JD.com, the online retailer that is Alibaba’s long-time nemesis, announced Wednesday a strategic partnership with Kuaishou, the main rival of TikTok’s sibling in China, Douyin.
The collaboration is part of a rising trend in the Chinese internet where short video apps and e-commerce platforms increasingly turn to each other for monetization synergies. The thinking goes that video platforms can leverage the trust that influencers instill in their audience to tout products ranging from cosmetics to electronics. Much of the transaction happens over live broadcasting — a bit misleading as these apps are billed as “short video” apps with live video features — which allows for real-time interaction between merchants and shoppers. COVID-19 has certainly advanced live-streamed shopping in a time when Chinese consumers were confined indoors.
The marriage of live broadcasting and e-commerce is reminiscent of what happened at the start of the social networking boom, which saw microblogging platform Weibo and Alibaba team up for similar motivation: expand content platforms’ revenue streams beyond advertising by turning content consumers into shoppers.
Retail requires such a different set of industry know-how that pure internet companies — social networks and video apps — are compelled to find allies in supply chains and logistics. Douyin has similarly tapped Alibaba for the latter’s retail resources and TikTok started testing social commerce recently.
This isn’t the first time that Kuaishou — which totals more than 300 million daily active users compared to Douyin’s 400 million — has sought out an e-commerce partner. It briefly worked with Alibaba’s Taobao and Pinduoduo, a rising challenger to Alibaba. What’s at stake is the fight for control over user data and traffic. After all, who’s entitled to all the data generated from these live-streamed transactions?
The JD-Kuaishou alliance seems to have settled on a friendly agreement. The online retailer will let Kuaishou users purchase JD products directly within the video app, a big leap from Kuaishou’s previous arrangement with other retail partners, which would redirect shoppers to buy on the e-commerce apps.
The collaboration appears to be a win-win. For Kuaishou, adding e-commerce capabilities will bring new revenues not only to itself but also to its influencers, strengthening their loyalty to the video platform. JD, on the other hand, can lean on Kuaishou’s popularity in small towns and rural villages to advance its goal to “further penetrate into lower-tier cities where hundreds of millions of consumers have a growing but underserved demand for quality products and upgraded services.”