Author | Liu Baodan
Editor | Zhang Xiaoling
B Station, a small and insignificant platform, has always been the base and stronghold for young people and the new generation. Three years ago, B Station released a short film called &#34;The Next Wave&#34; on the occasion of &#34;Youth Day&#34; and it went viral. It excited 130 million users for a while and sparked a heated discussion on whether the next wave could surpass the previous one.
Now, three years have passed, and B Station has once again stirred up another wave, which is the e-commerce field that Alibaba, JD.com, and other predecessors have long been involved in.
However, B Station's choice to integrate with external e-commerce platforms only allows it to gain growth in advertising revenue. It is still premature to truly transform into a trading platform.
The long-standing issue of B Station's profit model remains unresolved.
Channels
Compared to platforms like Douyin, Kuaishou, and Xiaohongshu, which directly enter the e-commerce market, B Station has proposed the concept of &#34;opening up the e-commerce ecosystem&#34; by integrating third-party e-commerce platforms into its community to drive traffic for them.
This model was launched in 2022, and B Station has partnered with Alibaba, JD.com, Pinduoduo, and others to improve the entire process from product recommendation to transaction. This move has driven rapid growth in B Station's advertising business.
According to the financial report, in the second quarter of 2023, B Station achieved a revenue of 5.3 billion yuan, an 8% year-on-year increase. The fastest-growing segment was the advertising business, which grew by 36% compared to the same period last year, far exceeding the industry average.
Among them, advertising revenue from games grew by over 40%, and revenue from e-commerce grew by over 140%. It is evident that the intense competition in the e-commerce market has benefited B Station.
Currently, B Station is the only content platform that integrates with external e-commerce platforms. Although it can quickly gain a share of the e-commerce market, it only plays the role of a channel, willingly giving away its traffic advantages. It seems to be helping others at its own expense.
For example, Alibaba's user growth rate in the first half of the year reached 9.0%, and B Station was one of the contributing factors, apart from its own strategy changes.
&#34;70% of users who enter Taobao stores after being recommended on B Station are new customers, and in some industries, the proportion exceeds 90%.&#34; On the conference call on August 17th, B Station's COO Li Ni said that the cooperation with Alibaba during the 618 shopping festival exceeded expectations.
Not only Alibaba, but Pinduoduo and JD.com are also important partners for B Station. &#34;Almost half of the knowledge-sharing content creators on B Station are making money from Pinduoduo.&#34; According to industry insiders, the return on investment for advertising on Pinduoduo on B Station is greater than 5.
Data shows that during the 618 shopping festival, B Station's advertising revenue from e-commerce platforms such as Alibaba, JD.com, and Pinduoduo increased by over 200% compared to the same period last year.
However, while all content platforms are building their own closed-loop e-commerce ecosystems, B Station's &#34;open ecosystem&#34; strategy has also raised doubts.
Regarding this, Li Ni stated that B Station will adhere to the open ecosystem and cooperate with e-commerce platforms and brands to expand the scale of transactions.
Whether B Station will venture into self-operated e-commerce in the future remains unknown. However, B Station currently places great importance on cultivating users' consumption mindset.
B Station has strong user stickiness and the ability to influence users' purchase decisions, but users are not inclined to shop on B Station. After all, the transition from a content community to a consumer platform involves different attributes.
From the perspective of the path, &#34;Dolphin Research&#34; can quickly build B station's consumer mindset.
Data shows that in the first half of the year, nearly 30 million users generated transaction-related behaviors by clicking on the video comment section of B station; the number of transactional videos on the platform increased by 8 times compared to the same period last year, and the number of live streaming sessions for product promotion increased by 7 times.
On June 29th, B station established the Trading Ecological Center to strengthen its commercial transaction infrastructure.
At present, these actions still point to the advertising business.
The management of B station expects that &#34;the advertising revenue from the e-commerce industry during Double 11 is expected to achieve a year-on-year growth rate of 50-60%.&#34;
Curse
For many years, due to the insistence on not using video ads, B station has never established a stable profit model. Since its listing in 2018, B station has continued to incur losses, with a net loss of up to 7.5 billion yuan last year.
B station is eager to break the curse of not making money, and this is already an open secret. The &#34;Dolphin Research&#34; strategy seems to bring a glimmer of hope to B station.
Li Ni revealed that the proportion of advertising revenue to total revenue has increased from an average of about 25% last year to 30%, driving the overall gross profit margin to increase by 8.1 percentage points year-on-year to 23.1%.
Emphasizing the gross profit margin precisely reflects B station's profit anxiety.
B station previously proposed to achieve a balance between profit and loss by 2024.
In the second quarter of this year, B station's net loss was 1.5 billion yuan, a year-on-year decrease of 23%; the adjusted net loss was 964 million yuan, a year-on-year decrease of 51%.
Chen Rui, Chairman and CEO of B station, expects to narrow the loss this year and achieve a balance between profit and loss next year.
However, compared with financial statements, the outside world is more concerned about whether B station can find its own business model.
Three years ago, with the launch of &#34;The Next Wave,&#34; B station began its journey of breaking through barriers, driving an increase in paid members and shifting its performance support from games to value-added services, including live streaming and membership revenue.
However, with the growth of Internet users reaching its peak and the wave of content creators leaving, B station's operational pressure has significantly increased.
B station has to explore new ways of making profits, so business represented by e-commerce advertising has become a new focus.
An industry insider who declined to be named said that from long videos to games, from live streaming to short videos, B station has done too much and lacks strategic focus, which makes it difficult for each aspect to succeed.
While losing strategic focus, B station is unwilling to lower its value and has set a flag of never adding video ads too early. &#34;Freeloading&#34; has even become a community culture of B station, which hinders its commercialization.
Unwilling to use video ads but letting anchors sell products, B station is stuck in a loop when it comes to profitability, without finding a way out.
In comparison, YouTube, which also started with UGC long videos, has already achieved profitability through video ads.
Currently, B station's main source of income is still value-added services. With the establishment of consumer mindset, it is not ruled out that it will expand its e-commerce layout.
Bilibili's founder, Zhuang Shuai, expressed to Wall Street News that Pinduoduo has grown rapidly under the noses of Alibaba and JD.com, while Douyin and Kuaishou are rising stars. Xiaohongshu has only increased its investment this year, and there are many opportunities in the retail e-commerce sector. Bilibili can also make a breakthrough.
However, as a latecomer, if Bilibili wants to penetrate the e-commerce market, it will need to strengthen its capabilities in the supply chain, merchant management, fulfillment and after-sales service, and platform governance in the future. This seems to be a challenge as it is not their expertise.
For Bilibili, the core question may still be: who are they and what is their purpose in existence?

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