local life business leader. At the same time, Kuaishou local life will be upgraded to a first-level department parallel to main websites, commercialization, e-commerce, internationalization and other businesses. This adjustment shows that the importance of e-commerce and local life businesses has been further enhanced.
The domestic economic environment has changed in 2022, and the advertising revenue of most leading Internet companies has also declined sharply. Douyin and Kuaishou are exceptions. Thanks to the internal circulation advertising brought by e-commerce and local life, the advertising revenue of both companies has maintained a growth of about 15% against the trend.
In order to sell more products in the live broadcast, merchants and anchors will advertise on the platform to attract more people to follow their accounts and see the live broadcast. Kuaishou calls this type of advertising revenue brought by e-commerce business "internal circulation income".
According to "LatePost", in the second quarter of 2022, the proportion of internal circulation advertising revenue of Douyin and Kuaishou has reached 40% of the overall advertising revenue. Among them, Kuaishou's internal circulation advertising revenue accounted for more than 45%.
A person close to Baidu senior management said that Baidu most envies Douyin and Kuaishou for the internal circulation advertising revenue brought by e-commerce and local life. Baidu once acquired Nuomi.com with wholly owned investment in 2014 to try to develop local life business, but it was not successful in the end. Baidu, founded in 2000, had advertising revenue of 32.8 billion yuan in the first half of this year, while Kuaishou, which only started commercialization in 2018, had its advertising revenue of 70% of Baidu's during the same period.
"Internal circulation advertising will definitely become the core revenue growth engine for Douyin and Kuaishou in the future." A Kuaishou person said, "This also means that e-commerce and local life business will become more and more important to the two companies." Kuaishou's executive appointment this time is also an adjustment made to cope with the above trends.
Many Kuaishou people said that Xiaogu had a good reputation when he was in charge of e-commerce, but Cheng Yixiao always thought he was not doing well enough. This is one of the reasons why he decided to lead the team himself. "This way he can better understand this business and find new breakthroughs." said a Kuaishou person.
According to the financial report, the GMV (transaction volume) of Kuaishou e-commerce, which has been established for 4 years, has reached 680 billion yuan in 2021, making it the fifth largest e-commerce platform in the country. However, in comparison, Douyin e-commerce, which was established later, has developed faster. According to market analysts' estimates, the GMV of Douyin e-commerce exceeded 800 billion yuan in 2021.
"Cheng Yixiao himself also has a strong interest in e-commerce." said the above-mentioned Kuaishou person. He often encourages management to browse Kuaishou more, experience more, and place orders on Kuaishou e-commerce more. After Cheng Yixiao was directly in charge of the e-commerce department, the middle-level e-commerce managers who originally reported to Xiaogu would turn to Cheng Yixiao to report, and some of them would turn to local life.
Local life is similar to the business model of e-commerce, so Xiaogu, who once built Kuaishou e-commerce from scratch, is currently the most suitable executive to take over this new business.
Previously, Kuaishou's local life business was scattered in the main website and e-commerce business units. After the adjustment, Xiaogu is directly responsible for the upgraded new department, which is conducive to better leading the business forward.
"LatePost" learned that after this adjustment, Kuaishou's local life will change its previous strategy of light investment. Compared to cooperating with Meituan to obtain merchant resources, the newly established Kuaishou local life department will officially build its own sales team and introduce merchant resources, and will also actively connect with more Douyin service providers.
Local life and e-commerce are one of the few high-frequency businesses with still a large market space. No one on Kuaishou or Douyin can sit by and watch other people fall into the hands of these two cakes. As the two major short video platforms continue to increase investment, the long-term stable industry structure will also change.
900 billion yuan of e-commerce sales target
Now 39-year-old Xiaogu became the head of e-commerce business after joining Kuaishou in 2019. Before this, he was the general manager of Weibo's e-commerce business department.
During his tenure as the head of Kuaishou e-commerce, Xiaogu's first major achievement alleviated the problem of Kuaishou e-commerce's excessive dependence on top anchors.
In 2020, he led the team to launch a long-term special operation code-named "Raise". "Racing tail" means "make the anchor at the middle tail louder." At that time, Kuaishou E-commerce divided the anchors into three levels: head, middle and tail based on the average sales of each live broadcast; then Kuaishou began to limit the monthly sales times of some top anchors, and provided additional traffic support and cash rewards to the middle and tail anchors.
After two years of multi-faceted adjustments, the proportion of GMV contributed by the six major families led by the Simba family to Kuaishou has dropped from 30% in the early stage to 10%.
A Kuaishou e-commerce person said that when Xiaogu was in charge of e-commerce business, he would often remind the team to try to affect the original user experience of the product as little as possible while pursuing large GMVs. In 2021, Xiaogu put forward clear requirements for the e-commerce department-user experience and trust should be greater than operating efficiency.
At the beginning of 2022, Xiaogu adjusted the task goal of e-commerce employees from pursuing GMV to pursuing monthly active buyers, that is, compared with sales, Kuaishou e-commerce should pay more attention to how many people spend on Kuaishou every month. It is understood that Kuaishou’s monthly active buyers target in 2022 is 100 million, and it plans to increase by about 30% year-on-year compared with the end of last year.
"LatePost" learned that Kuaishou E-commerce has set an e-commerce transaction volume target of 900 billion yuan this year. However, compared with competitors, Kuaishou e-commerce still has many problems.
