How Chinese Farmers Hopped Onto Kuaishou’s Bandwagon and Mined Gold

Holding up a black lace camisole with silver shoulder straps, doll-faced Wawa with her porcelain-white skin, thick eyelashes, sparkly eyes and chubby cheeks, is live-streaming on Chinese video platform Kuaishou the latest merchandise from her online shop Wawa, or Doll in English. Standing beside Wawa is her husband who droned on and on about how cheap and popular the sleeveless undergarment was. If it were not for the piles of clothes around them and their exaggerated expressions in front of the Barbie pink phone, viewers might’ve thought that they had bumped into a stand-up comedy show.

Within an hour, Wawa and her husband sold nearly 110,000 units of their items, totaling to a volume of transaction of 1.47 million yuan ($0.21 million), a monumental figure equivalent to 237 times the median weekly earnings of a full-time American, according to United States Department of Labor. And this wasn’t even their highest sales record. On Nov. 6, 2018, when Kuaishou shopkeepers were competing against each other to see who could secure the largest sale, the couple completed a 43 million yuan ($6.0 million) transaction on a single day, outperforming the others by a landslide.

Wawa’s rise is among the many inspiring stories of Chinese live-streamers or broadcast jockeys who made a fortune streaming on short video platforms like Kuaishou and TikTok. In an era where live-streaming might still be considered exclusive to the gaming industry by many, Chinese broadcasters have realized its potential as a business tool and used it to promote their merchandise from clothes produced in the backyard of factories to freshly picked fruits from farms.

Holding a firm belief in Kuaishou’s slogan, “Buy quality goods recommended by your homies on Kuaishou,” live-streamers on Kuaishou often refer to their audience as “老铁,” or homie in English, to create a sense of familiarity with their buyers. With a seamless integration of e-commerce into social media, including video sharing and live-streaming, sellers on Kuaishou are able to bring down-to-earth content and goods to its users. That’s what the so-called “老铁经济,” or “homie economy,” is all about.

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Kuaishou, also known as Kwai in overseas markets, was founded in 2011 as “GIF Kuaishou,” a mobile app for creating and sharing GIFs, a computer format for animated images. Two years later, it evolved from a picture company to a short video community where users recorded and shared video clips about their daily lives. It echoed the transformation of the largest global video sharing platform YouTube, which started as a video version of an online dating service.

Short video apps embraced their golden age around 2015, when smartphones and cellular data became more affordable for people. Kuaishou’s major competitor TikTok went online in 2016, joining the heated waves of short videos.

However, unlike its trendy and fashionable rival, content on Kuaishou had a sense of tuwei (土味), or an “earthy” feel that made itselt more local and down-to-earth. Viewers can watch a person growing up by the sea catching different marine animals daily, or high voltage cable engineers eating steamed buns on their lunch breaks, or even witness a rural chef prepare a feast for an outdoor wedding in a distant village. 15 million videos are generated daily to depict the life of grassroots in China, among which 28% are lifestyle clips. Instead of fine-tuning one’s video with flashy special effects such as on TikTok, most clips on Kuaishou are shot on mobile phones with simple captions added over them.

“Attention is a fundamental currency of the Internet age. Our hope is that, like sunshine, we’ll shine the limelight on everyone’s story rather than a spotlight on just a few people,” said Su Hua, founder and CEO of Kuaishou.

As for the consumers of these down-to-earth content, only 9.4% percent are from first tier cities, an amount less than the number of mobile internet users in the same area. Kuaishou’s users are mostly scattered across second, third, fourth and even lower tier cities.

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Like most content creators and consumers on Kuaishou, Wawa was born in a farmers’ family in a rural village. Her husband, Liang, came from Xuzhou, a second tier city in Jiangsu province in Eastern China. All they had after graduating from middle school in 2010, was a tiny stall costing 180 yuan ($25) in a night market selling women’s wear. Each day, they would make a meager amount of 200 to 500 yuan (roughly $28 to $70). After saving up, they earned their first bucket of gold to rent a physical store for about 5,000 yuan ($700) per month. Since then, their profits increased tenfold.

However, that was still far from enough for Liang to start a business or to marry Wawa since his family, who were laid-off, couldn’t support him. After selling the 20-square-meter house that his grandmother left him before she passed away, Liang moved to Guangzhou with Wawa in 2011 with 118,000 yuan ($16,515), promising his future mother-in-law that he would start a business to support her daughter.

Two years later, they managed to earn 100 million yuan ($14 million) and bought a 18-million-yuan villa ($3 million) in full payment, along with two Ferraris and one Maserati.

It wasn’t all smooth sailing for the two however. In 2016, Liang father passed away with an illness suddenly, putting him in no mood to mange their booming business. As the company’s daily sales took a dive from 10,000 to less than 600, Liang struggled to pay the salaries of his employees. “2016 was the year that I will always remember to the last days of my life, because our business took quite a hit,” Liang said.

As unfortunate as 2016 was to Liang, it was also the lucky year that brought the couple to Kuaishou, where they amassed their first group of 5 million followers. They now enjoy a massive follower count of 12.3 million, who are willing to buy products from their 27 factories that tailor and package the goods before they’re sent out. With a business volume of 300 million a year, 90% of which is from Kuaishou, Liang and Wawa ranked fourth on Kuaishou in China.

