There is a trend of big anchors going overseas. Is it easy to make money from live streaming in the United States?

The rapid development of live streaming e-commerce in the United States has attracted the attention of many Chinese live streaming organizations. This article analyzes the potential of the US e-commerce market, the business model of TikTok Shop, and the strategies of Chinese MCN organizations in the US market, and explores the challenges and opportunities for major anchors to go overseas.

It is no longer a new thing for “Chinese Internet celebrities” to go overseas in large numbers.

Jiao Ge Pengyou and Dongfang Zhenxuan have already started selling goods through live streaming overseas. Recently, Lu Wenqing, chairman of Hefei Three Sheep Network Technology Co., Ltd. (hereinafter referred to as "Three Sheep"), a domestic MCN agency, revealed in a live broadcast that the Three Sheep US branch plans to open in Los Angeles in September this year.

According to data, Sanzhiyang owns many well-known anchors, including Crazy Little Yang, Qiao Mei, Zui Ge, Qi Laoban, Zhuo Shilin, etc. Among them, "Crazy Little Yang" is well-known throughout the network. As of June 2, 2024, the account has more than 99.99 million fans on the Douyin platform and 58.417 million fans on the Kuaishou platform. In the "Top 50 Online Anchors in Net Income in 2023" announced by the Guangdong E-commerce Summit Forum, Crazy Little Yang ranked first in the year with an income of 3.2123 billion.

In fact, it has been more than a day or two since Crazy Brother Yang showed his ambition to "go overseas".

As early as April last year, Crazy Little Yang revealed in a live broadcast: "The company will be renamed Three Sheep Holding Group to earn money from foreigners, because TikTok will also have e-commerce behind it."

At the beginning, they considered setting Indonesia as the first stop for their overseas expansion. Du Gang, CEO of Three Sheep, once said, "TikTok's largest overseas market should be Indonesia. We have a lot of fans there." Later, due to local policy issues, the trip was not made, so the first stop was changed to Singapore, which also has a strong Chinese atmosphere.

It then tried live streaming in Malaysia, Thailand and other places. Before the news of setting up a branch in Los Angeles came out, Three Sheep had already conducted many live streaming sales events overseas with the help of the TikTok platform.

Coincidentally, well-known domestic MCN agencies such as Jiao Ge Pengyou, Dongfang Zhenxuan, and Yaowang Technology have also set their sights on the US market.

1. Why choose the United States?

Data shows that the United States is the world's second largest e-commerce market, with the overall e-commerce market size of approximately US$1.14 trillion in 2023, and live streaming e-commerce has been the fastest growing sector in recent years.

In the United States, TikTok, Amazon, Walmart and YouTube have all joined the live streaming track. Although many giants are optimistic about this field, live streaming e-commerce on local American platforms such as Amazon and eBay has not been operating well.

It was not until TikTok Shop began to gain momentum that the live streaming e-commerce track in the United States ushered in a new era.

The TikTok Shop model is similar to the domestic Douyin e-commerce, and is embedded in the TikTok main site. After merchants move in, they can direct traffic to products through live broadcasts, short videos, and shelves on the main site, and complete closed-loop transactions within TikTok.

In September 2023, TikTok's US store was officially launched. On Black Friday, TikTok Shop's US GMV reached $34 million. A large number of sellers, MCN agencies, and overseas warehouse service providers poured in, and the new channel brought a lot of opportunities. According to Kalodata, TikTok has adjusted its 2024 TikTok Shop US GMV target to $50 billion.

The reason why TikTok dares to set such a high goal is mainly due to three factors: the mature US e-commerce infrastructure, the high stickiness of TikTok users and the strong purchasing power of consumers.

Separately, the 87% e-commerce penetration rate in the United States not only demonstrates the high acceptance and dependence of American consumers on online shopping, but also reflects the maturity and perfection of the country's e-commerce platforms, logistics networks, payment systems and other infrastructure. This also provides convenience for latecomers such as TikTok and Temu to enter the market.

