On February 5, Kuaishou successfully launched an IPO on the Hong Kong Stock Exchange. Its share price increased to HK$338, an increase of 193.91% from the issue price of HK$115, with a market value of HK$1.39 trillion.
Kuaishou, established in 2011, was initially just a GIF-making tool. Since then, it has continued developing new functions, such as short videos, live-streaming, social networking, and e-commerce. Now it has formed a huge online ecosystem, becoming by far the biggest rival for Douyin, Chinese version of Tik Tok.
Live-streaming is Kuaishou’s ace product. In the first three quarters of 2020, live-streaming’s revenue accounted for 62.6% of the total revenue. 1 The primary transaction mode of live-streaming is to sell virtual gifts to viewers. After the viewers buy virtual gifts, they can give these virtual gifts to the live-streamers, and the Kuaishou and the live-streamer will share these virtual gifts’ profit.
In addition to live-streaming, Kuaishou has also developed online advertising. In 2017, Kuaishou’s online advertising revenue was 390 million yuan, accounting for 4.7%, and in the first three quarters of 2020, it had risen to 13.3 billion yuan, accounting for 32.8%. The average online advertising revenue of its daily active users increased from 5.9 yuan in 2017 to 42.3 yuan in 2019 and further increased to 50.9 yuan in the first three quarters of 2020. 1
E-commerce business is another Kuaishou’s speedy growing business. In August 2018, Kuaishou launched its e-commerce business, with GMV of less than 100 million that year. In the first 11 months of 2020, the GMV of Kuaishou e-commerce reached 332.682 billion, which was 5.5 times the GMV of the whole year of 2019. It was the e-commerce platform with the fastest growth rate last year. 2
Compared with other social platforms that welcome celebrities and pop stars more, Kuaishou has a more fair traffic distribution system to ensure that ordinary users have equal opportunity to be noticed. People, especially young, less educated and less urbanized people, gather and share their life on Kuaishou, fueling the emergence of many online grassroots talents. Because of this characteristic, Kuaishou KOLs (Key Opinion Leader) have a much tighter relationship with their followers. Sometimes, they are more like friends rather than KOLs and fans. Therefore, Kuaishou KOLs usually have a higher conversion rate than KOLs on other platforms when they promote products, a good factor that brands should consider when inviting KOLs to sell products. Besides, Kuaishou’s TOP200 e-commerce live-streamers’ GMV accounts for only 25% of the total, meaning that Kuaishou’s small and medium sized live-streamers play an important role in Kuaishou’s e-commerce system. 2 This group of junior live streamers usually have an affordable marketing price and a high conversion rate, undoubtedly a good choice for brands. Although Kuaishou’s cash cow is live-streaming and virtual gifts, it aims to double down on advertising and e-commerce by enticing and supporting high-end brands’ entry and growth. IPO is definitely not the final goal of Kuaishou. The app expects to thrive for the long haul as it continues to diversify its business. We encourage brands to tap into more opportunities on this platform.
