Live streaming of purchases and sales is the first step in the iteration of the live streaming sales model

As the Double Eleven Shopping Festival approaches, competition in live streaming sales is becoming increasingly fierce, with major platforms and anchors doing everything they can to attract consumers. However, behind the scenes, the iteration of the live streaming sales model is also quietly happening.

As soon as late October began, the atmosphere of Double Eleven began to become intense.

In the past few days, Li Jiaqi announced that a total of 500 million yuan in cash red envelopes would be distributed starting from October 14. JD.com also announced that its purchasing and sales live broadcast room would be synchronized with Li Jiaqi's live broadcast, and "the spot goods will be sold at a 10% discount at the same price."

The smell of gunpowder from the big sale is indeed a bit strong.

This year's Double Eleven seems a little different. The warm-up time has been advanced, and everyone seems to be working hard. This may be related to the stock market's rise in the past few days, and the market's consumer confidence seems to have returned.

A friend in the e-commerce industry revealed that if this year's Double Eleven is done well, the performance will be very good. Last year's Double Eleven data was not good, and the data of some live broadcast rooms were even worse than last year's 618 performance. If this year's Double Eleven can achieve results, then the year-on-year GMV data may be easier to pull up.

Although the atmosphere was so good, there were also some less "harmonious" voices before Double Eleven. For example, Xiao Yangge's live broadcast of selling goods went wrong, and he was fined for suspected false advertising for selling "Hong Kong Meicheng Mooncakes".

Information from Tianyancha APP shows that Xiao Yangge’s company “Three Sheep Network” was established only more than three years ago.

On the one hand, this year, the popularity of Double Eleven is so high, and the tension of live streaming is so strong that brands, merchants and consumers are indeed full of expectations;

On the other hand, whether it is Xiao Yangge, Li Jiaqi, or Simba, which anchor has not made mistakes these days? Is it true that after so many iterations of the live streaming business, there is really no "perfect" model?

This question urgently needs an answer.

01 Bugs in live streaming

Not only Xiao Yangge, Li Jiaqi's Double Eleven event also seems to have signs of "crashing".

Li Jiaqi announced in a live broadcast on October 4 that "5 million red envelopes will be distributed every 5 minutes on October 14, the first day of the 11.11 pre-sale." During the live broadcast, Li Jiaqi said, "From morning to night, how much money will be distributed in total? Everyone can calculate it." Some netizens calculated based on 8 am to 12 pm, and the total number of red envelopes will reach 960 million yuan.

Interestingly, during a live broadcast on November 14, Li Jiaqi suddenly changed his words and said that a total of 500 million yuan in red envelopes would be distributed from the 14th to the 15th, and that they would be distributed "at irregular intervals." The 900 million yuan in red envelopes became 500 million yuan, and the red envelopes were directly "reduced" by half...

Objectively speaking, whether it is sending out red envelopes or holding a lottery, "the final right of interpretation of the activity belongs to the live broadcast room", but some netizens who participated said that "I waited in the live broadcast room for 5 hours and didn't get a single red envelope."

Live streaming e-commerce has not only brought about the change of “it’s hard to grab red envelopes”.

Last year, Li Jiaqi started selling "79 yuan eyebrow pencils" in his live broadcast room, and this year, some sharp-eyed netizens found that the prices of some products in the live broadcast room seemed to have increased. Whether the red envelopes are reduced or the prices are increased, perhaps for the anchors who easily bring in over 100 million yuan in sales, it is just a small matter.

The frequent failures in live streaming e-commerce seem to indicate that the business model of live streaming e-commerce still has bugs that need to be fixed.

Why do anchors always fail?

Because live streaming with goods is a business model with "people" at its core. In other words, the first stage of the development of live streaming with goods is "trusting people".

For example, most of the people who frequently place orders in Dong Yuhui and Li Jiaqi's live broadcast rooms trust Dong Yuhui and Li Jiaqi, because fans have a preconceived notion that Dong Yuhui and Li Jiaqi can bring everyone good products at low prices.

There is no doubt that Li Jiaqi and Dong Yuhui are the undisputed first-tier live streaming e-commerce companies. They have complete product selection and after-sales teams, and are professional enough in live streaming e-commerce.

However, in any business model, trust built solely on "people" is always fragile, because people always make mistakes and always "crash".

