Live streaming has enlivened the e-commerce market and created a big business. Anchors, Internet celebrities, enterprises, brands, merchants, MCN organizations, platforms and other participants have all enjoyed the dividends brought by the explosive development of live streaming.

Source: This article is adapted from the new book "The Logic of Live Streaming E-commerce", edited by Chu Yanlai, Xue Yuanhao, and Yang Jing, CITIC Publishing Group, published in April 2022.

live streaming has enlivened the e-commerce market and created a big business. Anchors, Internet celebrities, enterprises, brands, merchants, MCN organizations, platforms and other participants have all enjoyed the dividends brought by the explosive development of live streaming. The live-streaming of goods can be so popular. On the one hand, it relies on strong IP to attract traffic. On the other hand, it also needs the support of a complete supply chain and high-quality and low-price products. As a booming new trillion-dollar market, the most indispensable thing is capital and players.

According to the "In-depth Analysis and Development Prospects Forecast Report of China's Livestreaming E-commerce Industry from 2022 to 2027", a research consulting report by China Yanpuhua Research Institute: In 2021, the livestreaming delivery market is expected to maintain a stable and progressive development trend, and the market size is expected to exceed 130,000 billion, maintaining a growth rate of around 10%. It is expected that the average annual compound growth rate in the next three years will be 58.3%, and the scale of live broadcast e-commerce will exceed 4.9 trillion yuan in 2023.

Live streaming e-commerce will continue to develop in 2022 and become a way to bring goods that brand owners cannot ignore. At the same time, with the rise of the live broadcast industry and the incentives of high-profit anchors, competition in the live broadcast industry will become more intense.

In the era of stock gaming, how will the live streaming e-commerce industry develop in the future?

In the book "The Logic of Live Streaming E-Commerce" , six predictions and prospects for the future development of live streaming e-commerce are made from different angles to help everyone Develop an overall understanding of the future trends of the industry, deeply understand the industrial logic of live streaming e-commerce, and grasp trends in advance.

01 Industry

Live streaming e-commerce will become the infrastructure of the retail industry, and future competition will gradually return to the essence of retail

In the physical world, we are dealing with the relationship between people, people and information, and people and things (commodities) all the time. technology, especially media technology, plays a crucial "connector" role in this process. Whenever new and more efficient media are produced, the original three types of relationships will be reshaped (strengthening the original connections or creating new connections), thereby giving rise to new social structures and business forms. As this new media technology continues to mature, gain popularity, and decrease in cost, it has gradually transformed from a special tool for a few people and a few scenarios to a universal infrastructure for the majority of people and multiple scenarios, and has even become a standard for the entire industry.

E-commerce before 20 years ago went through this process from dedicated to standard. Today’s live broadcast e-commerce has a similar logic: because it has a very significant effect on promoting the retail industry, more and more companies will definitely participate. Come in; in the early stages of industry development, whoever can better master the new tool of live broadcast and who can better use platforms such as Kuaishou, Douyin , Taobao Live will win in the competition. As the industry matures, the proprietary knowledge in the industry will become increasingly equalized with the flow of people and information. At that time, the "knowledge advantage" accumulated by early players will gradually decline, and the core of competition will gradually change. Returning to the essence of the retail industry, that is what 7-Eleven founder Toshifumi Suzuki summed up: using goods and services to meet the ever-changing needs of consumers. When the next major technological and media change comes, the above logic will be repeated, and the cycle will continue. The efficiency and well-being of society are also constantly improving in such cycles.

Based on the above analysis, we believe that live streaming e-commerce will gradually become the infrastructure of the retail industry (and even more industries), and in the long run, competition among industry players will gradually return to good products and services themselves.

Searches for short video platforms are increasing, and deterministic e-commerce demand is accelerating penetration

The current short video platform is becoming a new search hotspot. Search data released by Douyin in February 2021 shows that its video search monthly active users have exceeded 550 million, even exceeding the "500 million monthly active users of Souyisou" announced by WeChat in the WeChat public class in early 2021. Beijing subtitles Zhang Nan, CEO of Jiedou , said: “In the past few years, the expression and creation of the entire society have been video-based. As the most direct way to obtain information, search is also video-based.Douyin will increase its investment in search in the next year. "Video is becoming a new choice for people to understand and obtain more information and knowledge in a timely manner.

