JD.com, The online retailer, who has been Alibaba's longtime enemy, announced a strategic partnership with Kuaishou, the main competitor of TikTok's sibling Douyin in China, on Wednesday.
The collaboration is part of an increasing trend in the Chinese Internet, in which short video apps and e-commerce platforms are increasingly turning towards monetization synergies. It is believed that video platforms can leverage the confidence that influencers place in their audience to promote products from cosmetics to electronics. Much of the transaction takes place via live broadcasts – somewhat misleading because these apps are billed as "short video" apps with live video features – allowing real-time interaction between retailers and buyers. COVID-19 has certainly pushed live streaming shopping at a time when Chinese consumers were locked up indoors.
The combination of live broadcasting and e-commerce is reminiscent of the events at the beginning of the boom in social networks, in which the microblogging platform Weibo and Alibaba joined forces for a similar motivation: expand the revenue sources of content platforms through advertising by turning content consumers into buyers.
Retailing requires industry expertise so diverse that pure internet companies – social networks and video apps – are forced to find allies in supply chains and logistics. Douyin similarly used Alibaba for its retail resources, and TikTok has recently started testing social commerce.
This is not the first time that Kuaishou – with more than 300 million active users per day compared to Douyin's 400 million – is looking for an e-commerce partner. It briefly worked with Alibaba's Taobao and Pinduoduo, an emerging Alibaba challenger. It's about the struggle to control user data and traffic. After all, who is entitled to all the data generated from these live streaming transactions?
The JD-Kuaishou alliance appears to have reached an amicable agreement. The online retailer lets Kuaishou users buy JD products directly in the video app. This is a big step up from Kuaishou's previous agreement with other retail partners to direct customers to purchase in the e-commerce apps.
The collaboration seems to be a win-win situation. For Kuaishou, adding e-commerce features not only brings new revenue to itself, but also to its influencers and strengthens their loyalty to the video platform. JD, on the other hand, can rely on Kuaishou's popularity in small towns and rural villages to achieve its goal of “further penetrating subordinate cities where hundreds of millions of consumers have a growing but underserved demand for quality products and improved services. ”