Kuaishou Partners with Zhejiang Supermarkets to Push Offline Retail, Targeting Growth Revival

Why It Matters

Kuaishou’s shift toward offline retail underscores a broader trend in China’s e‑commerce sector: platforms are blurring the line between digital and physical shopping to capture growth in saturated online markets. By embedding its brand inside existing supermarkets, Kuaishou can test the viability of a hybrid model without the heavy logistics costs of building its own stores. The move also reflects mounting pressure from regulators and investors for the platform to improve product quality and compliance, as the Chengdu Kuai Gou probe highlights systemic risks in fast‑moving consumer goods sold through livestream channels. If Kuaishou can successfully convert its short‑video audience into offline spend, it could set a template for other mid‑tier platforms seeking new revenue streams. Conversely, failure would reinforce the dominance of incumbents like Alibaba and JD.com, which have already mastered the integration of online data with physical retail infrastructure.

Key Takeaways

• Kuaishou partners with Zhejiang supermarket chains under the “Duofang Youxuan” banner to launch in‑store Kuaishou Supermarket sections.
• E‑commerce GMV growth slowed to 17% in 2024, down from 78% in 2021.
• Regulatory probe launched in September 2025 into subsidiary Chengdu Kuai Gou for alleged e‑commerce law violations.
• AI unit “KeLing AI” generated 2.5 billion yuan (≈ $350 million) in Q2 2025, <1% of 350 billion yuan (≈ $49 billion) total revenue; R&D spend hit 34 billion yuan (≈ $4.8 billion).
• Local‑life GMV in new‑tier cities grew 200% YoY in 2024, with new‑tier city users representing over 62% of daily payers.

Pulse Analysis

Kuaishou’s offline pivot is less a bold expansion than a defensive maneuver. The platform’s core strength—short‑video driven traffic—has hit diminishing returns as user attention fragments across an increasingly crowded livestream market. The 17% GMV growth figure signals that the platform’s earlier white‑label strategy is no longer sufficient to sustain momentum, especially after the Chengdu Kuai Gou investigation exposed compliance gaps that could erode consumer trust.

By leveraging existing supermarket footprints, Kuaishou sidesteps the massive capital outlay required to build a proprietary store network, a path that Alibaba and JD.com have already taken. This partnership model reduces risk but also cedes control over inventory, pricing, and the customer experience—critical levers for margin improvement in low‑margin discount retail. The success of the “store‑in‑store” experiment will therefore depend on Kuaishou’s ability to integrate its livestream commerce tools with the physical retailer’s supply chain, creating a seamless omnichannel experience that convinces shoppers to stay in‑store longer and spend more.

Looking ahead, Kuaishou’s AI ambitions could become the linchpin of its offline strategy. If the KeLing AI unit can deliver predictive demand analytics, personalized recommendations, and dynamic pricing for supermarket partners, the platform could differentiate itself from rivals that rely on brute‑force logistics. However, the current R&D spend—over ten times the AI unit’s revenue—highlights a cash‑burn risk that investors will monitor closely. The next earnings season will reveal whether the offline rollout can generate enough incremental sales to justify the AI investment and to offset the regulatory headwinds that continue to loom over Kuaishou’s e‑commerce operations.