Compared with traditional shelf-style e-commerce, live broadcast e-commerce more satisfies the uncertain needs of users for shopping, that is, users do not know What they need to buy is planted and converted by watching short videos or live broadcasts, and more of them are "buying while shopping." For traditional shelf e-commerce companies such as Taobao, , JD.com, , etc., users have a stronger purchasing purpose. Complete conversion through search. Purposeful search behavior is the key manifestation of deterministic demand. With the popularity and development of live streaming e-commerce, users have gradually developed a mindset to purchase goods on non-e-commerce platforms. We predict that short video platforms will be the key to success in the future. Fully benefiting from the improvement of video search, it will gradually shift from mainly satisfying users' uncertain needs to improving the penetration of deterministic needs.

02 Supply chain

The proportion of self-broadcasting in stores on each platform is expected to continue to increase

from two aspects: cost and supply chain efficiency optimization. Judging from the results, we believe that store self-broadcasting will become the mainstream e-commerce live broadcast model in the future. Store self-broadcasting refers to live broadcasting led by stores and brands, using store accounts as the carrier, and the core is to sell store or brand products. The broadcast mode is different from the master live broadcast mode. Most of the master live broadcasts are based on the investment model and connect to multiple brands or suppliers.

On the one hand, merchants and brands can arrange store broadcasts to help increase the gross profit on the supply side. In the supply chain system, experts with traffic have higher bargaining power and share the majority of profits. For example, if the gross profit of a certain product is 40%, the current mainstream interest distribution ratio is roughly as follows: 5% for the platform, 20%~30% for experts, leaving only 5%~15% for merchants.

On the other hand, self-broadcasting by merchants and brands can improve the efficiency of the supply chain. The supply chain collaboration between merchants and experts has a long collaboration chain, including merchants. There are a lot of repeated communication and confirmation links between product promotion, selection by experts, samples sent by merchants, confirmation by experts, communication of oral broadcast materials, trial broadcasts, live broadcast sales, orders returned to merchants, and shipments by merchants. The autonomy is poor and the efficiency is low. There is great room for optimization. In addition, the supply chain management of live broadcast e-commerce faces many challenges, such as inventory management. Live broadcast e-commerce has strong explosive properties, and the sales volume generated by a live broadcast by a leading expert may exceed 10%. The largest supply of merchants. Without an effective information communication mechanism, it is easy to cause a bad shopping experience on the consumer side. The "2020 Tmall 618 Taobao Live Broadcast Innovation Report" released by

Taobao List shows that the number of merchants' self-live broadcasts is increasing. It has been increasing year by year. During the 618 period in 2020, the number of merchant live broadcast rooms on Taobao Live increased by 160% year-on-year. During the event, merchant self-streamed GMV accounted for 70% of the overall GMV of Taobao Live, as shown in Figure 8-1. It mainly includes brand stores (such as Huawei , Xiaomi , Gree , Dyson, Perfect Diary , Lancôme , Anta , Three Squirrels , Chivas Sofa , etc.) and collections. Stores ( Tmall Supermarket , Suning Guanqi, Suning.com Super Buyer, Tmall International , Juhuasuan tens of billions of subsidies).

In mid-June 2020, Douyin launched the "Top 100 Growth Plan" for brand accounts in fast-moving consumer goods, luxury goods, beauty and daily chemicals, automobiles, travel, 3C (computer, communication and consumer electronics ) home appliances Recruiting 100 high-quality leading brands from the , local, film and television charity and other industries to be the first to settle in, providing brands with multi-dimensional services such as billion-level traffic support, exclusive marketing strategies, scene customization plans, and special operation support.

Comparing the top live streaming stores on Taobao platform, most of them already have official accounts in the Kuaishou ecosystem, and some of them have started to continue broadcasting, as shown in Table 8-2.

The supply chain innovation spawned by live streaming e-commerce continues to emerge

The live streaming e-commerce format has brought new opportunities and challenges to the supply chain. As merchants’ store broadcasts increase and the relationship between merchants and anchors becomes closer and even dependent on each other, we expect that supply chain innovations in the ecosystem will continue to emerge. The cases that have emerged so far provide us with some clues about the shape of the future supply chain.For example, several suppliers cooperate to build an alliance-type organization, instead of relying purely on the role of a platform or middleman. For example, using the live broadcast room (merchant or anchor) as the central contact point, we can improve demand matching efficiency by building a flexible supply chain. Perhaps one day, product production will rely on 3D printing devices located in the "cloud". They can mobilize sufficient production capacity based on user feedback and order status in the live broadcast room to ensure that users can quickly get the products they want.