The number of daily active users of Kuaishou and Douyin is less than twice, and the actual payment GMV of the two e-commerce is nearly 3 times. The proportion of new buyers retained is more than 10%; Douyin e-commerce has become a new channel for brand merchants to market, but many brands believe that Kuaishou is a channel for clearing inventory, which directly affects the degree of monetization of Kuaishou e-commerce.
Just from the situation of Kuaishou E-commerce itself, the proportion of its users from placing orders to actual payment has dropped slightly this year. In addition, most of the GMVs of Kuaishou e-commerce contribute from the private domain traffic of the "Follow Page", that is, Kuaishou users often only trust a few specific anchors and only shop in the anchor's live broadcast room. The sales limit that this fixed consumption model can contribute to the platform will not be too high. How to guide users to spend more time on the "Discover Page" to freely explore and enter more different e-commerce live broadcast rooms to consume is always a key challenge for Kuaishou.
After establishing a first-level department,
Kuaishou should more radically develop local life business
Compared with Douyin, it has built its own sales team from the beginning, Kuaishou chose a lighter model at the beginning of doing local life business. In February 2022, Kuaishou selected only 6 cities including Harbin, Shijiazhuang, Changchun to carry out local life pilot projects, and it did not expand to 7 cities until July; in terms of supply, Kuaishou chose to cooperate with Meituan - the latter will open the store POI (point of interest, which can be regarded as store specific information) to Kuaishou, and provide the ability to display products such as packages, vouchers and bookings, online transactions and after-sales services.
Half a year has passed, and the cooperation between Kuaishou and Meituan has not achieved the expected results. It is understood that the current GMV of Kuaishou’s local life business is still in low single digits (unit: 100 million), while Douyin has exceeded 20 billion yuan in the first half of this year.
Although Meituan has rich supply capacity, it lacks hot products as a whole, such as the deep discounted products provided by Douyin; on the user side, Kuaishou's user structure is relatively subdued and its consumption capacity is limited.
In addition, the Kuaishou algorithm recommendation capability is also lacking. "The conversion rate from traffic exposure to actual transactions has always been low," said a Kuaishou person.Just over a month ago, Kuaishou CFO Jin Bing also said, "The conversion efficiency of grass planting to transactions has not been fully verified, and there is no more progress in this business for the time being." Although the business progress is not very smooth, given that Kuaishou is increasingly relying on internal circulation advertising, "the internal will still try every means to build the local life business." A Kuaishou commercialist said.
The above-mentioned person said that after Kuaishou completed the "cost reduction" in the first half of the year, the most important task next is to "increase revenue" through e-commerce and local life businesses.
"LatePost" learned that after the establishment of a first-level department, Kuaishou has planned to increase the business budget for local life. The newly established local life department will expand from less than 50 people to hundreds. Kuaishou is also considering officially building a leading chain merchant chain sales team, and actively contacting Douyin local service providers to vigorously expand merchant resources.
It is understood that Kuaishou CEO Cheng Yixiao went to Yulin City, Shaanxi Province to investigate local life business at the end of August this year. A Kuaishou service provider said that in non-first and second-tier cities, users' in-store demand is much higher than takeaway demand. At the same time, there are still many merchants in third- and fourth-tier cities that do not operate Meituan and Dianping. "Kuaishou can rely on its advantages to open up the market that Meituan and Ele.me have not yet penetrated deeply."
"Kuaishou originally had to be a good student of Douyin. Douyin eats meat, and it can drink soup at the worst." An analyst who has been paying attention to local life for a long time said, "But now it seems that Kuaishou obviously doesn't want to do this."
Management frequently adjusts
Compared with ByteDance, it screens and promotes managers through large and small battles. Kuaishou mainly solves the problem of who will lead the troops to fight through airborne and change positions among executives.
Since its first attempt to go overseas in 2017, Kuaishou's internationalization business has introduced many external executives, including Liu Xinhua, head of ByteDance's early internationalization business unit, and Qiu Guangyu, former COO of Didi Internationalization business unit. After Qiu Guangyu left office in March this year, Kuaishou CEO Cheng Yixiao personally served as the head of internationalization for half a year.
Changes between executives are more frequent. In 2020, Ma Hongbin, then head of Kuaishou's operations, had changed positions with commercialization director Yan Qiang . Since 2022, the positions of the other business executives except Wang Jianwei, the head of the main site, have changed: in early August, Ma Hongbin, the former head of commercialization, was transferred overseas, and Liu Feng, the former head of human resources, was turned to be responsible for the commercialization department; in mid-September, the head of e-commerce, Xiaogu, turned to be responsible for local life business. There are many things that confuses the outside world when the
adjustment. Several secondary market analysts said that especially HR heads who do not understand why no business experience can be transferred to commercialization heads. This is the most core income-generating department of Kuaishou. Ma Hongbin had never had relevant business experience before joining the Internationalization Division.
"Ali let executives rotate for management needs, but not on Kuaishou." said a person who has long been observing the Internet industry. This can only reflect a problem that Kuaishou has not been solved for a long time - the company's middle and high-level management echelon and training system have not been established. Once executives are transferred or lost, it is difficult for someone to fill up their positions. Now that Cheng Yixiao is taking office as CEO, it is about to be a year ago, and he has not given his own answer to this old question.
Author | Shi Xian Follow Byte and Kuaishou.
Source | LatePost
