In recent years, there has been a growing emphasis on respecting users and returning to consumer-centric values across various digital platforms. The consensus is that platforms are shifting their competitive edge from mere product supply to a more user-centered approach.
At the 2024 Kuaishou Gravity Conference on May 15, Kuaishou’s senior vice president and head of e-commerce and commercialization, Wang Jianwei, introduced the platform’s “user-first” strategy to merchants. During the conference, Wang said that the platform will work with merchants to optimize the consumer shopping experience further. Additionally, Kuaishou aims to boost collaborative growth through comprehensive traffic coordination, enhance the supply of affordable quality goods, launch sales management functions, and help merchants adapt to changing consumer trends, seizing new opportunities to improve operational certainty and efficiency.
Over the past year, Kuaishou E-commerce has achieved significant milestones. Financial reports indicate that Kuaishou E-commerce’s total gross merchandise volume (GMV) for 2023 exceeded RMB 1.18 trillion (USD 166.3 billion), officially entering the trillion-RMB club.
This milestone is just the beginning. Kuaishou E-commerce released new data during the event, indicating that Kuaishou’s digital shelves contributed over 20% of its e-commerce GMV in the first quarter of 2024, and page views from e-commerce searches increased by over 120% year-on-year.
These data points suggest that, beyond live streaming and short videos, e-commerce domains like Kuaishou Mall are becoming new growth engines for merchants.
They may also signal that Kuaishou E-commerce needs to continue growing by exploring new incremental opportunities while acknowledging user demands and amplifying the value of trust-based e-commerce. The user-first strategy, aimed at optimizing the supply of affordable quality goods, is a natural extension of this shift.
Understanding the commercial migration path of this strategic focus is straightforward. Despite the era of stagnant traffic growth, online consumption channels continue to expand rapidly from a consumer perspective.
In the digital era, multiple generational groups coexist in the online consumption market, each with distinct memories, values, and consumption preferences. Representing the younger generation, Generation Z values individuality and cultural confidence, being highly price-sensitive with significant consumption potential. Platforms and merchants have long taken notice.
Generation X, born between 1965 and 1980, and Generation Y, born around 1980 to 1995, are characterized by a strong willingness for consumption upgrades and rational decision-making. According to Boston Consulting Group, these generations constitute the “twin engines of consumption.” They are willing to pay higher prices for quality products as long as the price matches the value. Kuaishou data indicates that over 47% of its GMV comes from users over 40 years old.
The complex composition of consumer groups drives diverse consumption needs, continually creating new market opportunities. For instance, Kuaishou’s financial reports show that, in Q4 2023, Kuaishou’s monthly active users reached 700 million, with over 130 million constituting monthly e-commerce buyers. This large user base represents incremental opportunities within the platform ecosystem and adds pressure on the supply side. Adjusting business strategies to meet consumer needs is therefore a natural response.
Amid these changes in supply and demand, dominance in the consumption market has shifted back to consumers, completing the transition from a seller’s market to a buyer’s market. This has, by extension, prompted platforms to collectively shift their emphasis toward users, reflecting intent to follow consumption trends and meet consumer demands.
For Kuaishou E-commerce, the integration of good content and good products is its core difference from traditional shelf-based e-commerce and supports the user-first strategy. This integration has been accelerating over the past year. Wang disclosed that, in 2023, the proportion of short video impressions on Kuaishou E-commerce increased by 75% year-on-year, indicating that content not only drives traffic growth but also enhances GMV conversion efficiency.
Regarding influencers as the medium for integrating content and products, Kuaishou E-commerce vice president and head of influencer business, Chen Tianhua, said that the platform will enhance its features to reduce the difficulty of e-commerce live streaming for influencers, explore new technologies to make live streaming more engaging, and provide more opportunities for promising influencers to be seen.
From a product perspective, the market’s shift from seller-driven to buyer-driven demands higher quality in product supply.
Kuaishou’s solution is evident in the following areas:
- The platform is partnering with merchants to continuously provide a rich supply of affordable quality goods. Kuaishou E-commerce data shows a significant increase in the sales of products priced below RMB 50 (USD 7) in 2023, indicating that the consumption needs of more price-sensitive groups are being tapped. Kuaishou also collaborates with major industrial belts to introduce high-quality products at low and medium prices from the source.
- The platform helps improve merchant operational efficiency and optimizes the consumer shopping experience. According to 36Kr, official sources indicate that traffic distribution in 2024 will favor e-commerce content with good product conversion and service quality.
- Additionally, the platform will ensure the user experience across the entire purchase process, from pre- to post-sale. Measures include reducing marketing noise in the pre-sale stage, assisting merchants in providing clear pricing information, enabling “try before you buy” during the sale stage, and offering refund-without-return and seven-day price protection policies post-sale to alleviate consumer concerns.