For example, the supply chain is not well done, or there is a problem with product selection? Another example is that the anchor is outspoken and has a slip of the tongue? Another example is that the anchor's personal time and energy are limited, and many things should actually be handed over to other colleagues in the team, just like the "small composition" incident.

Therefore, the "human" factor is often the biggest variable, which may make the business better, but it may also make it worse. The core of live streaming sales happens to be this variable that is not very "controllable".

It can be said that "people" are the biggest "BUG" in the live streaming e-commerce business.

The core of live streaming business is "people", but live streaming business does not completely rely on people. After so many years of development of the e-commerce industry, most consumers actually understand the simplest truth that "you get what you pay for", but everyone still hopes to buy good products at a cheap price.

When buying things, cheapness is the "first" principle, so the "anchor" of live streaming sales is actually price.

Do you remember how Li Jiaqi established his position as the "number one"? He relied on absolutely low prices and negotiated with brands for "exclusive lowest prices on the entire network."

In other words, the "price anchor" of the live broadcast industry in the past was more like a form of "price reduction." The anchor team coerced traffic and users, and then "raised the price" on the supplier, thereby aggregating traffic again to sell goods at the "lowest price on the entire network" to realize cash.

In this process, users did buy at low prices, but as the market gradually became inward-looking, excessively low prices made quality unguaranteed, and brands could only "lose money to gain publicity."

Now, things are starting to look different.

In today's e-commerce industry, the so-called low price is not a "hard" standard. For consumers, what they want is not an absolute low price, but "good goods at a low price" and even "good service."

For example, one phenomenon is the change in product categories in the live broadcast room.

In the past two years, the products that sold well in the live broadcast room were all low-priced goods. In the past two years, an obvious change is that more high-priced goods are sold, such as digital devices, tablets, Dyson products costing thousands of yuan, etc.

This change shows that the core group demanding live streaming sales is actually “low-priced and good goods”. Many consumers in the live streaming rooms also gave feedback that they hope the logistics will be faster and returns will be more convenient.

This shows one thing: when people place orders in a live streaming room, the factor of "goods" is actually much more important than "people".

After all, with so many live broadcast rooms and so many top anchors, everyone claims to have the "lowest price on the Internet", so who should we believe? In the end, it still depends on the product and how good the goods are. Whether it is Li Jiaqi or Dong Yuhui, the answer may come only if we compare the prices of the products in the live broadcast rooms.

Therefore, when the market completes the change from "people" to "goods", can the live streaming e-commerce business develop from "trusting people" to the next stage: "trusting goods"?

The Internet world believes that this is possible.

During this year's Double Eleven, JD.com made an interesting move. After increasing the salary of its purchasing and sales staff, JD.com began to let front-line purchasing and sales staff enter the live broadcast room, leaving professional matters to professionals.

Can live broadcast of purchase and sales "blaze a new trail" for the live broadcast sales industry? This question is crucial.

02 A new species of live broadcast of purchase and sales

Live streaming of purchasing and sales is JD.com’s unique capability, and it is also a “brand” and a “model” that JD.com wants to promote.

But in fact, live streaming of procurement and sales is actually a "new species".

What makes the procurement and sales live broadcast different from previous live broadcasts is that the focus of the live broadcast room is "goods". In the procurement and sales live broadcast, the host's greatest value is to convey information about the goods.

If live broadcasts by Li Jiaqi, Viya, Lao Luo and others rely on "people" to build trust, then live broadcasts of procurement and sales essentially rely on "information" to build trust.

Trust built on information is very solid.

When consumers know enough about the products, they will naturally trust them, place their own orders and make rational decisions. Such transactions are often more stable and easier to form consumption habits. For the e-commerce industry, to boost the annual GMV, it depends on promotions in the short term and habits in the long term.

Consumers obtain information and make decisions based on the information, essentially hoping to maximize their benefits in commercial transactions. People not only want low prices, but also good quality products.

Therefore, the consumption process is actually a game process.

In this game process, buyers have more information and thus have more advantages in decision-making.

In order to maximize your own interests and buy truly low-priced and good products, you need to master a lot of information, such as product quality, price, platform services, comparative analysis of similar products, and so on.

Therefore, the "Jimei" who can really get the ultimate cost-effectiveness in shopping must be a very "awesome" data analyst. But in fact, most consumers do not have the time or energy to do such a fine-grained analysis.

However, there is a group of people whose main job is to do this, and that is purchasing and sales.

