4 cool thoughts on live streaming sales

Since the beginning of 2018, the Internet industry has entered an innovation dilemma, which is manifested in the following ways: the mindset of traffic business has always been a shackle that restricts the innovative development of traditional Internet. Those blockchain and artificial intelligence (AI robots, driverless cars) projects that stand at the forefront of capital have been given high hopes! Capital giants generally recognize that they will soon take up the banner of future Internet innovation and become the "leaders" in the unicorn track.

But why do they fail one after another in reality? And under the epidemic in 2020, why have short videos and live streaming become the fig leaf for the tragedy of Internet innovation?

Commercialization! It’s all because of commercialization! At the 2013 China Internet Product Conference, I criticized in my keynote speech “Mobile Webpages: Discovering the Future of Video Content”: “ All high-tech that has not been universally adopted by civilians will not be truly commercialized. ”

Thought 1: The domestic demographic dividend has been basically exhausted, capital is retreating, and the country seems to be flourishing, but in fact it is full of crises.

In recent years, China's Internet has been constantly looking for opportunities. Once a trend is discovered, everyone rushes in and fights each other. Just because someone said, "If you stand in the right place, even a pig can fly." "Online games", "group buying", "live streaming", "takeout", "sharing economy" and so on. After chasing so many trends, only a few companies can survive to the end. It can be said that there is really nothing good to say!

Most of them lack experience, innovation, and basic research and development investment, which results in China's Internet being like a house built on the beach. One or two floors are fine, but the higher you go, the more dangerous it becomes.

After experiencing the Sino-US trade war and the subsequent global epidemic crisis, and against the backdrop of multiple contradictions, a large number of Chinese Internet companies listed in the United States are preparing to delist. Two years ago, we could rely on the momentum of the dual economic circulation. Now, due to the obstacles to global development caused by the epidemic, Chinese Internet companies can only focus more on the domestic circulation.

Previously, Ctrip.com released its first quarter financial report for 2020. Affected by the epidemic, its performance turned from profit to loss. Ctrip's net operating income in the first quarter was 4.7 billion yuan, a sharp drop of 42% year-on-year, but higher than the 4.097 billion yuan expected by financial media, and better than Ctrip's own forecast of a 45%-50% year-on-year decline in the previous quarter's financial report; excluding equity compensation expenses and gains and losses from changes in fair value of equity-based available-for-sale financial assets, Ctrip's net loss in the first quarter was 2.2 billion yuan, which was the same as the net loss of 2.205 billion yuan expected by financial media.

As one of Ctrip's largest individual shareholders, Liang Jianzhang has been rumored to have repeatedly saved Ctrip. In order to help the tourism industry resume work after being hit hard by the epidemic this year, Liang Jianzhang, who rarely speaks for Ctrip in his personal capacity, also went all out for the financial report!

It is not uncommon for entrepreneurs to personally participate in live broadcasts. Zong Qinghou, who is over 70 years old, even appeared on stage to support Wahaha. In order to attract attention, Liang Jianzhang tries all kinds of cosplay in every live broadcast, and the results are quite good. In the past three months, 15 live broadcasts brought in goods worth 600 million yuan!

In the past few years, the live streaming e-commerce market was in a stage of "many competitors competing for supremacy". At this moment, from grassroots internet celebrities to professional MCN agencies, what can be felt seems to be a double-helix track system: on one hand, it is a fan marketing model that strengthens KOLs with personal brand output as the core; on the other hand, it is a productivity model that focuses more on content production and revolves around professional team collaboration. In the early stages, these two forces will swing up and down and penetrate each other.

In the later stage of the industry, the overall trend will be: returning from grassroots individuals to professional groups, until a certain supply and demand balance is reached, and it will officially enter the "Three Kingdoms" stage. At this time, only a few professional teams with content production strategy as their core can truly win in the race.

Thought 2: Short videos accumulate traffic and fans for live e-commerce, but only 10% of loyal fans can be converted into customers who actually conduct transactions

Interesting and good content provides the best reason for the spread of short videos, because passers-by who are attracted by the high-quality content of short videos will be guided by the platform to follow the anchor and become fans. This is the advantage of short videos: maximizing the conversion of visitors to fans .

When passers-by become fans, it is equivalent to directing public domain traffic to private domain traffic. When the anchor starts live streaming to sell goods, the traffic and fans previously accumulated through short videos will be converted into orders through MOC (Mace Operating Centre)/MMC (Member Management Center).

But, unfortunately! According to the average statistics of multiple live e-commerce data, when top celebrities sell goods live, only 10% of their "die-hard fans" are willing to pay and will not ask for a refund.

