Original link: https://www.latepost.com/news/dj_detail?id=1316
“LatePost” exclusively learned that Kuaishou CEO Cheng Yixiao will also serve as the first person in charge of Kuaishou E-commerce from mid-September, and personally lead the e-commerce business department. Xiao Gu, the senior vice president of Kuaishou and former head of the e-commerce business unit, will be transferred to the head of the local life business. At the same time, Kuaishou Local Life will be upgraded to a first-level department parallel to the main site, commercialization, e-commerce, and internationalization. This adjustment shows that the importance of e-commerce and local living business has been further increased.
In 2022, the domestic economic environment will change, and the advertising revenue of most leading Internet companies will also decline sharply. Douyin and Kuaishou are exceptions. Thanks to the internal circulation of advertisements brought by e-commerce and local life, the advertising revenue of the two companies has maintained a growth of about 15% despite the contrarian 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 the account and watch the live broadcast. Kuaishou refers to this type of advertising revenue due to e-commerce business as “internal circulation revenue”.
According to “LatePost”, in the second quarter of 2022, Douyin and Kuaishou’s internal loop advertising revenue accounted for 40% of the overall advertising revenue. Among them, Kuaishou’s internal loop advertising revenue accounted for more than 45%.
A person close to Baidu executives said that Baidu is most envious of Douyin and Kuaishou’s internal advertising revenue brought by e-commerce and local life. In 2014, Baidu fully acquired Nuomi.com to try to develop local life business, but it was unsuccessful in the end. Founded in 2000, Baidu’s advertising revenue in the first half of this year was 32.8 billion yuan, while Kuaishou, which began commercialization in 2018, has reached 70% of Baidu’s advertising revenue in the same period.
“Inner loop advertising will definitely become the core revenue growth engine of 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 for the two companies. ” Kuaishou’s executive appointment this time is also an adjustment made in response to the above trend.
Many Kuaishou people said that Xiaogu had a good reputation when he was in charge of e-commerce, but Cheng Yixiao always thought that it was not good enough. This is one of the reasons why he decided to lead the team himself, “so that we can better understand this business and find new breakthroughs.” A Kuaishou person said.
According to the financial report, the four-year-old Kuaishou e-commerce GMV (transaction volume) has reached 680 billion yuan in 2021, making it the fifth largest e-commerce platform in the country. In contrast, Douyin e-commerce, which was established later, is developing faster. According to market analysts’ estimates, Douyin e-commerce GMV will exceed 800 billion yuan in 2021.
“Cheng Yixiao also has a strong interest in e-commerce.” The above-mentioned Kuaishou person said. He often encourages management to use Kuaishou more, experience more, and place more orders on Kuaishou e-commerce. After Cheng Yixiao is directly in charge of the e-commerce department, the middle-level managers of the e-commerce business who originally reported to Xiaogu will turn to Cheng Yixiao to report, and some of them will be transferred 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 the most suitable executive to take over this new business.
Previously, Kuaishou’s local life business was scattered in the main station and e-commerce business divisions. 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 with the cooperation with Meituan to obtain business resources, the newly established Kuaishou local life department will officially build its own sales team, introduce business resources, and actively connect with more Douyin service providers.
Local life and e-commerce are the few high-frequency businesses that still have a large market space. Neither Kuaishou nor Douyin could sit by and watch these two cakes fall into the hands of others. As the two major short video platforms continue to increase investment, the long-term stable industry pattern will also change.
E-commerce sales target of 900 billion yuan
Xiaogu, 39, joined Kuaishou in 2019 and became the head of the e-commerce business. Before that, he was the general manager of Weibo e-commerce division.
During his tenure as the head of Kuaishou E-commerce, one of Xiaogu’s achievements was to alleviate the problem of Kuaishou E-commerce’s over-reliance on head anchors.
In 2020, he led the team on a long-term special operation code-named “Ringtail”. “Ringtail” means “to make the anchor in the middle tail louder”. At that time, Kuaishou E-commerce divided the anchors into three levels: head, middle and tail according to the average sales of each live broadcast; then Kuaishou began to limit the number of monthly deliveries of some head anchors, and additionally carried out additional measures for the middle and tail anchors. traffic support and cash rewards.
After two years of various adjustments, the proportion of GMV contributed by the six major families headed 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 the e-commerce business, he would often remind the team to minimize the impact on the original user experience of the product while pursuing a large GMV. In 2021, Xiaogu put forward clear requirements for the e-commerce sector – user experience and trust should be greater than operational efficiency.
At the beginning of 2022, Xiaogu adjusted the task goal of e-commerce employees from pursuing GMV to pursuing the number of monthly active buyers, that is, Kuaishou e-commerce should pay more attention to how many people spend on Kuaishou each month than sales. It is understood that Kuaishou’s monthly active buyer 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 its competitors, Kuaishou e-commerce has many problems.
The number of daily active users between Kuaishou and Douyin is less than double, and the difference in GMV actually paid by e-commerce between the two is nearly three times. The ratio of new buyers retained varies by more than 10%; Douyin e-commerce has become a new marketing channel for brand merchants, but many brands believe that Kuaishou is a channel for clearing inventory, which directly affects the degree of monetization of Kuaishou e-commerce.
