In 2024, the battle for users intensifies among major e-commerce platforms once again: Taobao announces a "return to users," JD.com pushes its "low-price strategy," and Pinduoduo increases "consumer subsidies." In recent years, the drastic changes in consumer trends have accelerated the flow and migration of buyers across different platforms, with traditional e-commerce giants gaining and losing ground, while short video platforms like Douyin and Kuaishou have also joined the trillion-dollar GMV club.
The changing trends in consumer behavior have presented Kuaishou, with its 700 million monthly active users and 130 million monthly active buyers, with even greater possibilities.
On May 15th, at the Kuaishou E-commerce Gravity Conference, Wang Jianwei, Senior Vice President of Kuaishou and head of the E-commerce Business Unit and Commercialization Business Unit, made a high-profile announcement of Kuaishou E-commerce's annual strategy - "User First."
However, what puzzles outsiders is that despite the strategic focus on "User First," the core actions announced by Kuaishou E-commerce are centered around merchants, emphasizing "supply chain": shelf marketing strategies, sales hosting models, new business support policies, and holistic operational methodologies.
"After five or six years, Kuaishou has finally taken a seat at the e-commerce platform competition table," Wang Jianwei said, emphasizing the need for more consideration on what can be done for users and merchants. Why does Kuaishou E-commerce, with its strategic emphasis on "User First," place such importance on shelf marketing and holistic operations?
Why do live e-commerce platforms need to set up shelves?
The e-commerce industry, caught in a cycle of imitation, has been copying each other's homework. Whether it's the early rivalry between Alibaba and JD.com, or Pinduoduo's consumer-centric business strategy, over the past 20 years of e-commerce development in China, despite the tough talk in the public arena, everyone has been borrowing from each other's strengths. The operational strategies and methodologies of different platforms have long been intertwined.
JD.com, once prominently labeled as self-operated, has embraced more merchants through an open platform, while Alibaba, advocating customer-first in the new consumption era, emphasizes user priority. Live e-commerce, or content e-commerce, has seen the emergence of the "e-commerce reversion phenomenon" of setting up shelves in recent years. Superficially, this may not seem particularly special, similar to Taobao's move into content ecology years ago or Pinduoduo's venture into live streaming, all aimed at shoring up weaknesses.
However, upon closer inspection, the establishment of shelf spaces by content e-commerce platforms fundamentally addresses supply and demand issues.
In the fourth quarter of 2023, Kuaishou e-commerce gradually opened up the traffic entrance of the general shelf scene, with the Kuaishou Mall fully open on the homepage tab in December. Data shows that in 2023, the daily active buyers on Kuaishou's general shelves increased by 75% year-on-year, and the daily average turnover of merchants increased by over 100%.
It can be said that Kuaishou e-commerce's shelf spaces have entered a phase of rapid growth from the start. While there is certainly a platform-level bias in traffic, what truly drives growth is the changing demand. Over the past year or two, many Kuaishou users have shifted away from relying on content for random or semi-determined consumption needs and are increasingly inclined to use search for purchases, preferring shelves to meet their deterministic needs. Data shows that in Q1 of 2024, the GMV of product searches on Kuaishou e-commerce increased by 128% year-on-year.
The experiences of Huahua, a user on Kuaishou (nickname: Huahua's VLOG), are quite representative.
Huahua, born after 2000, works at a hotel group in Beijing. She started shopping on Kuaishou in 2023, covering everything from food, clothing, to cosmetics, with about 80% of her cosmetics purchases made on Kuaishou.
"Most of my family, relatives, friends, and colleagues use Kuaishou, and we often share great finds from the platform," says Huahua. Her shopping habit leans towards actively searching for items, such as searching for similar styles on Kuaishou when she likes something.
The deeper and more certain consumption demands of Kuaishou's 700 million users are yet to be fully explored and met, driving Kuaishou's push for its shelves. Throughout the development history of Kuaishou's e-commerce, supply has always been the keyword behind different stages of its e-commerce strategy. From the early emphasis on trust in e-commerce, branding, and industrial belts, to last year's focus on "low-priced quality goods," and this year's "user-first" approach, Kuaishou's e-commerce has gone through stages of addressing early supply shortages, expanding the scale of high cost-effective supply, and building a high-quality supply system.
