On the eve of 618, the video number quietly entered local life.
Text | New Business Review Luo Zhi
The war of local life has never stopped.
Some attack. Backed by logistics and distribution, JD.COM piloted the take-away business in the same city, and Tmall and Box immediately launched the "instant delivery" service; With the content as leverage, Tik Tok went deep into group buying to the store, Aauto Quicker launched a local life applet, and Xiaohongshu tried to plant grass and pull grass in a closed loop, recruiting catering merchants in the store.
There is defense. Meituan launched the "special group purchase" and put it on display at position C, entered the same city for group purchase and distribution, and restarted the Meituan circle to provide more favorable prices; Ali’s store-to-store business word-of-mouth APP officially merged with Gaode.
Not long ago, there was a new player in local life: video number. According to media reports, VideoNo. is accelerating the construction of local life service components. Head merchant brands, including Burger King China, have bought coupons online in the live broadcast room of VideoNo ..
People close to WeChat said that the local life business volume of video number is limited. Recently, the interface capability of local life components was tested in a very small scope to better support the business needs of businesses like Burger King, not to mention the strategic layout.
The local life business is regarded as the most difficult bone by Ali. Tencent originally lacked the e-commerce gene. It is not known whether the video number has the ability to stir up the muddy water of local life. Even whether it wants to be a catfish in local life is still unclear for the time being.
However, in the matter of speeding up commercialization, the video number is serious.
First, follow the fast, video number into local life
The video number is supported, and WeChat users can order takeout directly on the video number.
A few days ago, the video number has been launched on the local life component, and the local life business has been tested in a small scale.
In March of this year, the relevant person in charge of the video number revealed at the closed-door sharing meeting of the WeChat open class that in May, the local living components will be officially launched, and merchants will sell coupons on the video number, which can be used for business scenarios such as verification/self-collection at the store or door-to-door delivery in the same city.
Take Burger King as an example. Under the homepage of its video number, the newly added local life components can be divided into: membership, self-help ordering and delivery to home.
Among them, the bottom of the member secondary page is divided into four functions: "home page, discount, mall, mine"; The self-service ordering page provides the Burger King store closest to the user’s location; Delivery to home provides take-away service, and users can also order take-away at the video number.
To put it simply, the video number is built on the local living infrastructure such as exchange voucher transaction, self-service ordering at the store and delivery to home.
It’s just not perfect. The functions of ordering food, delivery and reservation under some pages can’t be realized, and there will be reminders such as "This function can’t be realized" and "Reservation is not allowed at the current time". More functions of local living components are still in the optimization stage.
The short video content platform has entered local life, and the video number is not the first one.
In 2021, Tik Tok made the local life business an independent first-level department, placing heavy emphasis on take-out; In July 2022, Tik Tok tested the group purchase and distribution business; In mid-April this year, Aauto Quicker local life officials announced that they would be stationed in Hangzhou, and signed an agreement with catering enterprises to cooperate in the group purchase of catering.
With the predecessors exploring the road, at this stage, the video number cuts into local life and follows two mature scenes: short video scenes, that is, local businesses sell group purchase coupons; In the live promotion scene, most of the merchants currently connected are KA, the head of the catering industry such as Burger King, KFC and McDonald’s, and these chain brands are more willing to invest in local life.
In terms of commission, from January 1 this year, the video number will charge technical service fees to all merchants in the platform at a rate of 1%-5%. Because the local life of the video number is still in its infancy, the official will provide incentives to merchants, and the actual rate is less than 1% or even free.
Tencent has been commercializing the video number, but its attitude is very cautious. The reason is that the video number can only live on WeChat for the time being, and the commercialization of the video number has side effects on WeChat socialization, and Tencent can’t afford it.
Since its establishment three years ago, the video number only talks about product logic, and does not emphasize commercialization. Compared with the high-profile commercialization of Tik Tok, Aauto Quicker and Xiaohongshu, the video number is very Buddhist.
Even though the top management of Tencent Group has repeatedly shown wild hope for the commercialization of video number in the earnings conference call, video number is not in a hurry to make money, is not hungry for the transaction scale, is not wild about the transaction efficiency, and has an elegant posture.
In 2022, it can be regarded as the first year of commercialization of video numbers. After half a year, in the second quarter conference call, Tencent executives explained the commercialization of video number in detail for the first time, saying that video number was thinking about how to find a suitable adLoad (advertising loading rate).
At that time, the ECPM of the video number (advertising revenue per thousand exhibitions) was lower than that of the circle of friends. At the same time, there was an advertising business competition between the circle of friends and the video number, which made the determination of the video number to be commercialized more or less vague.
