Ten thousand words reveal! The secrets of making money behind live streaming sales by influencers

In 2020, " live streaming with goods " is definitely one of the hottest phenomena.

Viya sold a rocket on live broadcast at a price of 40 million in seconds, the "CCTV male group anchor" sold 500 million yuan of goods in 3 hours, and Dong Mingzhu "joined hands" with Erlu and Jing Yuanlin to achieve sales of 310 million... Data shows that the market size of China's live broadcast e-commerce industry will be close to one trillion yuan in 2020.

But in fact, the popularity of live streaming sales is the result of a decade of development from the internet celebrity economy to the live streaming industry, which has led to today's explosion. From the birth of Taobao girls in 2010 and the rise of Weibo in 2012, to the rise of 4G technology in 2013, the explosion of live streaming platforms in 2015, the establishment of Taobao Live in 2016, Kuaishou's entry into live streaming sales in 2017, and Tencent Kandian Live's entry in 2019, internet celebrities and live streaming sales have experienced two golden ages of pictures and texts/short videos, and live streaming, and today have ushered in the third golden age of the rise of many heroes.

This article is based on my thoughts and understandings since I was in charge of the quick order business and live streaming e-commerce startup at Kuaishou. After summarizing the past and present of live streaming e-commerce, the evolution of the live streaming e-commerce model, the operating logic of each stage of live streaming e-commerce, and some judgments on future developments. At the same time, the article also explores what is the underlying logic of live streaming sales? Is the reason for placing an order in the live broadcast room because of the good quality and low price or the fan effect? How far can live streaming sales go with the lowest price model on the entire network? What is the final outcome of live streaming sales? Will it be the internet celebrity model or de-internet celebrity? And some hot issues.

I hope to help everyone gain a deeper understanding of the live streaming e-commerce industry, so as to assist in deciding whether to enter the market and how to monetize. (PS: The article is quite long, you can save it first. I have also organized a live e-commerce exchange group, the way to join the group is at the end of the article)

1. The Birth of Tao Girls

The TaoGirl platform was a key project of Taobao in 2010 . At that time, Taobao had been established for 7 years and had 370 million registered users, becoming the largest e-commerce platform in China and even Asia. The rapid growth of Taobao also led to a rapid increase in merchants' demand for online shopping models. As a result, the Taobao Girl platform was derived from the annual Taobao Girl competition. Merchants can find models on the platform, and flat models or ordinary people with good figures or looks can take orders through the platform and make money.

At the same time, thanks to the rapid growth of e-commerce, the profession of online model has quickly become popular . Statistics show that in August 2012, the total output value of Taobao girls reached 1.1 billion yuan, there were nearly 35,000 registered models, the average income was as high as 31,000 yuan, and the daily income of the top Taobao girls reached about 50,000 yuan. At this time, the Taogirl platform had developed into China's largest online model base, and thus incubated the first wave of online influencers in the history of China's Internet. Zhang Dayi, the former "No. 1 Internet Celebrity in China's E-commerce", and Viya, today's No. 1 Taobao livestreamer, both became Taobao girls during this stage.

The turning point was also in 2012. With the participation of a large number of online models, the competition among Taobao girls is becoming increasingly fierce and profits are declining sharply. The days when one can make a fortune by posing in front of the camera and waving clothes are fading away. After all, it is difficult for a group with an average age of only 23 to sustain in any industry with an annual income of millions or even tens of millions. Therefore, Taobao girls began to seek new ways out, and the top Taobao girls, with the support of Taobao, started to operate their own Taobao stores. However, at that time, Taobao was still a pure e-commerce platform. It had not introduced a content ecosystem and did not have social attributes. Therefore, Taobao girls were not the same as internet celebrities, and a Taobao girl opening a store was not the same as an internet celebrity selling goods.