Continuously encouraging comprehensive operations and firmly promoting mall development, the “user-first” strategy is likely to generate growth “gravity” for Kuaishou. However, to convert this gravity into actual growth for the platform and merchants, more specific business support may be needed.
A key indicator of Kuaishou E-commerce’s ecosystem vitality is the increasing number of merchants. Kuaishou data shows a 55% year-on-year increase in the number of e-commerce operators and a 68.5% increase in new active merchants in 2023. The number of merchants with monthly GMV exceeding RMB 2 million (USD 281,900) also grew by over 130% year-on-year.
It’s clear that, for merchants and influencers across various stages, Kuaishou E-commerce will provide comprehensive operational support from multiple dimensions, including traffic support, product upgrades, business innovation, and marketing optimization.
For new merchants, Kuaishou E-commerce has upgraded its identification model to quickly and accurately identify potential outstanding new merchants. Support measures include zero-cost store openings, first-sale GMV incentives, and return shipping subsidies, among other plans, ensuring mechanisms are in place throughout their growth cycle.
From a traffic perspective, the certainty of comprehensive operations becomes more apparent. Specifically, Kuaishou E-commerce will initiate a RMB 100 billion (USD 14.1 billion) plan to support new merchants, helping merchants quickly expand their business scale and GMV from the outset. Kuaishou data shows that the platform’s “cold start” traffic coverage rate for new merchants exceeds 95%. For high-quality merchants that have reached a certain level of progression, Kuaishou will continue to invest RMB 70 billion (USD 9.8 billion) to help them draw traffic and achieve business breakthroughs.
From a domain perspective, the value of live streaming and short videos for Kuaishou E-commerce is well-established, while the value of shelf-based e-commerce is fast emerging. Latest data released during the Gravity Conference shows significant increases in both user demand, with daily active users of shelf-based e-commerce on Kuaishou increasing 75% year-on-year in 2023, and business scale, with shelf-based e-commerce transaction volume increasing by 6.2 percentage points year-on-year. Additionally, in Q1 2024, search GMV growth was accompanied by a conversion rate nearly twice the overall market rate.
In Q4 2023, Kuaishou gradually began opening traffic entry points for merchants in the shelf-based e-commerce domain, and fully opened the “Mall” tab for regular use in December. Kuaishou Mall is also supporting merchants across multiple dimensions, including customer journey mapping, search entrances, merchant service products, and platform resources, to help them transition from traffic to sales.
According to Kuaishou E-commerce Mall business head Wang Wenbo, Kuaishou Mall has launched sales management functions, including commission management for branded products and pricing management for white-label products, to reduce operational difficulty and increase sales certainty. This function involves the platform conducting large-scale operations for managed products, integrating ecosystem traffic to provide merchants with access to certain sales channels and pathways. Meanwhile, users can access high-quality, low-priced products through Kuaishou Selection.
Having more comprehensive data allows the platform to more accurately identify potential top selling products. For example, in late March, Kuaishou Selection introduced high-quality products from the blueberry industry belts in Honghe and Dandong, resulting in a 41% increase in blueberry orders within ten days of launch.
At the Gravity Conference, the SEAS methodology for Kuaishou E-commerce domain operations was also introduced. This methodology involves:
- Store (S), for active store operations.
- E-commodity (E), for enhancing product competitiveness.
- Activity (A), for participating in platform activities.
- Sale (S), for full-channel distribution.
This methodology completes the loop from “product finding people” in live streaming and short videos to “people finding products” in mall and search operations.
Merchants experimenting with different domains are noted to have experienced significant business growth. Kuaishou E-commerce data shows that merchants focusing on two domains had a retention rate 10% higher than new merchants, while those operating in three domains retained 30% more.
Moreover, Kuaishou E-commerce is exploring better user experiences during major promotional events and marketing campaigns. For instance, during the recent 618 shopping festival, Kuaishou Mall canceled pre-sales and started direct sales from May 20, launching promotional activities under the “Everyday is 618” theme instead.
In an era where every user is crucial, gaining user trust has long been a challenging problem for merchants, brands, and platforms. This underscores the value of Kuaishou E-commerce’s inherent trust attributes.
The user-first strategy is an adjustment reflecting changes in the consumption market’s supply and demand, and it’s also the optimal solution for Kuaishou E-commerce to further unleash the value of trust as a “trust-based e-commerce” platform.
Ultimately, providing users with more choices and better experiences is the simplest business truth and an irresistible strategy for consumers. After announcing the strategy, Kuaishou E-commerce’s actual business actions will be essential steps in solving this puzzle.
Trust between people forms an almost perfect commercial foundation. Kuaishou has not betrayed this trust, addressing issues with both merchant supply and consumer experience, providing consumers with affordable, high-quality shopping experiences, and offering merchants more certainty over operations—proper execution will ensure the anchoring of its growth points for the foreseeable future.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Xiao Xi for 36Kr.