Many merchants are also holding a wait-and-see attitude towards the commercialization of video numbers, and they are a little skeptical about whether it is reliable to open a shop on the video number. After all, the infrastructure such as professional operation, industrial resources, specific delivery, and open data interfaces has not yet been established.
It is the reverse growth of video number, which gives Tencent confidence.
In Q2, 2022, when Tencent’s revenue dropped, its fundamentals bottomed out and its advertising business declined significantly, the revenue of video number live broadcast service and digital content subscription service increased, so that the commercialization of video number is expected to become the main growth path of advertising business.
CITIC Securities had expected Tencent to start the video number information flow advertisement by the end of 2022. Unexpectedly, the video number was officially launched on July 18th.
According to Tencent’s latest financial report, the average ECPM of video number is higher than other short video platforms, attracting new advertisers and existing advertisers’ new budgets; Wechat advertising accounts for more than half of Tencent’s entire advertising revenue, among which the revenue of video number is growing.
At present, the total usage time of video number users has exceeded 80% of the circle of friends. Especially in Q4, 2022, the usage time of video number once exceeded that of friends circle; In this quarter, the information flow advertising revenue of video number exceeded 1 billion yuan.
In commercialization, the video number has finally gradually revealed its ambition. In addition to short video streaming advertisements, live rewards and live e-commerce, local life has officially become a way to realize the video number.
Second, how big is the imagination of WeChat local life?
At present, the local life business of video number is more like testing water.
The opportunity to test the water is that in the first half of 2022, when the WeChat video number team and the WeChat payment team docked the local life business, they found that the WeChat payment team had ready-made capabilities, including merchant accounts and offline verification of merchant coupons, and the docking cost was low.
Part of the reason is that there is still much room for growth in local life.
QuestMobile released a report. In April 2023, combined with the penetration rate of the whole network, even the comprehensive services (mainly group buying) as an important supporting sector had a penetration rate of less than 40%, and the penetration rate of takeaway services was only 15.6%. This ensures that the video number that entered late can still seize some market share.
The video number is not very active in the local life. Perhaps the video number clearly knows that he can’t get much cake in the local life field. According to Tiger Sniff, the local life of the video number will be adjusted or removed according to the overall ecology of the video number.
The main actions of video number in local life can be divided into group buying and takeaway.
In terms of group buying, in view of the fact that other players have already found a way, the video number has taken a shortcut in playing, but it has become the main battlefield for major platforms to fight.
There are many comprehensive group buying players, including Meituan, Dianping, Hungry, Gao De, Tik Tok, Aauto Quicker and Xiaohongshu.
The classic player Meituan has accumulated a large number of users with its diverse and rich formats, businesses and distribution resources, and its dominance cannot be shaken within three to five years.
For defensive reasons, Meituan launched a pilot group purchase and distribution business integrating take-out and in-store services. For the entrance of online group purchase and distribution business for Beijing users, some packages also provide home delivery services.
Meituan can also afford the price war, adding special group purchases, and playing the slogan of "time-limited subsidies, low prices on the whole network" to storm the users’ low-price mentality. According to insiders of Meituan, the special group purchase business uses the budget to roll on a monthly basis, and the application fee gives lower price concessions to the head merchants who have settled in Tik Tok; Restart the circle of Meituan, position it as "Meituan Special Edition", seize friendly business users with more favorable prices, and form differentiation in Meituan main station.
As soon as Tik Tok, a rising star, entered the local life, he offered three killers, namely "low price strategy, catering group purchase and head brand", and became a powerful player savagely.
In order to differentiate itself, Tik Tok holds a huge amount of traffic, adopts a new model of "online content planting grass+offline consumption", and takes the road of e-commerce that suits his own interests.
At the same time, Tik Tok knows how to foster strengths and avoid weaknesses. Tik Tok Life Service Team is named after "Tik Tok Group Purchase and Distribution". The group purchase and distribution mode bypasses the areas where Meituan is good at, and does not emphasize timeliness so much. "Buy at once, store it first and then deliver it". Tik Tok cooperates with external platforms to complete the distribution, alleviating the embarrassment of insufficient platform capacity.
Gao De, a veteran of Ali’s local life, can’t be underestimated. In recent years, orders from Gaode have grown strongly. The financial report of Ali Group in the second quarter of fiscal year 2023 shows that the quarterly income of the local life service division increased by 21% year-on-year to 13.073 billion yuan, and the overall order volume increased by 5% year-on-year. The big hero is Gaode.
In terms of take-out, after years of market cultivation, it is needless to say that the US delegation and the hungry are divided into seven or three parts. If there is nothing special about the latecomers, it is difficult to change this pattern. The take-out in Tik Tok has already ended the GMV target of 100 billion yuan.