2. The first golden age of online celebrity e-commerce

It was also at this time that the first real opportunity for internet celebrities to bring products appeared. The battle among the four major microblog portals that began in 2010 ended with the rise of Sina Weibo, whose user base and activity began to crush its competitors. According to statistics, the total number of Sina Weibo users reached 503 million in 2012, with an annual growth rate of 73%. In addition, the open content model, the interactive method of forwarding, commenting and liking, and the recommendation mechanism for hot topics have made Weibo an ideal channel for Taobao girls to become internet celebrities and bring goods . They first posted their own beautiful pictures and established the image of fashion experts, then promoted marketing through various topics and quickly accumulated a large number of fans. Finally, they encouraged their fan groups to place orders in their own Taobao stores and realize monetization. This was also the first cross-border promotion of products by e-commerce platforms and social platforms.

During the “Double 11” event in 2014, seven of the top ten women’s clothing stores in terms of sales were online celebrity stores; some online celebrity stores achieved sales of over 10 million yuan when launching new products, and their performance was no less than that of some well-known clothing brands. You see, Internet celebrity stores can not only acquire a large number of accurate customers and reduce promotion costs through Weibo, but also predict product sales in advance, improve product selection capabilities, and reduce operating costs through feedback from Weibo fans. In addition, the increase in off-site sales will make up for the store's recommendations and exposure within Taobao. Traditional online stores are still in the conventional mode of selecting styles - launching new products - flat sales - commercial traffic - discounts, and naturally cannot compete with Internet celebrity stores.

The most representative internet celebrity of this era (2012-2016) is Ruhnn Holdings CMO Zhang Dayi, who was recently involved in a scandal with Taobao President Jiang Fan and was once known as “China’s No. 1 e-commerce internet celebrity.” In May 2014, Zhang Dayi opened her own Taobao store, which achieved four crowns in less than a year. In 2015, his store ranked second in Taobao's women's clothing category, with transaction volume exceeding 100 million yuan. In 2017, sales on Singles’ Day exceeded 170 million yuan. In April 2019, Zhang Dayi's parent company, Ruhnn Holdings, was listed on the Nasdaq in the United States. Its opening market value exceeded US$1 billion. Zhang Dayi became the first Chinese Internet celebrity to ring the bell on Nasdaq.

Of course, Zhang Dayi’s success is not an isolated case. Other representatives who rose in the same period include Xue Li, ANNA, Yu Momo, etc. In summary, they all have similar appearances: pointed faces, big eyes, tall figures, fair skin... Now it seems that appearance is indeed productivity, but opportunity, judgment and hard work are more important.

In addition, content social e-commerce platforms Meilishuo and Mogujie were born during this period . At their peak, they were known as the "WeChat of the e-commerce industry" and formed a community shopping guide atmosphere by having users share outfit photos, and then directly jump to Taobao to conduct transactions, forming a closed business loop . In fact, this is very similar to the model of influencers bringing goods from Weibo to Taobao, and it also incubated a group of relatively small platform influencers. But this model, in the final analysis, means that shopping guides earn commissions, while the power of life and death is held by Taobao. Last year, when I was chatting with Xu Yirong, the founder of Meilishuo, he summed it up as a "small Taobao" model and was trying hard to break through this dilemma. Currently, he is looking for opportunities in self-operated brands and high-quality exclusive sources of goods.

On the other hand, from 2005 to 2013, the online live broadcast market represented by YY, Liujianfang and 9158 began to take off. The model was mainly based on PC show live broadcast and had no relationship with e-commerce. It was not until 2014 and 2015 that the emergence of live streaming platforms represented by Douyu, Huya, Yingke, and Huajiao made some e-sports stars such as 2009 (Wu Sheng), Xiao Cang, Miss, and the comedian "Director, Don't Shoot, It's Me" become "overnight celebrities" and opened Taobao stores one after another. The live streaming industry was connected with e-commerce for the first time , and driven by a large number of game players, people who play games also stood at the top of the social income pyramid for the first time. However, in terms of user scale and GMV volume, it cannot be called the rise of the live streaming era.

On the other hand, when we look back at the rise of the first golden age of influencers, we can see that there are actually several foundations:

1. Those born in the 1980s and 1985s have become the main consumers . They grew up with the PC Internet. They are not only good at playing CS, but can also quickly accept new things on the Internet.

