Text丨Niudao Finance Zhang Chuan
The National Day holiday is still warm, and the "longest in history" Double 11 has kicked off.
At 8 p.m. on October 14, 2024, e-commerce platforms such as JD.com and Tmall will open the Double 11 Shopping Festival, about ten days earlier than in previous years. In fact, even ten days in advance, JD.com and Tmall are still one way behind. As early as October 8, Douyin took the lead in opening the "Douyin Mall Double 11 First Enjoy Good Things Festival".
Douyin's eagerness to launch the Double 11 shopping festival event largely shows its internal anxiety. Once upon a time, relying on the innovative e-commerce live broadcast business model, Douyin e-commerce was extremely growing. However, in recent years, as the mobile Internet traffic dividend has peaked and a number of big anchors have folded, Douyin e-commerce is facing huge downward pressure.
Although the extension of the Double 11 promotion period can boost the performance of Douyin e-commerce to a certain extent, considering that the consumption environment has changed, it may be difficult for Douyin e-commerce to successfully break through and open up the imagination space only by relying on the long promotion period.
1. Behind the first rush, the big anchors of Douyin have folded
Because Douyin e-commerce is highly dependent on live broadcasts, it is synchronized with the rush of many e-commerce platforms and the first to open the Double 11 shopping festival, Douyin has also driven Guangdong couples, Qi'er, Jia Nailiang and other head anchors into a "wartime state".
(Source: Walking with Hui)
According to the official data of Douyin e-commerce, from October 8th to 12th, there were 21 live broadcasts of head anchors with a turnover of more than 30 million, of which the cumulative number of viewers of the special live broadcast in Shaanxi with Hui reached 87.4 million, bringing nearly 400 goods, and the order volume exceeded 5.1 million. Chen He's team opened a special event for Hege's billions of subsidies and sold more than 60,000 new Timco V9 products.
In order to leverage more consumer consumption, Douyin doesn't even care about the rebroadcast of controversial Internet celebrities. In July 2024, due to the "overturning" of olive essence with goods, Luo Wangyu, the "first brother of beauty" on Douyin, announced that he would "withdraw from the network". However, on October 14, Luo Wangyu suddenly made a comeback and brought goods live on the Douyin platform.
Considering that Douyin urgently needs big anchors to help expand the volume of the Double 11 event, Luo Wangyu made a comeback at the beginning of the Double 11 event, and it is difficult to say that there is no connection with Douyin.
Although Douyin's official data shows that a few days before the Double 11 promotion, the platform's beauty, shelf scenes, payment users and other data performed well, but compared with the previous year's performance, many big anchors on Douyin are mired in negative growth.
(Source: "Silver Arrow Finance")
"Silver Arrow Finance" combed through the data of third-party platforms and found that in the premiere of Double 11 in 2024, the performance of more than a dozen top anchors on Douyin has declined sharply. Among them, Luo Wangyu, Jia Nailiang, and Guoyue's GMV plummeted by 89.8%, 45.4%, and 50% year-on-year respectively, with double-digit declines.
In fact, not only the Douyin platform, but also Kuaishou, which also focuses on live e-commerce, has encountered similar problems. According to the financial report, in Q2 2024, the year-on-year growth rate of Kuaishou e-commerce GMV will only be 15%, which is "halved" compared with the previous two years. Among them, Simba, the big anchor of the Kuaishou platform, will have a total sales of 1.427 billion yuan in the first live broadcast of 618 in 2024, less than half of the premiere of Double 11 last year.
If the performance of only one big anchor declines on Double 11 in 2024, it can also be explained by the anchor's dislikeability of consumers, but in the past period of time, many top anchors on different platforms have experienced a sharp decline in performance, which clearly shows that there are systemic problems in the entire live broadcast e-commerce industry.
2. Behind the weak follow-up of Douyin, the live broadcast e-commerce industry has ushered in great changes
As we all know, compared with shelf e-commerce, the biggest competitiveness of live broadcast e-commerce lies in the fact that it can rely on the appeal of the anchor to leverage massive traffic and concentrate on purchasing a popular single product. In this process, merchants can make profits to anchors and consumers through small profits and quick turnover, and then achieve a win-win situation for the platform, merchants, anchors, and consumers.
It can be said that paying for massive traffic is the foundation of the establishment of the live broadcast e-commerce business model. If there is a lack of a large number of consumers to pay, no matter how strong the appeal of the anchor is, it will be difficult for merchants to make money, and it will be difficult for the entire live broadcast e-commerce business to operate.
In the past few years, as short video platforms have penetrated into the sinking market, the live broadcast e-commerce industry has continued to capture the new generation of traffic, and the performance of related companies has steadily risen. However, in recent years, as the mobile Internet traffic dividend has peaked, it is difficult for the live broadcast e-commerce business to easily capture massive incremental traffic.
At the same time, with the gradual solidification of the live broadcast e-commerce industry, the fearless head anchors often ask for a lot of money, which brings huge cost pressure to merchants.
