Live streaming e-commerce has entered its real second half

With the end of 618, major platforms have also released relevant results. E-commerce has also entered the 3.0 era, reconstructing a thick field.

As 618 officially came to an end, major shopping platforms have also released their performance this year. As of 23:59 on June 18, more than 500 million users placed orders on JD.com, 83 brands had a cumulative transaction volume of over 1 billion, and more than 150,000 small and medium-sized businesses had a sales growth of 50%. JD.com's live broadcast orders increased by 200% year-on-year; on Tmall, 365 brands had a transaction volume of over 100 million, and more than 36,000 brands doubled their transaction volume. Taobao live broadcast rooms continued to explode, and the number of live broadcast rooms with a turnover of over 100 million increased by 53% year-on-year.

Although, like last year, JD.com and Tmall did not release specific GMV data, from everyone's enthusiasm for consumption, we can sense that the traditional era of big promotions is coming to an end, and the new e-commerce ecosystem with live streaming as the core has quietly begun.

Under the new trend, the achievements of Xiaohongshu this year are undoubtedly quite impressive. As of June 18, the number of orders for Xiaohongshu live broadcasts reached 5.4 times that of the same period last year, and the number of users who purchased in the live broadcast room reached 5.2 times that of the same period last year. However, unlike many platforms that rely on super-head anchors to drive sales, the growth of buyers on Xiaohongshu this year did not rely on top anchors such as Dong Jie and Zhang Xiaohui, but on a large number of "amateur buyers."

They are ordinary people from all walks of life, some are full-time mothers, some are college students, some are white-collar workers, and some are Taobao shop owners who have switched careers to become fashion bloggers.

Most of them have tens of thousands of fans, but they can generate GMV of millions or even tens of millions in a short period of time. Behind the growth of Xiaohongshu, we see a new possibility for e-commerce. But how is it achieved? What is its significance?

Slow motion conducted some research based on the development history of domestic e-commerce.

1. E-commerce 3.0 Era

Back in the last century, the Internet entered China around 1995, and a number of B2B websites such as China Electronic Mall and Made-in-China.com began to appear. Alibaba China Trading Market (now known as "1688") was also born during this period.

Then, around 1999, Internet e-commerce began its 2C transformation, and e-commerce platforms such as Alibaba, 8848, and eBay emerged one after another. This year is also known as the first year of e-commerce.

1.0 Era: PC e-commerce

Around 2000, a large number of e-commerce companies switched from B to C and opened websites for ordinary users. For a time, the goods were in short supply and sold out quickly once they were put on the shelves. Behind the rapid development is the continuous increase in the number of Chinese PC Internet users.

The "Statistical Report on the Development of China's Internet (2003)" shows that as of June 30, 2003, the total number of Internet-connected computers in my country has reached 25.72 million, an increase of 59.5% compared with the same period in 2022.

Subsequently, the PC Internet entered its golden age. Shopping websites, led by Taobao, quickly expanded their market share. By 2009, the leading e-commerce platforms had almost occupied 80% of the market share. At the same time, the second half of PC e-commerce also quietly began.

The extensive development of e-commerce also brought about a mixed quality of goods. Therefore, in 2007, JD.com, a platform represented by JD.com, rose rapidly by relying on high-quality goods and services, starting with the 3C category. Tmall also emerged at the same time.

2.0 Era: Mobile E-commerce

By 2009, the Internet penetration rate had steadily increased, and China's broadband households had exceeded 100 million. At the same time, influenced by the development of 3G services, mobile Internet users reached 155 million, accounting for 46% of Internet users, an increase of 32.1% in half a year. The development of mobile Internet has allowed many platforms to see the traffic dividend again, so the leading e-commerce companies quickly launched mobile versions, opening a new round of competition.

However, the changes that mobile Internet has brought to the e-commerce industry are not limited to this. In 2014, WeChat launched WeChat red envelopes, which really made WeChat grow into a national-level application. With the support of WeChat's acquaintance social networking, Pinduoduo quietly sprouted.

When it first went online in 2015, Pinduoduo used the "Kan Yidao" policy to quickly accumulate a large amount of initial traffic in the WeChat ecosystem. In just one year, the platform's annual active buyers exceeded 100 million and its monthly GMV exceeded 100 million.

3.0 era: live streaming e-commerce

As the growth of Internet penetration rate gradually slowed down, China's Internet ushered in an era of content explosion. Douyin and Kuaishou achieved explosive growth with short videos. Douyin released data saying that as of January 5, 2020, Douyin's daily active users had exceeded 400 million, a year-on-year increase of 60%. In order to commercialize the platform, major social platforms have started commercialization one after another, and live e-commerce has gradually become popular.

Taobao's Li Jiaqi and Wei Ya, Kuaishou's Simba, Douyin's Luo Yonghao, and Dongfang Zhenxuan's Dong Yuhui are all in their heyday. At their peak, the top anchors could bring tens of billions of goods in one night on "Double 11", outperforming the annual operating income of more than 4,000 listed companies. But now, as the top anchors gradually retire and major platforms are exploring new directions, Xiaohongshu's "buyer model" has become an important attempt in the second half of live e-commerce.