2. From the launch of 4G network in 2013 to the full coverage of 4G in 2016 , the scale of China's mobile Internet users has rapidly increased to 690 million, and the mobile Internet user penetration rate has reached an astonishing 95%. On this basis, the scale of e-commerce has expanded rapidly, and Internet celebrities have emerged in large numbers.

3. The rise of internet celebrities has directly led to the upgrade of e-commerce operating models and business concepts . The internet celebrity model allows users to directly produce samples and take beautiful photos, then publish them on Weibo and interact with fans. Popular styles are selected based on feedback before they are finally put into production and put on the shelves. This e-commerce model of graphic content based on internet celebrities and the operation model centered around fans have directly reshaped the supply chain model, transforming the model in which traditional clothing factories only produce a few popular styles a year and produce thousands or tens of thousands of pieces of each style into a "small batch and multiple styles" model with the ability to quickly return orders.

At the same time, Internet celebrities have inadvertently opened up cross-platform cooperation between Taobao and external traffic platforms such as Sina Weibo. In 2013, Taobao directly invested in Weibo, enabling the interoperability of data and some operational promotion processes between the two platforms.

These have all contributed to the rise of online influencers selling products, but at this point in time, they are still mainly based on text and images . It will be in the next stage that our protagonist, live streaming selling products, will truly come onto the stage.

3. The second golden age of online celebrity e-commerce

In March 2016, Taobao Live was the first to go online; in May, Mogujie launched the live broadcast function; in September, JD.com also launched the live broadcast function... E-commerce live broadcast became popular overnight.

But in fact, before 2018, the development of e-commerce live streaming was relatively slow and it was not very popular. The difficulties were mainly due to the following three points:

1. Major e-commerce platforms are relatively restrained towards live streaming e-commerce, mainly testing the waters and not giving it any preference on traffic. For example, Taobao Live was only featured on the homepage of Taobao Mobile in March 2018, and the entrance to JD Live has always been very hidden, requiring one to go from the homepage to the discovery page and then to the live broadcast page. In fact, the reason is easy to understand. For e-commerce platforms, the internal live broadcast entrance will divert the platform's own traffic. Before the live broadcast model has been proven to be efficient, the platform naturally adopts a relatively restrained trial strategy.

2. A high-quality live broadcast content ecosystem and a national live broadcast platform have not yet been formed. In 2015 and 2016, with the full coverage of 4G network, the live broadcast industry ushered in an explosion. Live broadcast platforms represented by Douyu, Huya, Inke, and Huajiao boldly shouted the slogan of "the era of live broadcast for all". But watching live broadcasts is actually the same as watching movies. It requires uninterrupted climaxes to stimulate the audience in order to continuously attract their attention. This places extremely high demands on the anchor. Only top anchors in various fields can achieve this effect. But on the other hand, due to commercial pressure and the pressure of survival under the "Thousands of Live Broadcast Wars", the live broadcast platforms were forced to choose to return to the PC show and game live broadcast mode. This also led to the ceiling of the user scale of the live broadcast platforms being within reach, and the dream of "the era of universal live broadcast" was shattered in the cradle. This in turn resulted in the fact that no large live broadcast e-commerce platform was born from this batch of live broadcast platforms.

3. The top internet celebrities who have already reached the top look down on Taobao Live. On November 11, 2016, Zhang Dayi live-streamed her product on Taobao for the first time, attracting 413,000 viewers and selling goods worth 20 million in just 2 hours. And if things can continue to develop in this way and top internet celebrities join Taobao Live, then live streaming e-commerce will have a chance to rise quickly. However, the top internet celebrities, who are the beneficiaries, think that live streaming is too tiring and that the live streaming mode of competing in length will cause aesthetic fatigue among people, so they gave up on this track. Of course, this also gave Viya and Li Jiaqi the opportunity to start their rise.

The turning point occurred in 2017, when Taobao Live and Tmall Live merged and began to accelerate the layout of live e-commerce. At the same time, Kuaishou also seized the opportunity to launch live e-commerce functions to quickly tap the consumption potential of platform users.