For example, how many layers of tissue paper are the most useful? How much down is suitable for the beginning of winter and how much is suitable for the winter solstice? These details that are closely related to consumers are well understood by the buyers and sellers. JD has many experienced buyers and sellers who have worked for more than ten years. Their daily work is to go deep into the first-tier factories and production areas to repeatedly compare the functions, quality and prices of products.

Therefore, when it comes to product selection, the frontline buyers and sellers may be much more professional than "Li Jiaqi and Xiao Yangge". It can even be said to be a "dimensionality reduction attack".

There is a joke on the Internet: Don't use your hobbies to challenge other people's jobs. Choosing and buying goods carefully is the "job in hand" of the buyers and sellers.

What does procurement and sales mean for live streaming e-commerce?

Not only will it be easier for consumers to trust it, it may also mean a reshuffle of the "pricing power" of low-priced good products.

JD.com does not charge slot fees or commissions from influencers for its own live streaming rooms, so JD.com does not have too many concerns about product selection or pricing. This "no concerns" allows the live streaming rooms to have a wider range of products and have real "pricing power" for low-priced and good products.

Why has live streaming sales been so popular for so many years?

There are two main reasons:

Oversupply has led to low-price competition, which remains the main sales strategy for most brands.

Live streaming sales have always held the power to set “low prices”.

During this year's Double Eleven, the situation of oversupply in the market has not changed. What has changed is that the previous practices of "losing money to gain publicity" and signing "low-price agreements for live broadcast rooms across the entire network" are no longer suitable for this era.

For brands and factories, most of them hope that live streaming can bring about "cost reduction and efficiency improvement" rather than high cost impact.

Therefore, for the industry, the original live streaming sales model is unsustainable and a new model is urgently needed.

Why do some top anchors raise their prices in their live broadcast rooms? Or, do they add some high-priced products? The reason is not hard to guess. It is probably because the slot fees are too high and brand merchants are not making money, so they must increase the unit price and increase the gross profit.

So, in a sense, the price increase in the live streaming industry is inevitable, and in a sense, it is also paying the price for the previous "low-price monopoly."

Why does live streaming of purchasing and sales have the hope of regaining “pricing power”?

The reason lies in the natural cost advantage of supply scale, coupled with a mature model and correct operating methods.

For a platform like JD.com, it is not difficult to provide “low-price and good-quality goods”. The scale and quality of JD.com’s supply chain are among the best in the e-commerce industry and even the retail industry, which is recognized by the industry.

In addition, if a low-cost "live streaming with goods" model can be found to help brands sell goods, more brands and merchants will participate in the new supply system, thus quickly completing the scale of the supply side. The more good products enter the live streaming room, the easier it will be to do live streaming of procurement and sales.

Secondly, once the mentality of selling good products at low prices is fully understood, the live broadcast room for purchasing and sales will have "huge traffic".

Good e-commerce platforms never lack good supply, but have a greater demand for traffic.

With the pricing power for low-priced high-quality goods, when JD.com's senior buyers and sales personnel begin to come to the fore, the problem of traffic may be easily solved.

The essential logic of the live streaming e-commerce business is that good products at low prices have their own traffic attributes.

How did Pinduoduo achieve a similar scale to Alibaba? It was because of the rapid growth of GMV after the traffic brought by low prices poured into the platform.

By the same logic, once the live broadcast of purchasing and sales has fully tapped into the mentality of good products at low prices, then a huge amount of traffic will also flow into the live broadcast room. With sufficient traffic and good product supply, the model of live broadcast of purchasing and sales will be like a snowball and may grow quickly.

At that time, how to deal with this huge amount of traffic will be a question that every brand and merchant should think about.

03 Conclusion

There are a thousand Hamlets for a thousand readers. The business model of live streaming with goods will have different interpretations in the hands of different platforms.

The emergence of a new species, live streaming of purchasing and sales, may be the beginning of the evolution of this business model. After JD.com takes this step, there may be more "live streaming of purchasing and sales" in the industry in the future.

By then, the "BUGs" in the live streaming industry's model are expected to be completely eliminated, and the entire e-commerce consumption will usher in real rebirth and growth.

Author: Liu Zhicheng This article is written by the author of Operation Party [Internet Jianghu], WeChat public account: [Internet Jianghu], original/authorized to be published on Operation Party, and any reproduction without permission is prohibited.

The title image is from Unsplash, based on the CC0 protocol.