03 Anchor

Inside the platform The Matthew Effect : The evolution of the anchor group

All major live broadcast e-commerce platforms are trying to eliminate the Matthew Effect, support mid-waist anchors, and encourage merchants to broadcast themselves. This will reduce the platform's dependence on top anchors and increase the diversity of the anchor group. A more diverse anchor group can meet the needs of more consumers, making the platform ecology more stable and more attractive to both anchors and consumers. But from a user's perspective, compared to vertical or mid-waist anchors, head anchors can bring better live streaming experience, more favorable prices, more diverse categories, a more convenient and efficient shopping decision-making process, and more powerful After-sales service.

We expect that in the future, the dominance of top anchors will decline and the influence of vertical anchors will increase, but user demand will continue to spawn top anchors. In addition, as antitrust and other regulatory measures become more complete, the platform's ability to influence anchors and users may decline.

The regular army has entered the market, and anchors have gradually relied on various institutions, and their income has returned to a reasonable level.

As more brands, merchants, MCN institutions, content creators, etc. enter the live broadcast e-commerce industry, if you want to do a good job in live broadcast sales, you can no longer do it. Instead of relying on individuals to fight alone, we must rely on professional and team competition. Against this backdrop, we predict that the tendency for anchors to become attached to institutions will become prominent.

When individuals with content creation capabilities enter the live broadcast e-commerce track, choosing an affiliate agency can help them gather various capabilities faster, complete the transformation of monetization methods, and further increase the number of fans. Individuals with live broadcasting capabilities may be attached to merchants and become their own anchors for store broadcasts, truly making live broadcasting a job. Head anchors may also choose to join forces and deeply bind with big brands to achieve mutual promotion in terms of traffic and conversions.

Under the above background, anchors can no longer enjoy a large proportion of commissions alone, but need to share these incomes with the team. Even the institutions they are attached to will have the right to distribute the income and obtain most of the income. The income of the anchors will gradually return to a higher level. reasonable level.

Anchors' own positioning is becoming more clear and differentiated

Also in the context of intensified competition, we expect that anchors will become more aware of creating their own differentiated characteristics, because a clearer positioning can help anchors occupy users' minds and accumulate fans. . Therefore, we infer that the personal labels of anchors will become more clear and the differences between anchors will become more prominent.

We infer that several types of anchors will coexist: one is the store anchor who is dependent on the brand, with brand tags and a small number of personal tags as the core positioning; the other is vertical anchors, who win users with their professionalism in specific categories Trust helps users make decisions and plays a role similar to membership-based e-commerce; the first type is personality-based anchors, which are based on interpersonal trust based on lifestyle and values, and play a role similar to social e-commerce shopping guides.

04 service provider

service provider is one of the key roles in the live broadcast e-commerce ecosystem. Service providers refer to third-party service groups that have certain software or hardware capabilities in the field of e-commerce and provide brand owners with all or part of online store operation services. The birth and development of service providers in the live broadcast e-commerce ecosystem is an inevitable product of the refinement of division of labor after the industry develops to a certain scale.

Currently, in the live broadcast e-commerce industry, service providers mainly include supply chain service providers, data operation service providers, warehousing and logistics service providers, live broadcast industry bases, etc., as shown in Figure 8-3, which provides live broadcast for practitioners in the live broadcast industry. Various services including cargo operations, data analysis and review, e-commerce auxiliary tools, etc.

Live streaming e-commerce service providers move towards professionalization

With the rapid development of the live streaming e-commerce industry, brands have turned to live streaming e-commerce, new merchants have entered the live broadcasting industry, etc., and the demand for service providers has become stronger. The unique two-way supply-driven approach of the live broadcast e-commerce ecosystem requires the supply of both commodities and anchors. This dual-drive model determines that the industry needs more service providers to help merchants and anchors provide better services to consumers.

As the ecosystem continues to improve, we expect that live broadcast e-commerce service providers will become more professional. Only by providing professional and refined services can service providers quickly seize the market. At the 2021 E-commerce Service Provider Conference, Kuaishou proposed for the first time the concept of the "Five Forces Model" of service provider capabilities, namely traffic marketing capabilities, anchor incubation capabilities, service performance capabilities, supply chain capabilities, and live broadcast operation capabilities, as shown in Figure 8-4 shown.

Under the "Five Forces Model", there are more professional anchor services, better fulfillment and experience, better traffic management, more extreme product selection capabilities, and more powerful supply chain resources. Obviously, in the context of continuous upgrading and standardization of the industry, service providers will face more stringent access standards, platform entry processes, and review and assessment standards. In the fierce competition, service providers need to continuously improve the professionalization of their own business capabilities. If they were originally "guerrillas", they now have to become a "regular army." This will be a process of sweeping the sands. On this basis, with strong strength Service providers will have the opportunity to grow into leading companies in the industry.

