From an operational perspective, let’s talk about Luo Yonghao’s live streaming sales!

After reading a lot of articles analyzing Mr. Luo’s sales, I found that everyone is concerned about whether Mr. Luo can succeed! After all, for such a topical figure, too many Luo fans hope that Mr. Luo can succeed once, while there are also many people who are just waiting to see the joke.

In fact, whether Lao Luo’s live broadcast can succeed is really not within my concern. After all, when it comes to predicting whether a company will be successful, as long as you predict that it will fail with a ridiculous attitude, then your probability of success can at least reach 99%, because the probability of the company’s bankruptcy within 3 years is so high! But you have to know that this kind of prediction is actually meaningless.

Actually, I would like to talk about the live streaming business from an operational perspective.

The live streaming business is actually an e-commerce business. Since it is an e-commerce business, it is inseparable from the famous formula: sales = traffic * conversion rate * average order value.

Of course, if it is more complicated, more data such as repurchase rate should be included, but obviously I don’t intend to talk about that much.

Part 1: Traffic

The biggest misunderstanding that those who have switched to the physical industry have about e-commerce business is that as long as your products are of good quality and low price, the probability of your business being successful is very high. But this idea completely ignores the importance of traffic. For offline businesses, renting a store will do the job. After all, as long as it is a store, there will be traffic.

But for online businesses, this logic is totally incomprehensible. I often encounter some newbies asking me, "The videos I watched on Douyin are not as good as mine, with average innovation, average plot, and average acting skills, so why are their data so good?"

The reason I ask this is because I have no idea about the logic of online traffic. Online business is a complete traffic black hole. If you don’t have the ability to import corresponding traffic, then it’s basically as if your store has never existed!

For most online businesses, traffic comes from only four sources:

• The first is to spend money to buy traffic. Toutiao’s massive engine, Baidu’s paid ranking, and Taobao Tmall’s direct express all mean the same thing. The vast majority of online companies obtain traffic mainly through the first method.
• The second is by "cheating" , that is, studying the logic and key weights of the search algorithm, and using cheating to rank one's own products at the front in order to gain more traffic exposure. Search engine SEO, Taobao and Tmall's order-brushing methods are actually cheating methods. This is also a mainstream approach.
• The third is the injection of platform resources! For example, a certain platform recently lacks high-quality merchants in a certain category and wants to create a brand model. After analysis, it finds that there is a potential company or enterprise that may be able to succeed, so the two parties collude with each other... The platform imports a large amount of traffic for this enterprise! These are all free... You see, Lao Luo has a natural advantage in this regard.
• The fourth type is the import from other channels. For example, Gao Xiaosong, Ma Weidu, Xiaoma Song and others are experts in certain fields. They can naturally import a large amount of external traffic from Weibo, Knowledge Planet and official accounts.

The third and fourth ways of obtaining traffic still require strong hard power from the entrepreneur himself. Lao Luo can easily obtain the third and fourth types of traffic support. This process from 0 to 1 is actually the most difficult starting stage for many companies.

Part 2: Conversion Rate

When I have nothing to do, I always read books written by my peers, among which there are several books about conversion rate! After reading it, I think it's ridiculous. I'll give you a title and you'll understand:

“Use XXX method to increase conversion rate from 3% to 30%.”

In fact, this method can only be implemented in the following two situations:

No. 1: Switch tracks! If you originally worked in the digital product business, then you may be able to achieve a surge in conversion rates by switching to cosmetics. This is a typical product of rational decision-making and impulsive decision-making.

The second one: Your traffic drops to a negligible level. After all, if 10,000 people watch, 300 of them may place an order, but if the traffic drops to 10 people watching, it is entirely possible that 3 people place an order.

My personal experience is that for most practitioners, the conversion rate is something like that. Basically, the online conversion rate can reach an average level. After certain tests, there may be an improvement, but usually, it is considered very satisfactory if it can reach more than 1 times, unless the previous foundation is really too poor. The main factors affecting these conversion rates are actually mainly concentrated on pain point presentation, marketing copywriting, technical optimization, etc. There are many courses in this area on the Internet, so I recommend that you take a look at them.

But back to the essence of conversion rate, what is the essence of conversion rate?

Simply put, it is to stimulate desire and dispel worries! (We won’t talk about arousing desire here, this is another topic)

Let me give you a simple example and you will understand! If you often buy things on e-commerce platforms, you will find that the biggest difference between big brands and small brands is that big brands rarely do too much marketing on their detail pages, while small brands always exaggerate their promotions on their pages. (The following is a more obvious comparison)

The reason why the design of the details page is different is, after all, the different means of gaining the trust of users.

More trust of big brands is built outside of the details page, while small brands have to rely on the details page to promote themselves!

Back to Lao Luo, Lao Luo’s biggest advantage in conversion rate is that most people would have this idea: After all, Mr. Luo is just a person’s name, and he also pretends to have feelings, so his product selection won’t be too ugly, right?