Judging from the situation of Kuaishou E-commerce itself, the proportion of its users from placing an order to actual payment has dropped slightly this year. In addition, most of the GMV of Kuaishou e-commerce is contributed 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 live broadcast room of the anchor. The upper limit of sales that the consumption model can contribute to the platform will not be too high. How to guide users to spend more time on the “discovery page” to explore freely and enter more and different e-commerce live broadcast rooms for consumption is always a key challenge for Kuaishou.
After the establishment of the first-level department
Kuaishou to be more aggressive in developing local life business
Compared with Douyin’s self-built sales team from the beginning, Kuaishou chose a lighter model at the beginning of its local life business. In February 2022, Kuaishou only selected 6 cities including Harbin, Shijiazhuang, and Changchun to carry out local life pilots, and did not expand to 7 cities until July; in terms of supply, Kuaishou chose to cooperate with Meituan – the latter will come to the store POI (point of interest, which can be seen as store-specific information) is open to Kuaishou, and provides the ability to display packages, vouchers and reservations, online transactions and after-sales services.
Half a year later, 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 the low single digits (unit: 100 million), while Douyin has exceeded 20 billion yuan in the first half of this year.
Although Meituan has abundant supply capacity, it lacks explosive products as a whole, such as deep discounts and preferential products provided by Douyin; on the user side, the user structure of Kuaishou is relatively low, and the consumption power is limited.
In addition, the recommendation ability of Kuaishou algorithm is also lacking. “The conversion rate from traffic exposure to actual transactions is always low,” said a Kuaishou person. Just over a month ago at the second-quarter earnings analyst meeting, Kuaishou CFO Jin Bing also said, “The conversion efficiency from planting grass to trading has not been fully verified, and there is no more progress in this business for the time being.”
Although the business has not progressed smoothly, given that Kuaishou is increasingly reliant on in-loop advertising, “the company will try its best to build a local life business internally.” A Kuaishou commercialization person said.
The above-mentioned person said that after Kuaishou completed the “cost reduction” in the first half of the year, the next most important task is to “increase income” by relying on e-commerce and local living.
“LatePost” learned that after the establishment of the first-level department, Kuaishou has planned to increase the business budget of local life. The newly established local life department will expand from less than 50 people to hundreds of people. Kuaishou is also considering formally building a major customer sales team for leading chain merchants, and actively contacting local service providers of Douyin to expand business resources.
It is understood that Kuaishou CEO Cheng Yixiao went to Yulin City, Shaanxi Province at the end of August this year to investigate the local life business. A Kuaishou service provider said that in non-first- and second-tier cities, users’ in-store demand is much higher than take-out demand. At the same time, there are still many merchants in third- and fourth-tier cities that do not operate Meituan and Dianping. “Kuishou can use its advantages to open up the market that Meituan and Ele.me have not penetrated deeply.”
“Kaishou originally only needed to be a student of Douyin. Douyin eats meat, and at worst it can drink soup.” An analyst who has long been concerned about local life said, “But now it seems that Kuaishou is obviously unwilling to do this. .”
Frequent management adjustments
Compared with ByteDance, which screens and promotes managers through large and small battles, Kuaishou mainly solves the problem of who will lead the war through airborne and changing posts between executives.
Since the first attempt to go overseas in 2017, the Kuaishou internationalization business has introduced many external executives, including Liu Xinhua, head of the early internationalization division of ByteDance, and Qiu Guangyu, the former COO of Didi’s internationalization division. After Qiu Guangyu resigned in March this year, Kuaishou CEO Cheng Yixiao personally served as the head of internationalization for half a year.
Changes of roles among executives are more frequent. In 2020, Ma Hongbin, then the head of Kuaishou operations, and Yan Jiang, the head of commercialization, changed positions. Since 2022, in the Kuaishou Economic Management Committee (the company’s highest decision-making body), the positions of other business executives except for Wang Jianwei, the head of the main station, have changed: in early August, the former head of commercialization, Ma Hongbin, was transferred to overseas, the former human resources. Liu Feng, the person in charge, turned to be in charge of the commercialization department; in mid-September, Xiaogu, the head of e-commerce, turned to be in charge of the local life business.
There is a lot of confusion about the adjustment. Several secondary market analysts said that in particular, they do not understand why HR leaders with no business experience can be transferred to commercialization leaders. This is the core revenue-generating department of Kuaishou. Ma Hongbin had never had any relevant business experience before joining the International Business Department.
“Ali’s rotation of executives is out of management needs, but this is not the case in Kuaishou.” A person who has observed the Internet industry for a long time said. This can only reflect a long-term unresolved problem of Kuaishou – the company’s middle and senior management team and training system have not yet been established. Once an executive is transferred or lost, it is difficult for someone to replace it. Now that Cheng Yixiao is about to take over as CEO for a year, he has not yet given his own answer to this old question.
This article is reprinted from: https://www.latepost.com/news/dj_detail?id=1316
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