Specifically, Taobao Live has used the three axes of "content, traffic and gameplay" to upgrade its tactics . At the content level, we will first target UGC anchors and gradually transition to PUGC, using scripted, personalized, and themed models to continuously strengthen the anchor IP and enhance interaction. In addition, Taobao has also begun to support high-quality PGC. By November, it has launched more than 60 programs, including Wu Zongxian's "Xian Zai Chuchu", Huang Zijiao's "Tonight's Highlights", and Ran Yingying's "Stand Out", etc. In terms of traffic, Taobao Live released the "Thousands of Big Names on Taobao Strategy" and jointly launched an internet celebrity e-commerce platform with Weibo, introducing a large number of off-site content entrepreneurs and providing certain traffic support to help them quickly integrate into Taobao's content ecosystem. In terms of gameplay, Taobao Live is positioned as the most user-friendly e-commerce live broadcast tool and the most powerful live broadcast open platform. It has continuously strengthened functions such as the cloud director desk, data dashboard, video editing and content delivery, and added black technologies such as short video slicing and VR gestures.

However, Kuaishou has unique platform advantages when it comes to live streaming e-commerce. First of all, Kuaishou entered the live streaming e-commerce market from short videos, which is a high-frequency and low-frequency model at the underlying level . Through short videos, users are gradually trained to use Kuaishou in their spare time, and on this basis, a live broadcast function is added to guide platform users to switch to the live broadcast room. Moreover, compared with pure live streaming platforms, short video platforms have a huge traffic base, so their development is naturally smoother. Secondly, unlike general entertainment live streaming, Kuaishou has developed a "live streaming is broadcasting life" model . Users in the sinking market have a natural desire to be seen and noticed, and the content of their live broadcasts is often a natural extension of their daily lives. They share knowledge related to their main business, sing and dance, and chat when they have nothing to do. This display and companionship of real life has established a solid "old iron relationship" between the anchor and the fans. Under this trusting relationship, Kuaishou live broadcast rooms often sell things while chatting.

After the upgrades, Taobao Live and Kuaishou have also ushered in an explosion in live streaming sales. In 2018, Taobao Live drove GMV to over 100 billion yuan throughout the year, and in 2019 it exceeded 200 billion yuan. During the Double 11 and Double 12 shopping festivals in 2018, Kuaishou received over 10 million orders, with daily turnover in the billions. Its turnover in 2019 is expected to be 40-50 billion.

However, in terms of form, there are huge differences between Kuaishou and Taobao Live. In early 2019, in a chat with Kuaishou CEO Su Hua, he attributed Kuaishou's sales to "ground floor business logic", that is, Kuaishou stores are similar to ground floor businesses in the community, operated by community users to provide convenience for other users. Therefore, from the perspective of business model, Kuaishou is more like a shopping mall, where one can shop and entertain; Taobao Live is more like a department store, with only individual shopping stores.

But in fact, no matter which business model, its rise and development is based on the underlying logic of live streaming to improve the efficiency of "people, goods, and places".

People: From active consumption to passive consumption . Previously, when going to centralized e-commerce platforms such as Taobao and JD.com, users mainly searched to find target products and then made final decisions through comparison. However, in live streaming e-commerce, the anchors save users from the time-consuming product selection process through pre-selection of products and discount promotions, and the consumption state is transformed into passive consumption led by the anchors.

Goods: Shorten the supply chain and achieve disintermediation . First of all, source manufacturers naturally have price advantages when building their own live broadcasts. As long as the manufacturer is willing, the lowest price on the entire network will always be the privilege of their own live broadcast room. On the other hand, top anchors have great advantages in traffic and scale, and can directly connect with brands or manufacturers, eliminating the need for original channel dealers or agents.

Scene: Live broadcast has rebuilt the online consumption scene, which is intuitive, real-time and interactive . Compared with TV shopping, which was popular more than ten years ago, live streaming e-commerce has increased the real-time interaction between anchors and users, and can also spark discussions among users, creating a strong community atmosphere. In addition, relying on data analysis and operational tools, we can also better understand and serve users.

However, it is important to point out that the current improvement in the efficiency of the "people, goods and places" of live e-commerce is just a trend. To truly complete the reconstruction of market elements, it is also necessary to meet the requirements of scale and stabilization. Therefore, it does not mean that having traffic or supply chain resources can lead to a complete victory.