Secondly, the United States is the market with the largest number of TikTok users. Compared with other social media, TikTok is a highly sticky and high-attention traffic portal, and users are easily attracted to it. According to TikTok data, the average daily usage time of American users on TikTok is more than 90 minutes, and 67% of American users prefer to use TikTok in their daily leisure time. The possibility of users watching TikTok without distraction is 1.2 times that of other social media platforms.

Image source: Guosen Securities

Finally, compared with other shopping platforms, TikTok users are young and have strong online spending power. Statistics show that as of Q2 2024, 69.3% of TikTok users are between the ages of 18 and 34. These young people have strong spending power. In the first half of the year, the average monthly sales in the US market reached US$490 million, higher than the global average of TikTok. In terms of average customer unit price, the US market also leads other regions with an average customer unit price of US$19.5. This data not only reflects the higher purchasing power and consumption level of American consumers, but also reflects the pursuit and recognition of high-quality and high-value goods in the US market.

In addition, live streaming by influencers in the United States is still in its infancy, and the Matthew effect is not obvious. Data shows that the top 6 influencers in the US region of TikTok in December 2023 all brought in $700,000 to $900,000, with a small gap, and the number of fans of the top influencers is less than 500,000. This pattern is in sharp contrast to the current situation in China where "top anchors eat meat, mid-level anchors drink soup, and bottom anchors starve", and it also provides development opportunities for domestic MCN organizations such as Three Sheep.

2. Going abroad collectively to “earn extra money”

The reason why the anchors can "earn extra money" is obvious. Domestic live streaming e-commerce has become saturated and its development has entered a bottleneck period, while e-commerce live streaming is still an undeveloped new business field overseas.

In 2021, "Three Sheep" opened a TikTok account. In January this year, TikTok Business Unit (Three Sheep) announced its first overseas expansion to Singapore on Douyin. Together with Singapore local anchor @shopwithsasax, it launched Singapore's first live broadcast sales event on the TikTok platform, ranked first on TikTok's Singapore sales rankings, and set a local single live broadcast record.

Image source: Weibo @三只羊网络

Subsequently, "Three Sheep" announced that the next stop for its overseas expansion would be Malaysia. In the month after the plan was announced, the number of authorized live streaming slicing experts in Malaysia had reached more than 150. Then in May, Zui Ge and Lao K, the sales experts under Three Sheep, went to Thailand to hold a live streaming event to sell durian, mangosteen and other fruits. When they landed, they were met by the director of the Chiang Mai Tourism Bureau.

After a successful trial in Southeast Asia, the three sheep set their sights on the United States across the ocean.

But everyone knows that the United States is a "big cake" for e-commerce consumption, so on the road to the United States, the three sheep face a large group of competitors.

In May 2023, the Xinxuan Group of Simba, the "Kuaishou No. 1", launched its international expansion plan, with Thailand as its first stop. This year, media reported that Xinxuan plans to enter the TikTok channel and has submitted an application for an advertising account, further strengthening its overseas label.

Jiaogepengyou's overseas business started earlier. It is reported that in May 2017, Jiaogepengyou incubated an overseas local company in Indonesia, and established a US company in 2020.

Many well-known domestic MCNs such as Dongfang Zhenxuan, Yaowang Technology, and Qianxun are also actively promoting plans to land in the United States.

In June 2022, Dongfang Zhenxuan released information about recruiting TikTok anchors, requiring applicants to have a certain foreign language speaking foundation, excellent control and adaptability. These anchors will mainly target the European and American markets. Yaowang Technology established a TikTok live broadcast team in the first half of this year and set a new record for TikTok's single-game sales in North America. Qianxun hopes to use digital humans to complete overseas live broadcasts. Zhao Ran, the president of the holding company, publicly pointed out that the AI ​​digital human live broadcast system developed by Qianxun can well solve the problems of live broadcasts in overseas local live broadcast rooms and live broadcasts of Chinese brands going overseas.

For domestic live broadcasting organizations, going overseas and doing domestic business again is a natural thing. Last year, data from the Crawley Index Research Institute also showed that nearly 30% of domestic MCN organizations have begun to go overseas, and another 14.9% are in preparation or waiting.