2. The rise of the buyer model: What exactly is a “buyer”?

In August 2023, Xiaohongshu COO Conan mentioned in his keynote speech at the Link E-commerce Partner Week: Xiaohongshu's buyers not only bring goods out, but also convey the value of the goods to everyone based on their own understanding of the goods, their own aesthetics, and their lifestyle.

In this process, the buyer is not a super salesperson, but a connector between users and products.

Take home buyer @一颗KK as an example. Many fans say that KK has a unique way of thinking about soft furnishing design, and can always mix and match to create eye-catching effects.

Fans also like to discuss their outfits with her in the comment section and ask for KK's advice. KK and her fans are more like life friends with the same aesthetics.

For KK, promoting products is not simply an introduction to product features, but a combination of his past experiences, aesthetic tastes, and a test of his professionalism.

From KK’s introduction on Xiaohongshu, we can see that she is a mother of an 8-year-old child. During the 2020 epidemic, the 37-year-old left the news industry and founded Grain Life (a soft furnishing design studio).

With 15 years of experience as a journalist, she has a keen insight into new trends. She also applies the rigor of a journalist’s investigation to product quality control. As a mother of an 8-year-old child, she is more empathetic to the needs of her child at different stages of growth and home scenes. Her rich life experience allows her to bring in some life concepts and pitfall avoidance suggestions in addition to product matching in her live broadcasts.

There is no noisy selling in KK's live broadcast room. In the home scenes created by KK, many people find their own home inspiration and follow her to buy attractive and high-quality homes. This way of connecting more closely with fans has also enabled KK, who has only 530,000 fans, to leverage greater commercial value.

After the sales volume exceeded 100 million yuan during last year's Double 11, the total sales volume during this year's 618 exceeded 100 million yuan again, with GMV reaching 126 million yuan. During this period, the home furnishing brand Rudai sold more than 16 million units in a KK live broadcast room, which was a quarter of Rudai's total channel sales during the 618 period.

Among them, three products have become hit items with a GMV of one million. In July last year, a sofa that was first popularized by a KK sold more than 6 million units during this year's 618 shopping event.

▲Image source: Xiaohongshu

There are many buyers like KK on Xiaohongshu. Although they don’t have many fans, they are not only content creators with high productivity, but also bloggers with the ability to bring goods. They are also buyers who know how to select good products, and use their own experience and aesthetics to influence a group of consumers with the same values.

Although fashion buyer @合合噠 has less than 180,000 fans, she has achieved sales of 13 million in a single broadcast. As a blogger from Yunnan, she started live broadcasting when she had 100,000 fans, talking about local Yunnan brands she was familiar with and versatile clothing that she repurchased for many years. In the first live broadcast, she achieved sales of 2 million.

In her recent public sharing, she believes that the product must first be consistent with one’s own cognition and understanding of the product itself, followed by the after-sales and experience during one’s use.

In addition to explaining their direct value in the live broadcast room, we also hope to convey their value in our lives, how to wear them, how to use them, how to match them, and even other values ​​that will extend into future life.

▲Photo source: Xiaohongshu New Mom @西红柿罐头ChloMato

She has about 150,000 fans on Xiaohongshu, but she started live streaming when she only had 50,000 fans. In July 2023, she sold goods through live streaming for the first time, which exceeded one million GMV, and in just three months, she jumped to 5 million. After becoming a mother, she not only shared her experience, joy and pitfalls of raising children with everyone, but also recommended her carefully selected products to new parents who are also breastfeeding young babies.

▲Image source: Xiaohongshu

In addition to Dong Jie and Zhang Xiaohui, such a large number of low-fan buyers constitute the foundation of Xiaohongshu's business ecology and also promote the improvement of Xiaohongshu's overall business value.

At the Xiaohongshu 618 media exchange meeting on June 12, Xiaohongshu's e-commerce director Gintoki released a set of interim data: as of June 10, the number of buyers on Xiaohongshu exceeding one million in a single session was three times that of the same period last year, and the number of buyers whose GMV growth exceeded 100% was 2.8 times that of the same period last year.

3. Why is the buyer model rising?

In the above article, we mentioned that every change in the e-commerce model is supported by a more profound change in the social environment. In the 1.0 era of e-commerce, the popularization of the Internet brought dividends from the PC era, and a large number of B2C and C2C e-commerce platforms emerged.

However, as competition intensified, differentiated and more segmented e-commerce companies joined the competition in the second half; in the e-commerce 2.0 era, the emergence of mobile Internet brought dividends from mobile traffic, and e-commerce platforms began to develop mobile versions.

But in the second half of the traffic, mobile social software represented by WeChat brought real changes to e-commerce. Pinduoduo, which "cut the market", rose rapidly by leveraging social links. In the e-commerce 3.0 era, the Internet penetration rate has almost reached its peak, and with the participation of all the people, content began to explode.