The representatives who rose during this period are Wei Ya and Li Jiaqi on Taobao Live and Simba (Xin Youzhi) on Kuaishou.

In 2016, Wei Ya, a Taobao girl, received an official invitation from Taobao to try out Taobao Live. Although she was unknown, she had the highlight of her life on Taobao Live: on November 11, 2017, the GMV reached 70 million in 5 hours of live broadcast; on November 11, 2018, the sales volume reached 267 million in two hours, and the sales volume reached 330 million in one day (at that time, the average daily sales of SKP, the shopping mall with the highest sales in Beijing, was only 32 million).

In the same year, Li Jiaqi stood out among the 200 people in L'Oreal's "BA Internet Celebrity" project. In the first half of 2018, Li Jiaqi live-streamed 80 shows for L'Oreal, which attracted tens of millions of viewers. L'Oreal's direct sales exceeded tens of millions. Now, he has more than 70 million fans across the entire network. Recently, he frequently appeared on hot searches because of his purchase of a 130 million mansion and his interaction with Yang Mi in the live broadcast room.

Also in 2016, Simba, a young man from a small town, rose rapidly with the help of Kuaishou. He called himself "farmer CEO" and "farmer's son", played the emotional card, and constantly shared his entrepreneurial stories, interesting experiences abroad, etc., and quickly accumulated a group of fans. In 2017, he formed a team, founded an e-commerce company, and set a record of selling out a Thai latex factory in 10 minutes and achieving total sales of 180 million in 6 hours. At present, she has nearly 50 million fans, cooperates with more than 1,000 brands and factories, and the average transaction volume of a live broadcast exceeds 220 million yuan, exceeding that of Viya and Li Jiaqi.

On the other hand, Douyin entered the live streaming sales market in 2018. The popularity of live streaming sales has also attracted more and more MCN players to join the market.

But unlike the era of pictures, texts and short videos, the same live broadcast cannot appear on Taobao Live, Kuaishou or Douyin. This requires MCN and anchors to make decisions among the major live e-commerce platforms. At the same time, the inconsistency of traffic characteristics of various live broadcast platforms also determines the differences in MCN gameplay and the difficulty of cross-platform replication.

First of all, the underlying foundation of Taobao Live is a centralized e-commerce platform, and traffic distribution is controlled by the platform. It is difficult for some content and small anchors to obtain traffic inclination. Based on this situation, MCN has three main operating modes: one is the pure expert model , similar to Qianxun and Mei ONE behind Wei Ya and Li Jiaqi, which mainly earns merchant commissions and pit fees through expert sales; the second is the small expert + agent operation model , which mainly focuses on discovering and cultivating experts with a certain private domain accumulation or segmented categories, and providing merchants with services such as agency broadcasting and live broadcast operation, which can be regarded as a small outlet in the current live broadcast business; the third is MCN organizations that mainly focus on Weitao and PGC business . These MCN organizations have not brought the first-mover advantage of the text and short video era to the live broadcast era. The operating mode is still mainly in the previous era, but they are also constantly trying live broadcast sales.

Secondly, Kuaishou's e-commerce is based on the underlying content ecology. Compared with Taobao, the anchor traffic mainly relies on the fixed traffic, and the growth of new accounts also mainly relies on the incubation of large accounts. Under the old iron culture formed by users in the sinking market, a family and master-apprentice model has gradually formed , such as the "Simba Family" and "Sanda Family", which has resulted in the weak role of MCN and guilds. Of course, this is related to the fact that Kuaishou only opened up to MCNs in 2018, and initially it was mainly by invitation without much operational intervention. However, as Kuaishou users break through to the upper level and open up to content recommendations, it will become more friendly to the development of MCN.

Finally, compared with Kuaishou, Douyin places more emphasis on operations. Only one year after its establishment, it took MCN as its key operation target and actively launched various challenge competitions as well as themes, gameplay, music, etc. of hot content. Therefore, it is more open to MCN and its gameplay is more mature. At the same time, Douyin is the most public traffic platform. Based on its waterfall content format and hierarchical recommendation algorithm, top anchors and popular videos often get more traffic. The content and operational advantages of MCN have resulted in most of the super top influencers on Douyin coming from MCN agencies. MCN agencies often adopt a model of mass production of short video content, distribution through multiple accounts, and guiding users into the live broadcast room.