Agency broadcasting service providers will usher in greater development opportunities

Based on the judgment of the previous trend, we believe that the market will further divide labor, and agency broadcasting service providers that specialize in serving merchants and brands will further benefit. The core difference between agency broadcasting service providers and live broadcasting by experts is account ownership. Accounts operated by agency broadcasting service providers belong to merchants and brands. In addition, merchants and brands can independently choose products to launch, and have certain influence in event planning, process arrangements, etc. The agency broadcasting service provider of the

e-commerce platform developed earlier. Taking Taobao Live as an example, with the growth of store live broadcasts in Taobao Live, Taobao Live broadcasting service providers increased from 0 in June 2019 to 200 in February 2020. Douyin, a representative content platform, is actively cultivating brand service providers DP, which provides brand owners with content operation and product sales services. The Douyin platform looks forward to providing brand operation services to help brands grow and accumulate in Douyin e-commerce, form a brand ecosystem, provide users with more high-quality products, and achieve the healthy growth of users, brands, brand service providers, and platforms in 2020 In September 2020, Douyin launched brand service provider recruitment; as of December 2020, Douyin has conducted 4 phases of brand service provider recruitment. Brand service providers provide brands with services from entry to long-term operation and healthy growth, which can be divided into two categories: content operation services and product sales and services.

Localization service providers/The rise of service provider localization

Among many types of institutions, localization service providers can build their own professional teams and build capabilities such as content creation, traffic delivery, supply chain services, anchor incubation, and live broadcast operations, providing Anchors or merchants provide in-depth and efficient services; they can also build a base with comprehensive service capabilities through resource links. Compared with online services and simple goods services, this type of supplier has more advantages. Therefore, we expect that localization service providers around merchants or anchors will become more and more common.

In order to compete with localization service providers, other types of organizations may also actively or passively build their own regional operation centers. In fact, this localization trend is already happening, and there are some successful cases.

05 Capital and Industry

In the field of live broadcast e-commerce, mergers and acquisitions and investments have shown a diversified trend and will maintain the trend of diversification. Whether it is open source content to attract traffic or tracing back to the origin of products, whether it is focusing on the present like ByteDance or chasing the future like Kuaishou Technology , industrial collaboration should be an eternal theme.This is the core logic of the entire business organization and the fundamental reason why live streaming e-commerce is different from the traditional retail industry.

06 New form

With the optimization of 5G network environment and the increasing maturity of immersive technology, various new content presentation methods will be applied to live broadcast e-commerce, and give birth to new forms such as VR live broadcast e-commerce and cloud game e-commerce. The fundamental purpose of live e-commerce is to trigger purchasing behavior. The entire process of consumer purchasing behavior is divided into six stages: awareness, understanding, liking, preference, conviction, and purchase. No matter what method or technical means are used, the goal to be achieved is very clear, which is to find the password to guide consumers to the next stage at each stage.

This includes reaching potential users, displaying product effectiveness, establishing product favorability, impressing product advantages, strengthening preferences and stimulating consumption impulses. Being able to meet the needs of consumers at all stages and levels is a key factor in determining the direction of technology application and development. For example, by developing from text to pictures, the browsing rate of e-commerce shopping increased by 94%, sales increased by 35%, and purchase intention increased by 57%. This is the result of optimizing product display and also adapts to and satisfies consumers' visual information acquisition habits and needs. After developing from pictures to videos, the improvement in traffic conversion rate has also been verified on various platforms. We have reason to believe that 3D, immersive presentation that meets the requirements for optimizing product display effects will be the next best form of expression. However, in this development process, an important issue that must be grasped at all times is the control of viewer participation in live e-commerce content, that is, the constant mobilization of the audience's enthusiasm for action.

This article is adapted from the new book "The Logic of Live Streaming E-commerce", edited by Chu Yanlai, Xue Yuanhao, and Yang Jing, published by CITIC Publishing Group in April 2022. The copyright belongs to the author and this book. Please indicate the author and the source of the work when reprinting.

"The Logic of Live Streaming E-commerce"

Editor-in-Chief

Chu Yanlai, Xue Yuanhao, and Yang Jing

goes straight into the essence of industry operation and clarifies the logic of industry development.

overcomes the industry trap of brutal growth and opens a new era of live broadcast e-commerce.

analyzes the logic of live streaming e-commerce from all aspects and multiple angles, from the platform structure and interaction logic of live streaming e-commerce, to anchors, users, supply chains, to social impact and the investment logic behind it, to reveal the driving factors behind the phenomenon and help Readers can see the essence through the phenomenon and gain a deep understanding of live e-commerce.