JD.COM, Tmall, and Box Horse joined in, tearing a small hole in local life with instant delivery, relying on powerful logistics distribution as a moat, and relying on their own strong logistics teams to try to share a slice of fresh delivery.
The take-away business process is numerous and complicated, and the video number needs to solve more problems.
In addition to the video number to test the local life, the applet has also been reported to deliver the service in the internal test. WeChat responded that it is only an interface ability in the internal test, so that merchants who already have the ability to deliver the service can take it in, and they will not do it themselves.
Compared with the closed loop of distribution integration, WeChat wants to be an aggregated platform for local life services.
Combining the smart retail that WeChat has always emphasized and building a decentralized trading field, it is not difficult to understand why Tencent, without e-commerce genes, can bravely break into the battlefield of local life.
Therefore, despite the crowded local life, WeChat is still full of imagination in the local life field. After all, "selling shovels" can make money everywhere.
Third, the hope video number of the whole village has a long way to go.
"The most eye-catching business of WXG (WeChat business group) is the video number, which is basically the hope of the audience." Ma Huateng’s words at the internal staff meeting pushed the video number to the C position, and at the same time, the pressure also came to the video number.
Boss Ma values the video number so much because it has become the backbone of the commercialization of WeChat, and it is also a rare business that Tencent has the opportunity to grow at this stage.
In fact, before identifying the video number, in order to make up for the "two small mistakes" of that year, Tencent tried more than 20 times, and micro-vision, Penguin Watch and Flash Coffee were all Tencent’s experiments.
The video number also found its own position after many experiments: Westlife’s concert made the video number break the circle for the first time, Cui Jian’s concert made the video number sponsored by the content for the first time, and the attempt of live broadcast with goods made the video number attract big names during the promotion period and then developed into a regular customer …
The enhancement of liquidity has made Tencent pay more and more attention to the video frequency number. In the Q1 financial report of 2023, Tencent praised the pulling effect of video number on various business incomes.
As mentioned above, the average ECPM of video number is higher than other short videos, and it is a good player in advertising. Driven by the increment of video number advertising, Tencent’s online advertising business has achieved a year-on-year growth of 17% and a strong recovery.
Although the video number performed brilliantly in the first quarter, it is not easy to make big money. It is a long way to go for the video number to become the hope of the whole village. Video number has three business models: advertising, e-commerce and live broadcast.
In the advertising business, almost all the questions about the video number at the financial report meeting can be linked to commercialization. It is not difficult to see that after several years of development, the capital market has become more and more urgent for the commercialization of video numbers, and it is a bit unbearable.
When Tencent’s filter on the video number is removed, the reality is that when Tik Tok and Aauto Quicker reach the same volume, the contribution income is as high as hundreds of billions of yuan, and the video number is only tens of billions, which is obvious.
In the e-commerce business, giving priority to building the underlying capabilities and handing over the content and communication to users may be a more suitable way for video numbers. However, compared with being a good content exporter, Ma Huateng obviously hopes that the video number will become a live broadcast room that has been bought and exploded. "Doing the e-commerce closed loop well" is Ma Huateng’s earnest hope.
As we all know, e-commerce transactions are unfamiliar to Tencent. What’s more, what the video number needs to do is to do a closed-loop e-commerce on the premise of not doing e-commerce. This is an extremely difficult action.
Although the video number has a high degree of accurate matching between the content and the crowd, it can’t internalize social videos and social e-commerce into its own genes, so it can only run behind the shaking ass.
The video number with private domain as king should think about how to incite more public domain traffic, reach more potential users and turn itself from a brand exhibition hall into an ace sales center.
In the live broadcast business, the gap between the video number and Tik Tok is obvious, and the ability to carry goods is not satisfactory.
Streaming is not only the advantage of video signal, but also its constraint. Because the video number has no user tag, it is not accurate, and even if there is a traffic advantage, the usage rate is average. This leads to the effect that the video signal is not even as good as the natural flow.
For some businesses, the dividend of the video number is gradually disappearing, and it has already met the growth ceiling without making much money. The product logic of video number is relatively flat, and it is not easy to produce super head live broadcast room and super head anchor.
For video numbers, there may be no need for superstars like Li Jiaqi and Luo Yonghao, but benchmarking cases are undoubtedly very attractive to brands and advertisers. Since you want to make money, the creation and cultivation of superstars has become a compulsory question, and video numbers are not allowed to be selectively avoided.
All in all, the video number is still in the state of being "raised" by Tencent, bringing goods and living locally. If you want to thrive as a bearer of Tencent’s hopes, you need the video number to work together with Tencent. After all, no matter in which battlefield, the video number has high expectations.