In summary, whether it is Taobao Live or Kuaishou Douyin, there are two important reasons for the explosion of live streaming sales : first, people born in the 1990s and 2000s have become the core group of the mobile shopping industry, accounting for more than 40%. They have a strong desire to shop and are easily tempted. Second, the success of Pinduoduo and Kuaishou has successfully tapped into the mobile Internet users in the sinking market and cultivated their habits of online shopping and watching live broadcasts respectively. This group is more dependent on the guidance of opinion leaders.

4. The third golden age of online celebrity e-commerce

In November 2019, WeChat launched the live broadcast mini program "Kandian Live". Compared with Taobao Live, Kuaishou and other platforms, the biggest difference of Kandian is that it is a live broadcast platform based on the WeChat ecosystem, that is, a private domain traffic live broadcast model.

At this point, live streaming e-commerce has ushered in an era of the rise of many players, including live streaming platforms under e-commerce represented by Taobao Live/Pinduoduo, social live streaming e-commerce platforms represented by Tencent Kandian/Weibo Live, short video + live streaming e-commerce platforms represented by Kuaishou/Douyin, vertical live streaming e-commerce platforms represented by Xiaohongshu/Mogujie, and live streaming e-commerce platforms built by internet celebrities represented by Xinxuanbang app under Xin Youzhi.

At the same time, the arrival of this era also has a very important background. In 2019, the growth rate of China's online retail sales fell below the global average for the first time. The e-commerce war is shifting from expanding territory in the incremental market to mutual erosion of the existing market. The live streaming e-commerce model, which improves the efficiency of "people, goods and places", has naturally become a battleground.

As for the future direction of the war, I have some simple opinions, which I hope to discuss with you:

1. There is still a lot of room for the development of live streaming e-commerce.

As of March this year, the number of Internet users in China reached 904 million, the number of online video users reached 850 million, and the number of online live broadcast users was only 560 million. There is still huge room for growth. In terms of sales scale, the sales of live e-commerce in 2019 was 433.8 billion yuan, and is expected to reach 916 billion yuan in 2020, with a growth rate of more than 100%. It only accounts for 8.7% of the scale of China's online retail, and there is also huge room for growth.

2. The core factors for placing orders in live broadcast rooms on different platforms are not the same.

First of all, Taobao Live is a centralized content e-commerce platform, and traffic distribution is actually controlled by the platform. Kuaishou and WeChat Live are based on the underlying content or social platform attributes, and the live broadcast traffic also mainly relies on designated private domain traffic. Therefore, this also results in Taobao live broadcast rooms being used to sell goods, and the need to continuously attract and retain users with the "lowest price on the entire network". Compared with the trust in the anchors, most users pay more attention to the price-performance ratio of the goods. Kuaishou and WeChat Live are different. The anchors pay more attention to the emotional connection and trust endorsement with fans, and convert them into paying users. Therefore, the role of anchor trust is relatively greater. Finally, Tik Tok is a form between the two modes.

3. The “lowest price on the entire network” model of top anchors is still sustainable under the current e-commerce ecology.

First of all, the "lowest price on the entire network" model has two foundations. One is the decentralization of the supply chain and the reduction of costs. The other is that the revenue from live broadcast sales and brand exposure can cover the cost of the "lowest price on the entire network."

The first point has been mentioned before. Live streaming e-commerce is a model that eliminates middlemen and can directly reach consumers from primary warehouses. Compared with traditional offline retail, it has advantages in circulation costs, warehousing costs, channel efficiency and prices.