Some professionals have analyzed that with the rapid growth of e-commerce platforms such as TikTok, China's cross-border live streaming e-commerce industry is showing an unstoppable trend. It is estimated that by 2025, the market size of this industry is expected to reach 828.7 billion yuan.

It is precisely because of the belief in the huge potential of cross-border live streaming e-commerce that these well-known domestic celebrities, internet celebrities and MCN agencies have joined the team of live streaming sales on TikTok in the United States.

3. Both are overseas markets, but the gameplay is very different

According to statistics from the General Administration of Customs, in Q1 2024, my country's cross-border e-commerce imports and exports amounted to 448 billion yuan, a year-on-year increase of 14%, significantly ahead of the overall foreign trade growth rate.

In addition to expanding their own channels, domestic brands are more likely to choose to cooperate with existing cross-border platforms to achieve their "going overseas" goals.

The so-called "four little dragons" of cross-border e-commerce now have their own expertise. Take the US region as an example. Temu, as Pinduoduo's overseas base, continues to position itself as the main site and attracts consumers with its extreme cost-effectiveness. Its core categories are currently women's clothing and daily necessities. SHEIN started with women's clothing in its early years, based on the small-order fast-response model, and took the fast fashion route. Later, it expanded horizontally from clothing and accessories to all categories. AliExpress, backed by Alibaba's deep cultivation in overseas markets for many years, combined with innovative models such as semi-hosting, has also made breakthroughs at an extremely fast speed.

TikTok Shop is similar to Douyin e-commerce, intervening in shopping decisions from the very beginning (commonly known as "planting grass" in China). This strategy of intercepting user needs in advance has escaped the dilemma of competing in the same dimension with shelf e-commerce.

From the perspective of goods, TikTok's US store has both Amazon's branded goods and Temu's white-label goods, and the prices of goods are significantly lower than those of Amazon and Temu.

Moreover, TikTok's commission and marketing rates are lower. Currently, TikTok charges a 2% commission in the US, which is much lower than Amazon's average commission of 15%. The general commission for influencers is 10%-15%, which is also lower than Amazon's advertising rate of about 20%. The above policies are very friendly and have created conditions for many small and medium-sized brands to test overseas sales with the help of "live streaming".

Newme co-founder and CEO Gu Jun believes that TikTok still has huge dividend opportunities in the United States.

Gu Wenrui, who runs an MCN agency in the United States, believes that the top anchors in China may not understand cross-border business and may not even be good at foreign language skills, but they have funds, know how to play, and have inventory. From the design of speech, the creation of atmosphere to the layout of the live broadcast room and the skills of forcing orders, the comprehensive strength they have forged is more than one level ahead of anchors in other countries.

However, despite these advantages, domestic big anchors or MCN agencies also face many challenges in overseas markets.

Among them, the biggest challenge is the recruitment and training of anchors.

"American consumers trust 'locals' more. Even if you are a native Chinese American, it will be difficult to break into the American talent circle as soon as others see your yellow skin and black hair, so most agencies can only recruit anchors locally. In first-tier cities like New York, anchors make around $50 an hour, and this cost is very high for operations. In second-tier cities, $20-30 an hour is the norm. This salary gap will cause newly trained anchors to jump directly to other jobs," said Gu Wenrui.

Gu Jun also pointed out that the business model of MCN agencies in the United States is more like that of domestic guilds, and influencers have great freedom and choice. This makes it difficult for MCN agencies to sign long-term contracts with influencers in the United States, and also dooms the cooperation between the two sides to instability.

Therefore, for domestic top anchors and institutions that are planning overseas business, even if they are already well-known "big anchors" in China, it is difficult to replicate previous successful experiences in the US market, and it is also difficult for a single anchor to create long-term value.

References:

[1] TikTok 2024 E-commerce White Paper, Kalodata

[2] “E-commerce In-depth Research Series 4: TikTok Shop is now going global in the US”, Guosen Securities

Author | Tang Fei Editor | Weber This article is written by the author of Operation School [Xiaguangshe], WeChat public account: [Xiaguangshe], original/authorized to be published in Operation School, and any reproduction without permission is prohibited.

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