Strategically, the context of Kuaishou's e-commerce "supply-side reform" is clear, with demand changes represented by "user-first" serving as a significant driving force for these strategic adjustments. The reality facing Kuaishou's e-commerce is this: on the demand side, the pursuit of cost-effectiveness and rational consumption has become the mainstream trend; on the supply side, many suppliers and industry merchants are not adept at short video and live streaming operations, limiting the platform's scale and granularity of "low-priced quality goods" supply. By introducing shelf scenes and new supplies, the situation is continuously improving.
Data from Kuaishou's e-commerce shows that in Q1 2024, the sales of products priced below 50 yuan saw a significant increase, with the GMV of the fruit and vegetable category growing by 66% year-on-year, and the order volume increasing by 114% year-on-year, demonstrating a two-way surge in demand and supply.
In terms of the overall user base of 700 million on Kuaishou, the penetration rate of monthly active users on Kuaishou e-commerce is 18%, indicating significant room for growth. The shelf space undoubtedly holds greater potential for user consumption.
To serve users well, it is essential to focus on supply. This is a simple logic and also the challenge and opportunity for Kuaishou e-commerce in this new phase.
It is clear why Kuaishou e-commerce, advocating "users first," is vigorously developing a wide range of shelves. By concentrating on solving the "goods issue," one can follow user demands with merchants, creating a positive cycle of serving users.
What is the endowment of Kuaishou e-commerce?
While everyone is copying homework, the quality of the homework still depends on the platform's endowment. Over twenty years ago, when domestic e-commerce platforms first entered the era of shelves, the abundant supply and convenient payment methods quickly brought online shopping into the lives of ordinary people. Shelf e-commerce also has its shortcomings: a lack of content capabilities and social accumulation can continuously raise the cost of traffic; passive consumption based on shelf logic can limit the detection and understanding of user needs.
Pinduoduo, through precise matching of people, goods, and prices, further expanded the imagination of traditional shelf e-commerce by "de-shelving," driving another iteration of the e-commerce industry. The extreme low prices on the supply side, the power of algorithmic matching, and the outbreak of social fission have disrupted the industry landscape.
When short video and live streaming platforms enter the arena of commodity trading, the species of e-commerce born in the United States 30 years ago has a new look. So, what is the endowment of Kuaishou e-commerce? Currently, short video and live streaming are still recognized as one of the best tracks in the industry, especially the consumption potential of the basic user base of 700 million, particularly the untapped potential of new users.
However, Kuaishou does not seem to be content with just relying on the ecological momentum to make money easily. Although Kuaishou e-commerce has just entered the competitive arena of the e-commerce industry, its development strategy clearly follows a logic of "both this and that." The introduction of shelf spaces allows Kuaishou e-commerce to upgrade from a content field based on live streaming and short videos to a universal traffic field. This is the next-generation e-commerce ecosystem that traditional shelf e-commerce has long dreamed of.
Starting with content, Kuaishou's algorithmic recommendations are a fundamental capability of the platform. Matching supply and consumption on the content side, building relationship chains are the platform's strengths. For the first time, content logic and e-commerce logic have the opportunity to merge, forming universal traffic.
From a universal traffic perspective, different types of merchants on Kuaishou can seek growth opportunities in various scenarios such as live streaming, short videos, malls, and search, catering to different consumer needs. Merchant retention represents their confidence in platform operations.
At the 2024 Kuaishou E-commerce Gravity Conference, an interesting set of data was revealed. In the distribution of the number of operating merchants in different fields, pure live streaming accounted for 20%, pure shelves for 32%, and pure short videos for 10%. Nearly 40% of merchants chose to operate across two or more domains. More interestingly, the data shows that compared to single-domain operations, merchants operating across two domains saw a retention rate increase of over 10%, and those operating across three domains saw a 30% increase in retention rate.
This means that operating globally is becoming a must for businesses - providing good products on the shelves and producing quality content in the community are essential for more certain growth.
The fast e-commerce of "global operation" aims to match goods with people and people with goods, forming a new model where the supply and distribution of goods and content are seamlessly integrated.