The second point of consensus is that in the current Internet e-commerce ecosystem, the sales ability of live streaming e-commerce is undoubtedly the highest. But the main contradiction is that merchants need to pay the anchor commission and slot fees, which leads to an increase in costs, so it may result in the live broadcast revenue being unable to cover the marginal cost under the "lowest price on the entire network." In fact, from the perspective of game theory, merchants and anchors are not opposing parties, but parties that cooperate with each other to earn profits from consumers, so their point is actually to reasonably distribute benefits. On the other hand, fans are the guarantee of the anchor's bargaining power with merchants. Once the anchor takes too much advantage, the low-price advantage and fan credit that he has worked hard to build may quickly collapse. So, from this perspective, the anchor and the fans are not opposing parties, and the interests of the fans must be protected. Therefore, the anchor is both a shopping guide for the merchant and a buyer for the consumer. The "lowest price on the entire network" model can still be sustained before a more efficient e-commerce model emerges.

In addition, it is very important that the "lowest price on the entire network" live broadcast model is very efficient for merchants to clear inventory and promote new products. In addition, the increase in product sales can also obtain traffic subsidies on e-commerce platforms such as Taobao.

4. Although the traffic of live e-commerce platforms seems to be completely divided up by the top anchors, there are still obvious opportunities for differentiation.

The platform attributes largely determine the distribution mechanism of anchor traffic . Taking Taobao Live and Kuaishou as examples, Taobao Live's traffic tilting mechanism, such as homepage recommendations for top anchors, creates a Matthew effect where the strong get stronger; while Kuaishou pays more attention to maintaining private domain traffic. At the same time, its anchor model with strong social connections and strong trust results in Kuaishou's mid-level and small anchors having good monetization capabilities. According to the data, Wei Ya accounts for 30% of the GMV of Taobao Live every night, Li Jiaqi accounts for 20%, and the total number of Taobao anchors is 200,000 to 300,000 (data from the middle of last year); while Kuaishou’s DAU is as high as 300 million, and the top 10 KOLs only account for 30% of the traffic. Therefore, for individual anchors, it is easier to sell goods through Kuaishou, which is more private, than through Taobao live streaming.

In addition, as for new platforms, Douyin is prone to forming a head effect similar to Taobao due to its centralized traffic distribution mechanism, and self-built stores are not as effective as the more private Kuaishou, but there are relatively more opportunities. WeChat Live, because of its more private social attributes and restrained style, will have greater opportunities to bring goods in private domains and longer entry opportunities. It is suitable for groups with a certain amount of fan accumulation, and its moat is also relatively deeper.

In addition, although Pinduoduo started late in live streaming, it has taken a different approach and chosen a model of finding people through goods. That is, if brands want to enter Pinduoduo's live streaming, they must ensure that there is only one brand store on the platform. This avoids the model of conventional live streaming e-commerce that first incubates Internet celebrities and then builds a supply chain. Of course, this also results in a situation where it is relatively friendly to brand stores but relatively exclusive to Internet celebrities.

Finally, although the users of vertical live streaming e-commerce platforms such as Xiaohongshu and Mogujie are very precise, the ceiling of user scale is too low. At the same time, the user overlap between beauty, clothing and other sectors and Taobao is extremely high. If they cannot provide differentiated services and attractive price-performance ratio, the shrinkage of live streaming users is a high probability event. Therefore, they are only suitable as auxiliary live streaming platforms.

5. Industries with low prices and high repurchase rates are more suitable for live streaming sales, but the competition is also more intense.

As mentioned earlier, live streaming e-commerce has transformed the active consumption model into a passive consumption model. That is, many consumers make impulse purchases because of the cost-effective products in the live streaming room. Therefore, the common characteristics of these products are low price and high frequency. Taobao Live’s Double Eleven 2019 industry participation ranking data also confirmed this judgment. The top-ranked industries are: textile and clothing, light industry manufacturing, beauty and personal care, food and beverages, electronics and electrical appliances, medical care, home furnishings and decoration, and pet life. However, although these industries are suitable for live streaming, they are also relatively competitive. Therefore, choosing specific sub-industries and providing differentiated services may be the key to breaking the deadlock.

6. Merchants ’ own broadcasts are the main force of live e-commerce, but internet celebrities will also coexist together.