Their success lies in having their own independent supply chain, as well as being amiable and authentic to their followers. By supply chain, Liang meant having their own e-commerce team to provide excellent post-sales services. “Do not narrow your mind on selling 100 pieces of clothes for over 1,000 yuan ($140). If customers want to return items, be nice with them and they will prioritize you over other sellers in the future,” Liang said. They were the first sellers on Kuaishou to make their refund period 15 days, a much longer period compared to China’s e-commerce giant Taobao’s 7 days. The decision allowed buyers to feel more respected and raise customer loyalty. The funny thing was, according to Liang, that even after extending their refund period, no one would actually wait until the second day to return an item. Most people would return an item on the day of receipt if they were unhappy with it.

Authenticity brings about trust from customers, as indicated by Liang. As China is a collectivist society which values human relations, customers are more willing to buy goods from people who they’re more familiar with as opposed to from strangers. And that’s where live-streamers and Kuaishou’s slogan come in. Liang and his wife are among one of the most typical sellers on Kuaishou, who established strong connections with their fans and owned a relatively mature supply chain. Social e-commerce platforms like Kuaishou integrates online chatrooms with commodity transactions, which further increases user stickiness. 84% of consumers will come back for the same live-streamer, according to Kuaishou’s data analyst Hu Jian. “Users often leave comments that indicate they might as well support their online influencers when they need to go shopping anyway,” Hu said.

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Unlike Liang and Wawa who manages their own business, another group of Kuaishou content creators chose to sign a contract with multi-channel networks (MCNs), a concept that originated from YouTube. A MCN’s job includes mining potential influencers, customizing roles for them, producing video content and distributing them across various platforms. MCNs provide virtually everything for content creators apart from anchoring in front of the camera.

Over 600 MCNs with nearly 7,000 accounts are active on Kuaishou. They publish about 16,000 posts in a week, amassing more than one billion clicks, according to Zhang Zhan, Kuaishou’s MCNs manager. Across the numerous industries on Kuaishou, users are mostly interested in home decoration, jewelry, 3C products, education, travelling and makeup, Hu said.

May Makeup is a MCN that targets the beauty space by incubating beauty influencers. “We turn average people into beauty influencers on Kuaishou, leading them to the primes of their lives,” said Gao, the chief operating officer of May Makeup. Their top influencer, Keiko-chan, who ranked ninth among all beauty influencers in May, is a fresh graduate majoring in music. Others who have been transformed include designers, video editors and human resource managers of the company.

Founded in August 2018, the organization now boasts 55 million fans across multiple platforms, including 20 million from Kuaishou. It topped the list of Kuaishou MCNs’ influence two months after it was founded.

Gao also pointed out that Kuaishou has a great conversion rate, which comes from the close bonds influencers have formed with their fans. The relationship is founded more on mutual interests and the idea of companionship. “If viewers like a certain influencer, they will buy anything that’s recommended,” Gao said.

MCNs would benefit from Kuaishou’s operations, guidance and studio, which is similar to a YouTube studio. A specific group of Kuaishou employees is assigned to newly registered MCNs to resolve issues such as account setup. Kuaishou will also pay attention to copyright protection and provide suggestions for MCN development. Gao received a phone call from Kuaishou the other day, offering solutions to the incubator’s problems in its period of stagnation. “I was so excited to receive the phone call that I told our production team that we must up our performance on Kuaishou,” Gao said. For makeup MCNs and influencers, Kuaishou unleashed a host of traffic subsidy plans starting from July 2 along with several promotional events.

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What attracted influencers to jump on Kuaishou’s bandwagon was its massive potential market with a high conversion rate. The platform has gathered over 200 million daily active users and 15 billion daily video consumers as of May 2019. The number of comments with purchase intentions exceeded 1.9 million per day, according to Bai Jiale, Kuaishou’s e-commerce manager. In addition to that, 97% of users on Kuaishou will show interest in buying related items, among which 58% will take action, and 43% of the action-takers will be willing to recommend the items to friends and families, Hu said.

The embedded e-commerce function in Kuaishou is one way the short-video platform and its streamers get a slice of the cake. Items that are available for purchase are displayed directly on the live-streaming page, short video page and influencer home page. The yellow cart that appears on the bottom left of a video makes transactions as easy as one click. Apart from its own online shopping channel, Kuaishou is also connected with other Chinese e-commerce giants like Taobao, JD.com and Pinduoduo.

Advertising is another way for influencers to load up their pockets. They can take ad requests from advertisers or accept randomly assigned ads by Kuaishou, and share ad revenues with the platform. The latter will allow the platform to add a certain advertising segments to videos, usually attached at the end. With that, all that content creators need to do is to focus on content creation, and the platform will arrange promotional ads itself. As this incentive plan is application based, only influencers with over 10,000 followers are qualified to apply.

Other monetization strategies include paid knowledge, benefits from yearly contract with Kuaishou and live-streaming plus, which give live-streamers more chances to make money.