<Editor's Pick>In the battle of e-commerce live streaming, what "tricks" are Chinese tech giants showing?

In the battle of e-commerce live streaming, what "tricks" are Chinese tech giants showing?

The one that claimed "after thousands of live streaming, this kind of promotion is going to be forgotten" must not think that a few short years later, "thousands of live streaming" will come back again.

The focus of this game has shifted from talent shows and games to e-commerce. In 2019, in the sales miracle of Li Jiaqi and Weiya, the concept of KOL promotion is fully activated. E-commerce live streaming also took off. The first thing that happens is that the sudden epidemic has added a boost to e-commerce live streaming. Companies that originally only operated offline also came online for "emergency" and all walks of life regarded live streaming promotion as the way out.

For a time, business owners, local government leaders, KOLs, and celebrities all gathered in the live streaming. Major Internet companies with or without live streaming business all started their own e-commerce live streaming.

According to the Chinese Ministry of Commerce's big data monitoring, there have been more than 4 million e-commerce live streaming in the first quarter of 2020.

E-commerce, short video, live streaming, social networking, and other platforms are almost all entering e-commerce live streaming. In this white-hot competition, how do all these platforms play out live streaming differently? And who will win in the end?

 

Multiple platforms running into the game

The e-commerce live streaming has been born from the 2016 "thousand live streaming battle". The first players entering into live streaming selling are e-commerce platforms such as Taobao, JD.com, and Mogu.

Initially, live streaming for Taobao and other e-commerce platforms is just a way to keep users staying for a longer time. These strategies didn't generate much attention at first. In 2019, however, Weiya and Li Jiaqi's influence made e-commerce live streaming popular all over again, and major e-commerce platforms followed them at this point. JD.com and Pingduoduo made strong support plans and policies to attract brands to settle on their platforms.

In addition to e-commerce platforms, there are currently four other categories of competitors in e-commerce live streaming: first, the short video platforms represented by Tiktok and Kuaishou, promoting goods through short videos and live streaming, and the second is the social e-commerce platforms represented by XiaoHongShu and Tencent Live with the advantage of private traffic. The third is the talent show live streaming and game live streaming mainly represented by YY, Douyu, Huya and other live streaming platforms, with the intention of stepping into the e-commerce competition, and fourth, platforms that didn't have a live streaming business, such as the tool-based app Meitu and tech giant Baidu which does not have e-commerce or live streaming genes at all.

Among the older players who entered the game earlier, Taobao has a first-mover advantage and has now formed a complete industrial chain including live streaming bases, multi-channel network institutions, and supply chain. Beyond that, there are Tiktok and Kuaishou which aggressively laid out their live streaming plans. Short video brought a huge flow of traffic for e-commerce live streaming business which is the foundation for a rapid roll-out.

 

Tencent's "one-end live streaming, multiple-end distribution" model

Tencent Live began internal testing in March 2019 and began testing the e-commerce function in May. It is said that at the beginning, Tencent Live is not positioned to be an e-commerce live streaming platform, but to help WeChat official accounts owners and fans better interact. However, with continued internal testing, Tencent Live found that WeChat official accounts owners and business owners have the need to sell goods through live streaming, so in the final version, Tencent Live turned into a tool to help business owners promote goods in this strong social relationship.

The positioning of this basic tool makes Tencent Live very different from other live streaming platforms. The most significant difference lies in the "one-end live streaming, multiple-end distribution" model.

"One-end live streaming " refers to the Tencent Live app, which is a complete "to B" live streaming tool. Business owners or KOLs can initiate live streaming on this app, and generate small program code posters that can be promoted in multiple channels.

"Multiple-end distribution" refers to the content initiated through the Tencent Live app that has the opportunity to be recommended to more platforms. Among them, the small programs which are embedded in WeChat, are mainly to attract private traffic within WeChat. High-quality live streaming may attract more public traffic outside WeChat. At present, Tencent Live has connected a number of content platforms such as Kuaibao, QQ kandian, Tencent Weishi, Tencent News, and Tencent Video.

From the model of "one-end live streaming, multiple-end distribution", Tencent Live does have certain advantages compared to other single platforms. On the one hand, outside WeChat, a huge traffic pool consisting of multiple content products that allow business owners or KOLs to directly distribute the content from multiple channels. On the other hand, WeChat itself has a powerful private traffic pool where business owners or KOLs can complete traffic conversion and fans aggregation. The consequent high conversion and repurchase rate is also a difference from other platforms.

 

The value of private traffic

Following the logic of Internet traffic classification, e-commerce live streaming platforms can be divided into two kinds including public traffic and private traffic.

Public traffic, more generally, means that the dominance of traffic is controlled by the platforms. For business owners, the advantage of being on such platforms is to receive resources and gain traffic in the early stages of the platform's business development.

But as seen in the current situation, user purchase behavior is often driven by the "lowest price." It is typical impulsive spending, and the consequence of impulsive spending is an extremely high return rate. Business owners have already paid for KOL commissions, free gifts, operations, and other expenses. The high return rate made it even more difficult to gain profit.

KOLs and celebrities can be replaced, but for the brand to continue operating, increment-sale is needed rather than a single million-selling record. Brands need to continue to reduce the return rate and improve the repurchase rate which can be completed by private traffic.

The dominance of private traffic is in the hands of business owners themselves, and it's all about more economical traffic conversions.

Undoubtedly, WeChat is currently the best platform for building private traffic pools, where business owners can use their WeChat, WeChat official accounts, WeChat groups, and small programs to build up their own membership pools. Live streaming joined the WeChat ecology in the form of small programs and is to further build a complete business closed loop so that private traffic can be better used. This is precisely the reason why Tencent Live is regarded as an "important traffic gathering place" by the industry.

With the unique advantage of private traffic, the most optimistic ones are naturally business owners. At present, a considerable number of brands have settled on Tencent Live. It also launched the first "Tencent Live Carnival" that lasted for seven days, with more than a thousand brands participating, including Gome, Chow Tai Fook, Peacebird and other well-known brands covering a variety of goods such as clothing, jewelry, home appliances, food and more.

 

Differentiation advantages

First of all, being in WeChat ecology is Tencent Live's biggest advantage. Fans' quality and loyalty in WeChat private traffic pool are much higher than that on other content platforms which can meet the needs of business owners to develop sales, lower return rates, and improve repurchase rates.

Secondly, the social nature of the WeChat ecology makes social networking an accelerator for e-commerce live streaming. For example, before brands start live streaming, Tencent Live provides them with shareable exclusive small program codes, appointment posters, and coupons that can be used for preheating. At the same time, social networking is the lowest-cost way to acquire customers which is very friendly to small and medium businesses.

Finally, Tencent Live has both public traffic and private traffic. The former's main role is to obtain external traffic and resource support; the latter is to achieve fans aggregation. And as more content products are connected, brands can get billions of public traffic and more resource support from these products.

At the moment, Tencent Live has not yet fully demonstrated what this private traffic plus public traffic mode will get in the competition. And back to the entire e-commerce live streaming industry, although the number of players has reached millions, for many brands, the trial-and-error cost is too high for the many uncertainties.

With major live streaming platforms have entered the race track, the private traffic logic operating in the e-commerce live streaming will play a bigger role.  Ultimately, who will win the "thousand live streaming battle"? All of this deserves continued attention both inside and outside the industry.

 

This is an article from WeChat official account Deep Echo (ID: deep-echo), written by Lv Yue, translated by Linda Yang.