One problem that cannot be ignored about live streaming sales is that the number of anchors with strong sales effects on Taobao Live, Kuaishou, and Douyin platforms is limited, and the sales field is also limited to industries with low prices and high repurchase rates. Therefore, it is almost impossible to support the live streaming business of product categories and the trillion-level market size of live streaming e-commerce in the future. Therefore, the entry of merchants is an inevitable trend in the development of live streaming e-commerce, and daily store live streaming will also become popular and become standard for medium-sized merchants . Pinduoduo has a thorough understanding of this point, and Taobao Live has also changed its direction: starting from mid-February, Taobao Live has carried out multiple training sessions for merchants and provided a series of support policies. Its intention is obvious, which is to attract millions of merchants to enter and expand and strengthen the live broadcast sector.

However, live broadcasts by experts and live broadcasts by stores should coexist for a long time and move forward in coordination. Just like when everyone on the Internet is talking about effects and CPS, brand exposure media such as CCTV and Focus Media are still doing well. This means that the brand needs to always be there and be strong. When expert anchors accumulate traffic, there will be a brand effect and it will exist for a long time.

7. With so many competitors vying for the top spot, who will be the winner of live streaming e-commerce?

In fact, this question itself is problematic. Just like from the PC Internet era to the mobile Internet era, Alibaba's e-commerce has never been able to dominate the market. From JD.com to Pinduoduo, and then to the current live streaming e-commerce, there are always iron-blooded warriors trying to dethrone Alibaba. Fundamentally, this is entirely determined by the underlying logic of e-commerce. We all hope to compare prices before buying things. We not only want to buy what we like, but also buy it at a low price. In the e-commerce era, we also need a large number of products and fast logistics. This has led to different e-commerce platforms constantly entering the market with differentiated operating methods, and the e-commerce turf war has never stopped.

Therefore , regarding the future of live streaming e-commerce platforms, I am more inclined to believe that they will form differentiated characteristics and maintain a certain degree of competition and balance . For example, Taobao's huge user base, strong supply chain capabilities and complete merchant system have strengthened the tool attributes of live streaming, so Taobao live streaming is more suitable for mature brands; while Kuaishou's large number of low-end market users, entertaining content attributes and a sales model based on trust in live streaming have downplayed its pickiness about brands, so Kuaishou is suitable for factories and white-label products. Although WeChat Live has the largest number of users on the entire Internet, it is still a private traffic pool, so it is more suitable for stores or individuals with accumulated fans or community resources.

5. Final words

Looking back over the past 10 years, from influencers selling goods to live-streaming e-commerce, three golden ages have been born one after another. In 2010, I was still studying and it was unlikely that I could make my debut based on my looks; in 2016, I saw the explosion in the video field and devoted myself to starting a business in the short video monetization and operation field, which was like joining the battle from the flank; in 2019, I joined Kuaishou and was responsible for the quick order business. I had a more intuitive understanding of the fierce momentum of live-streaming e-commerce, and I could be regarded as entering the frontal battlefield. So, this time I chose to join the army of live-streaming e-commerce entrepreneurs, and fight to my heart's content. Of course, just like my previous article "After raising 21 million in financing, the 26-year-old me fell into confusion, suspended my entrepreneurship and wandered around China, and finally found the answer! 》As I said, after going through so much, I no longer want to prove anything. Instead, I hope to do something valuable in a down-to-earth manner.

Finally, both influencer live streaming and live streaming e-commerce are actually extremely complex business systems, involving intricate stakeholders, business models, and industrial changes. This article is only some vertical thinking from the historical evolution of live streaming e-commerce . In fact, many horizontal industry comparisons and in-depth comparisons of the mechanisms and gameplay of various platforms are not involved. For example: Which is better in terms of cost and benefit between live streaming by influencers and buying volume models such as Taobao Affiliate/Taobao Direct? How do the advantages and disadvantages of live streaming e-commerce compare with Taobao Special Edition/Pinduoduo C2M model? What are the differences between content e-commerce represented by live streaming e-commerce and search e-commerce and social e-commerce in terms of core competitiveness and evolution direction? What are the differences between the commission sharing and traffic recommendation mechanisms and operational methods of the major live streaming platforms? etc. Next, when I have time, I will talk about these topics in detail, and also talk about my own experience in the operation and gameplay of each platform.

Author: Zhao Penglai

Source: Zhao Penglai (ID: penglaishow)