This naturally solves the biggest problem of conversion rate. Therefore, even if the copywriting level and marketing methods of the team are relatively weak, it is not a big problem. These are factors that can be continuously reviewed and optimized.

After all, Brother Long’s stunning beauty can solve the trust problem!

Part 3: Talking about average order value

Average order value is usually related to conversion rate! Generally speaking, the higher the average order value, the lower the conversion rate will be, and the lower the average order value, the higher the conversion rate will be.

But the average order value should be divided into two parts: one part is the low price due to bargaining power, and the other part is the low price due to product category reasons.

Regarding the low unit price caused by bargaining power, this is definitely a good thing. Because of his celebrity effect, Lao Luo's ability to charge a premium is naturally stronger. This may also lead to the fact that for the same live broadcast of a product, Lao Luo can get a 30% discount, while other anchors may get a 35% discount. Although Lao Luo's average customer spending has objectively decreased, this reduction is obviously a good thing.

So, is the low unit price due to product category reasons? For example, the unit price of a pair of wireless headphones may be much higher than that of a pair of headphones that costs 9.9 yuan with free shipping. So how should we choose products to ensure that they are highly compatible with our main audience while also meeting the needs of the vast majority of people? This is a difficult problem, but relatively speaking it is not the most difficult one.

Now let’s go back to the formula above. Looking at it this way, can Lao Luo succeed in this? It’s hard for me to say, but it’s still easy to make money to pay off debts and not be a deadbeat.

What are the risks ahead?

(1) Performance pressure brings up the question of how to expand SKUs!

In fact, if we regard Lao Luo’s live broadcast of selling goods as a video version of a high-quality group purchase recommendation, this industry is extremely familiar to me! At the beginning, everyone was still able to patiently choose products, and there were actually only a few dimensions of competition. But gradually, I found that the traffic was fixed, the conversion rate was roughly the same, and the average order value was basically maintained at the same level. If you calculate based on the above formula, the room for imagination of revenue is limited!

What should I do? Of course, increase the number of products!

As soon as you start adding SKUs, big trouble will arise! Here’s the most obvious little question:

• Assuming that the number of single recommendations is limited and a large number of merchants sign up, who makes the final decision on the list of products that will enter the product evaluation stage? This is another problem. After all, Lao Luo really doesn’t have time to search for these things. You see, Alibaba’s most troublesome problem has also come to Lao Luo!
• In order to deal with the above problem, can we appropriately release the SKU? You see, as long as SKU is liberalized, it means that the price negotiations with merchants will be discounted. The long-term live broadcast brand awareness will also be affected.

(2) Personal style is distinct and difficult to replicate on a large scale

Lao Luo’s selling of goods is essentially the same as Lao Guo’s crosstalk.

With more and more commercial performances, one day you won’t be able to handle it anymore, right? what to do? Send my little brother out! So, Lao Guo started to create stars in various ways. This process lasted for more than ten years, and now he has quite a few small-time stars under his banner who can sell their own tickets.

But Lao Luo’s statement may not be very reliable! After all, by comparison, the crosstalk industry is still a mature industry, with a lot of basic tutorials, plus the strong support of the crosstalk queen and the general urinating shoes...

But since Lao Luo made his debut until now, the people around him have been changing one after another!

It won't be a problem for me to carry on for two to three years, but if I don't quickly find a few successors, the sustainability of this business may be questionable. Of course, I may be a little overly worried. After all, Mr. Luo is a big boss who has ruined several companies, so this problem is not unimaginable.

But is Lao Luo’s style really easy to copy? God knows!

Could it be that Lao Luo really wants to set a precedent for a crosstalk group to sell goods?

(3) Bargaining is not a one-size-fits-all skill!

Why can a certain cat or dog always get the lowest price on Double 11, and even force merchants to lose money? Because essentially speaking, merchants cannot do without this platform for a while, and you will still have to rely on me for a living in the future, right? I’m sorry, we’re not going to achieve this year’s KPI. Can’t you show some courtesy at this time?

This is the helplessness of merchants on big platforms, they are always forced to bleed heavily.

But when it comes to live streaming sales, all you need is freshness. If you keep recommending a certain product over and over again, your audience will easily get tired of it over time! what does that mean? Your recommendation may be a one-time deal.

This will inevitably lead to several things:

1. The marketer will only give a truly exclusive price when they are clearing out their inventory for a sale. This may be a price that completely loses money. After all, the profit is after getting rid of the inventory, and the defective products will all be thrown in. This will damage Luo Yonghao's image as a seller.
2. If the merchant is not planning to run away, then the price will definitely leave a profit margin. After all, who doesn't want to make some money? Although the price given to Luo is the lowest price, it may be a one-time cooperation. As long as the price can be given to Luo, it can also be given to others! As for the relevant price protection contracts? It's nice to say, but impossible to execute.

Of course, in the end I still hope that Lao Luo can quickly make money to pay off his debts, develop himself steadily, and don’t waste time! Don't ruin a good hand!

Author: Barley

Source: Damai Operation View