Such a conclusion is bound to surprise merchants. Why do sales of products promoted by celebrities perform like this? This is related to the psychological construction of consumers. Before purchasing a certain type of product, customers have their own "channel personality" for different channels, or they can also call it "platform label."

From small items like movie tickets to medium items like fresh food to big items like digital products or home appliances, everyone has their own recognized channel platform. To break the previous cognitive boundaries, what is needed is an understanding of consumer psychology and a breakthrough in transaction value, which cannot be achieved simply by relying on the blessing of celebrity brands.

Thought 3: Live streaming is a one-to-many social drama. If you play it well, you will become a fan, but if you play it badly, you will become a hater.

Recently, there have been too many incidents of celebrity live broadcasts going wrong, causing great suffering to businesses. Live streaming to sell goods has become popular amid the epidemic. If a celebrity cannot do it, they would be embarrassed to call themselves a celebrity. Live streaming to sell goods has become a necessary skill for all celebrities. Whoever is better at selling goods can indirectly indicate that she may be more down-to-earth with netizens.

So do live streaming celebrity anchors who sell goods really not need to learn some online sales skills? The answer is obviously no!

This tornado of live streaming sales has swept through the traditional retail sector and has also activated the enthusiasm of celebrities to sell goods through live streaming. What's more, as an internet celebrity anchor, they have to go to the talk show to copy jokes and find creative ideas, and then put them back in their own live show to please fans. The goal of copying good content is very clear: "Everything is for attention! Everything is for voice! Everything is for sales!"

I remember that Li Xueqin, an internet celebrity from Liaoning, revealed her working status as a new generation of internet celebrity during the recording of "Talk Show Conference Season 3": "The output of a talk show actor every year can probably support 8 funny video bloggers, so I am here mainly to upload goods this time!"

I have witnessed a saying recently: " Everything that is unimaginable will eventually become commonplace; everything that seems commonplace will eventually become unimaginable."

It can be seen that the threshold for live streaming sales is no longer low. In the future, high-quality live streaming sales hosts must learn to cross borders and understand marketing. Fame alone is not enough.

Thought 4: MCN agencies incubate mid-level KOLs in batches, causing huge cost pressure

The Matthew effect in the live e-commerce industry has resulted in 1% of people monopolizing 99% of industry resources. Apart from the top MCNs, there are not many institutions that can make profits at present, and the same is true for anchors. Under normal circumstances, a healthy ecosystem should be olive-shaped, that is, "top and tail KOLs are in the minority, and mid-level KOLs are in the majority."

Starting from the second half of 2019, a large amount of capital began to flow into this field, resulting in a two-tier differentiation of MCN agencies. There is a huge gap between top internet celebrities and ordinary internet celebrities, and the possibility of becoming a top celebrity like Li Jiaqi and Viya is very slim. This forces MCN agencies to place their bets on mid-level KOLs, hoping to make them the core of their business.

Unfortunately, ideals are full of hope, but reality is very skinny. The cost of incubating a large number of mid-level anchors is quite high, which puts huge cost pressure on MCN agencies.

On the one hand, the nightmare that cannot be escaped is that the live streaming e-commerce industry is highly competitive, the anchors are highly mobile, and the cost of training anchors can easily be wasted when the anchors leave.

On the other hand, some MCN agencies only see the booming market, but do not have the market supply chain resources and experience. They have relatively poor capabilities, but in order to sign high-quality anchors, they make big claims and package themselves as the organization that knows anchors best, "painting pie in the sky" for the other party, but when it comes to providing resources, they are unable to provide what they should. In contrast, some anchors exaggerate their professional abilities in order to obtain more resources, but when it comes time to deliver their performance, they fail to achieve the expected results.

Due to the combined effect of various factors, disputes between the two sides have frequently occurred. No one is telling the truth because it involves the interests of many people. Once this window paper is broken, it means that the trend is not really a trend, hot money cannot come in, and these people cannot make money by taking advantage of the information asymmetry. The weakening of profits in the layers of the industrial chain will cause many people to lose their jobs.

A battle royale over MCN is inevitable, the information gap is about to disappear, and more real data on live streaming sales will be fully disclosed. From then on, there was not much time left for MCN agencies to perform.

Author: Alite Yu

Source: Commercialization Laboratory

Related reading:

How to plan high-conversion activities in live broadcast rooms?

7 major processes of live broadcast operation planning in 2020!

How does live streaming boost sales?

A complete guide to live streaming sales on the top 10 platforms

How do businesses manage live streaming traffic and conversions?