In an interview with "Xinhuanet", the relevant person in charge of Yalu Group revealed that the special fee for the head anchor is about 1 million-3 million, the middle waist is 500,000-1 million, and the commission is about 10%-20%. After a cooperation, "the gross profit margin is about 6%-8%". If you add the cost of the venue, personnel salary, packaging and delivery, etc., "it is very difficult for the brand to make money." ”
On the one hand, the traffic dividend has peaked, and it is difficult for merchants to make small profits and quick turnover, and on the other hand, the top anchors continue to erode the profit margins of merchants. All of this has directly led to some businesses "losing money and making money".
Taking Blue Moon as an example, in the first half of 2024, its revenue will be HK $3.13 billion, a year-on-year increase of 40.9%; Net profit was -664 million Hong Kong dollars, down 296.36%, the largest decline in medium-term net profit since listing.
(Source: Blue Moon's financial report for the first half of 2024)
The core reason for Blue Moon to fall into the quagmire of losses is the surge in sales expenses related to e-commerce live streaming. In the first half of 2024, Blue Moon's sales and distribution expenses were HK$2.201 billion, a year-on-year increase of 108%, of which promotional expenses were $1.095 billion, a year-on-year increase of 311%, and advertising expenses were $203 million, a year-on-year increase of 133%.
It is understood that in 618 in 2024, Blue Moon invited the Guangdong couple, the big anchor of Douyin, to conduct a special live broadcast, with sales of more than 10.3 million bottles and sales of 75 million to 120 million. However, Cicada Mother data shows that Blue Moon's streaming fees are as high as 40 million, and paid traffic accounts for 69%.
(Source: iResearch)
Due to the narrowing of profit margins, in order to avoid repeating the mistakes of the blue moon, since 2023, many brand merchants have abandoned big anchors, returned to shelf e-commerce, or increased self-broadcasting. According to the "2023 China Live E-commerce Industry Research Report" disclosed by iResearch, in 2023, the market size of brand store broadcasts will account for 51.8%, surpassing Daren live broadcast for the first time, and the proportion is expected to continue to grow in the next few years.
In the context of the retreat of brand merchants, in order to continue to provide extremely low-priced products to "family members", big anchors have targeted white-label products.
For example, since 2023, Brother Xiao Yang has vigorously supported the cosmetics brand "Jiaorunquan". After July 2023, Jiaorunquan will frequently appear on the monthly list of Douyin beauty sales. It is understood that Jiaorunquan was established in 2022, with a single product price range of 40 yuan to 200 yuan, with elements such as short establishment time, fast development pace, and low product price, and is a typical white-label commodity.
(Source: JD.com)
The reason why Xiao Yang chooses to sell white-label goods is mainly because the cost of such goods is extremely low and has greater profit margins, which can attract more consumers on the one hand, and contribute more commissions on the other hand. For example, the single price of Jiaorun Quanci Essence is less than 2 yuan, while the single price of similar products of first-line brands such as Quadi and Kefumei is about 15 yuan.
However, as we all know, physical goods are limited by the "triangle law" composed of quality, cost, and delivery speed, and the excessive pursuit of extreme low prices and efficiency will weaken the quality of white-label goods. In recent years, big anchors such as Simba, Brother Xiaoyang, and Sister Yubei have become the target of public criticism due to problems such as fake bird's nest, cottage moon cakes, and sweet potato powder, all of which are caused by the poor quality of white-label products.
In fact, not only big anchors, but in recent years, the entire live broadcast e-commerce industry has been widely criticized for the proliferation of low-quality white-label goods. According to data disclosed by the State Administration for Market Regulation, in 2023, the number of complaints in the field of live streaming e-commerce will reach 337,000, an increase of nearly 50 times compared with five years ago.
Due to poor product quality, the transaction rate of live streaming e-commerce is significantly lower than that of traditional e-commerce. In July 2023, "Phoenix.com Finance" quoted Douyin jewelry merchant news to break the news that the return rate of Douyin's jewelry industry during the 618 period was as high as 90%. In addition, "Business Show" reported that in the hardest-hit area of women's clothing, the return rate of traditional e-commerce platforms is about 50%, while Douyin is as high as 70%-80%.
In the context of narrowing traffic dividends, poor product quality has directly led to the difficulty of many live broadcast e-commerce platforms to continue to make great progress. LatePost reported that in January and February 2024, the cumulative year-on-year growth rate of Douyin e-commerce sales was 60%, which fell to below 40% in March, and even dropped to 20%-30% from April to June.
Obviously, the current live broadcast e-commerce industry is not simply experiencing a slowdown in growth, but the business model has quietly deviated, causing a huge crisis of trust. In the context of narrowing dividends, top anchors have increased the number of low-quality white-label products, trying to rely on routine consumers to win more dazzling benefits. This directly leads to consumers taking a wait-and-see attitude towards live shopping.
3. Increase shelf e-commerce, Douyin faces the obstacles of "cats and dogs".
In fact, Douyin has long seen the reality of the lack of follow-up of live e-commerce, so it actively increases new business and tries to open up imagination space by relying on shelf e-commerce.