For example, the creator "Wang Beisi in Northeast" who gained popularity on Kuaishou this year, accumulated 2 million fans in less than two years. In his first live stream for e-commerce transformation, he generated nearly 10 million GMV. This seamless integration of content and commerce has become a phenomenal benchmark for Kuaishou e-commerce in the content field.
Behind the convergence of content and commerce is Kuaishou's algorithm that matches content consumption with users, developed over many years. "The integration of content and products can help businesses gain more traffic on the platform, and the e-commerce ecosystem still has a high ceiling," said Wang Jianwei at the Gravity Conference. By 2024, he discovered that Kuaishou e-commerce's traffic, content, and product transactions began to bring more daily active users to Kuaishou. To some extent, e-commerce with a global operation approach is shifting from the traditional logic of traffic consumption on shelves to a new stage of nourishing the content field.
What new opportunities do businesses have from a global perspective?
An obvious issue is that not all businesses have the dual capabilities of managing content and shelves simultaneously. Therefore, Kuaishou e-commerce also has special support policies at the product level. In other words, Kuaishou e-commerce's supply-side reform is entering deep waters. Wang Wenbo, head of the Kuaishou e-commerce mall business, stated that the platform has allocated billions in support for traffic, billions in product subsidies, and a policy of commission-free product cards to help businesses establish a strong presence on the shelves. They have also comprehensively upgraded operational models, shopping experiences, product searches, and marketing strategies.
One of the most notable initiatives is Kuaishou Preferred. This project adopts a sales hosting model, where the platform integrates global traffic (shelves and content fields) to provide businesses with a deterministic sales channel and sales pipeline. The platform handles product selection, operations, while businesses manage production, shipping, and after-sales services. Liumanji was one of the first participants in Kuaishou Preferred and has achieved significant success in global operations.
Liumanji focuses on selling Thai durians in the Chinese market, primarily through offline wholesale channels. In recent years, they have increased their investments in online platforms, such as influencer distribution and live streaming.
In early April, Liumanji's channel manager, Zhang Jian, decided to collaborate with Kuaishou Preferred. What impressed him was that besides the commission waiver, he didn't need to create short videos or conduct live streaming sales, or manage influencer distribution. The platform handles all aspects of channel and traffic operations, provides guidance on optimizing product displays, and saves a lot of trouble.
"The key is the unexpectedly high volume of orders," Zhang Jian said, initially feeling a bit bewildered. "Orders came like snowflakes, seemingly out of nowhere." Zhang Jian still looks amazed when recalling the experience. Kuaishou also waived the withdrawal fees for Liumanji, significantly reducing operating costs. The surprising surge in orders was a result of the precise connection between supply and demand.
Sales hosting services, including the Kuaishou Preferred project, have seen rapid development since its launch at the end of March. The average daily number of hosted products has exceeded 150,000, and businesses have brought an additional 16% GMV through sales hosting services, greatly stimulating the enthusiasm of businesses to introduce new supplies.
In terms of active product operations, after upgrading the official supply chain alliance Kuaifendistribution, Kuaishou e-commerce further extends upstream in the supply chain. For example, in industrial belts, Kuaishou e-commerce focuses on supporting businesses in industries such as women's clothing, men's clothing, fruits and vegetables, and jewelry, introducing low-priced products.
At the same time, Kuaishou e-commerce has launched the "Rural Revitalization Plan," establishing deep cooperation with ten key fruit and vegetable industrial belts such as the Hainan mango industrial belt and the Yunnan durian industrial belt.
From the consumer's perspective, Kuaishou e-commerce is also striving towards a more refined logic in traffic distribution. For example, weighting the matching of people and products in the content field allows businesses with affordable and high-quality products and good repurchase rates to gain traffic, while low-quality products are commercialized to cut off traffic and prohibit advertising.
In short video distribution scenarios, if a business's price markup rate is too high, the distribution of products will be stopped.
Whether it's creating high-quality "new supplies" or optimizing the efficiency of matching people and goods, Kuaishou e-commerce is making the connection between the platform, businesses, and consumers even closer.
With "user-first" as its core strategy, Kuaishou, after unleashing the benefits of global operations, is boldly collaborating with businesses to optimize consumer experiences on the platform, including multi-item discounts, risk-free purchases, logistics experiences, and shopping experiences. This iterative process of the content ecosystem and the business ecosystem is moving towards deeper integration.