(Source: Douyin)
In May 2022, at the 2nd Douyin E-commerce Ecological Conference, Douyin announced that its e-commerce business will be upgraded from interest e-commerce to global interest e-commerce, complementing the shelf e-commerce model of "people looking for goods". Wei Wenwen, president of Douyin e-commerce, said that in the future, the proportion of shelf GMV in Douyin e-commerce will reach 50%.
In order to tap the commercial potential of the shelf e-commerce business as soon as possible, in March 2024, Douyin e-commerce launched an App called "Douyin Mall Edition", focusing on shelf shopping. In this regard, the relevant person in charge of Douyin e-commerce said that the Douyin mall version is committed to meeting the strong demand of users in active shopping.
After the end of 618 in 2024, due to the sluggish growth of the live broadcast e-commerce business, Douyin e-commerce will once again increase its efforts to cultivate the shelf e-commerce business. On July 8, 2024, 36Kr broke the news that Douyin is reducing the allocation ratio of live broadcast traffic for talents, tilting the traffic to high-quality short videos and brand store broadcasts.
(Source: Jiuqian Zhongtai)
In fact, combined with industry trends, under the background of economic pressure and increasingly rational consumer consumption, shelf e-commerce does have more growth potential. According to the data of Jiuqian Zhongtai, during the 618 period in 2024, there will be an obvious trend of users and consumption returning to the shelf, with the traffic burst coefficients of Tmall and JD.com being 1% and 19% respectively, and the traffic burst coefficients of Douyin being -14%. In other words, some users of Douyin have flowed to shelf e-commerce platforms such as Tmall and JD.com.
From this point of view, the significance of Douyin e-commerce to increase the shelf e-commerce business is not only to balance the downward pressure of the live broadcast e-commerce business, but also to fight for the initiative and deal with the impact of Tmall, Jingdong and other platforms.
Although Douyin is currently a leader in China's short video field and has built a closed loop of e-commerce business through the live broadcast e-commerce model, due to the fact that the business model of shelf e-commerce is completely different from that of live broadcast e-commerce, and there are obstacles such as Tmall, JD.com, and Pinduoduo, it may be difficult for Douyin's shelf e-commerce business to develop in one fell swoop.
For example, "Latepost" reported that in order to attract users to place orders on its own platform, Douyin e-commerce has set "price power" as the highest priority task in 2024. Under the guidance of this strategy, Douyin Mall has launched low-cost channels such as "Find a Good Price", "Super Value Purchase" and "Low Price Spike".
However, due to the need to take into account the creation of content, the operating costs of Douyin merchants are significantly higher than those of platforms such as Pinduoduo and Taobao, and it is difficult to provide extremely low-priced goods. "Latepost" broke the news that in Q1 of 2024, although Douyin e-commerce has completed a number of price power series goals, it has never been able to achieve low prices comparable to Pinduoduo, "The price difference of many goods is still between 10% and 20%. "Unable to achieve extremely low prices, Douyin has decided to re-prioritize GMV.
In addition to the lack of competitiveness in product prices, Douyin's shelf e-commerce business also faces the challenge of cultivating user habits.
The reason why Douyin launched a special Douyin mall version App for the shelf e-commerce business is mainly to make a clear distinction from Douyin's short video content platform positioning and strengthen consumers' cognition.
But the problem is that most of Douyin's business is highly dependent on the fertile traffic brought by short video content, the product form is highly homogeneous, and the price is not competitive, it is difficult for the Douyin mall version App to divert the influence of Taobao, JD.com, Pinduoduo and other shelf e-commerce giants in the context of being free from the Douyin App.
In fact, in the past few years, in order to open up the imagination space, not only Douyin, but also Taobao, Jingdong and other e-commerce platforms have also incubated Taobao special edition, Jingxi and other independent apps that focus on low prices. However, the development of these products has not been satisfactory.
For example, at the beginning of 2024, "LatePost" issued an article saying that merchants and goods on the Taote platform are moving back to Taobao, and the main position of merchants will also be transferred to Taobao in the future. This means that Ali is gradually abandoning the Taote App. Shelf e-commerce giants are struggling to cultivate user habits with new products, and the challenges faced by Douyin's shelf e-commerce business can be imagined.
All in all, a review of the development history of Douyin's live e-commerce business in the past few years shows that with the disappearance of traffic dividends and the decline of business innovation dividends, Douyin's live broadcast e-commerce business is facing the challenge of weak follow-up. In 2024, the performance of many big anchors on Douyin will plummet, and there is a strong inevitability.
As the tide of the first generation of super anchors gradually recedes, and white-label products trigger a backlash in live broadcast e-commerce, if Douyin's e-commerce business wants to continue to grow strongly, it needs to increase its unfamiliar shelf e-commerce business and capture incremental traffic.
However, in the context of the disappearance of mobile Internet traffic dividends, shelf e-commerce giants such as JD.com, Taobao, and Pinduoduo are also very anxious, not only carrying out business innovation, but also defending the basic market of shelf e-commerce by deeply cultivating superior resources such as supply chains, channels, and logistics.
This also determines that the "second curve" of Douyin's e-commerce business is difficult to depict easily.