Live streaming has become a new way to connect content and e-commerce, creating a new way of commercialization.

However, in the past two years, we have seen two signals: one is that it is becoming increasingly difficult for hawking-style anchors to sell goods, while anchors/buyers with distinct values ​​such as Dong Yuhui and Zhang Xiaohui are becoming more and more popular; the other is that bloggers with low followers on Xiaohongshu can also generate large GMV.

This means that the integration of content and e-commerce is further improving, and consumers' requirements for live streaming e-commerce are also changing, pushing live streaming e-commerce into the second half.

Specifically, when we understand retail, "people, goods, and places" are three very important elements. In the e-commerce era, people are placed at the core, and the goods-place-people/place-goods-people are beginning to change to people, goods, and places. Regarding people, the most significant change in the past two years is the continued increase in the impact of content on consumer behavior.

The hit TV series "My Altay" has once again aroused consumers' imagination of distant places, making the tourism popularity in Altay, Xinjiang even higher than that during the May Day holiday; Lelecha's crazy state has made the "One Punch" milk tea popular outside the circle.

On the other hand, unlike the previous generation of consumers, aesthetics and values ​​have become important factors in the decision-making of young consumers. In this case, brands will face increasingly segmented and diversified demands from consumers.

Fierce competition in China has forced the supply chain to mature, and flexible manufacturing has made it easier for the supply of "goods" to meet the personalized needs of consumers. With both people and goods changing, how the "market" can provide higher matching efficiency has become a key issue at present. In the "buyer model" of Xiaohongshu, individuals create purchase scenarios through their product selection, service and aesthetics.

Unlike previous live broadcasts, Xiaohongshu's buyers create a more profound field, compressing their life experiences, values, and aesthetics into the content. They themselves are a field with richer and more comprehensive information elements, rather than simply big brands + low prices. Under the buyer model, consumers are looking for more than just the satisfaction of functional needs.

In the comment section of home buyer @一颗KK, we saw some conversations like this: fans took photos of their own homes to ask KK for advice, and KK also gave some suggestions on style, color, and items from a professional perspective.

In such an environment, buyers and consumers are no longer just in a buying and selling relationship, but more like friends with the same aesthetic tastes, working together to create their own lives.

Therefore, in the era of live streaming e-commerce, top anchors improve the matching efficiency of people and goods through their traffic appeal. However, faced with consumers' increasingly personalized demands and the intervention of emotional purchasing factors, the previous live streaming model has gradually failed.

In the second half of live streaming e-commerce, Xiaohongshu's buyer model, through the buyers' product selection and expression, achieved more efficient matching and became the new version of the answer.

4. What is the value of the buyer model?

From the perspective of brands, the emergence of the buyer model has brought about three changes: First, products have returned to branding. In the past live broadcasts by top anchors, the value of brands was greatly compressed, and low prices became the only weapon in the live broadcast room.

Top anchors compete for the lowest price, and it is not uncommon for brands to undercut prices. In exchange for sales, many brands have to give up their brand premiums and compete with low prices. However, in the buyer model, the value of the brand can be more fully expressed.

Especially for many niche brands and highly sensitive brands, although they are not as well-known as big brands, they often have unique design concepts, which is also the source of their unique competitiveness. For example, Grado, a local design brand in Hangzhou, focuses on product design itself, hoping to provide domestic consumers with more furniture with a sense of design and affordability.

This year, Gedu and @一颗KK co-created a Chiwu chair. KK not only introduced the design thinking of this chair in detail in his notes and live broadcasts, but also brought the chair to the Milan Design Exhibition with the brand. This chair has been sold in the live broadcast room as soon as it was launched, and the cumulative sales in the live broadcast room of a KK during the 618 period reached 4.26 million.

As the chair became popular, some factories began to copy it. However, after understanding the design concept behind the chair, some consumers not only did not buy these imitations, but also went to KK's notebook to remind her that someone had copied it. Secondly, product research and development is closer to the market.

In the past, product research and development often required a very long and complicated process, from consumer insights to product development to market promotion.

If consumers are not fully understood, the product will often fail. However, in the buyer model, buyers are surrounded by a group of users with similar needs and aesthetics. They can also guide consumers in understanding products and provide a path for brands to develop in the market.

Xiaohongshu buyer @阿里北杯 and Hua Zhixiao launched an in-depth co-creation, and made a very detailed combination formula for different groups of people's concealer needs, which almost took care of all scenes and different skin colors. When doing new product promotion and live broadcast, they also provided a super comprehensive color selection strategy to avoid confusion in foundation categories.

Specifically, according to the concealer needs of different groups of people with yellow skin, white skin, yellow and black skin, 10 concealer and brightening selection formulas are sorted out, such as natural brightening + overall concealer for yellow skin, and brightening + facial color correction for white skin. Her understanding of concealer products has also become an important reference for Hua Zhixiao's iterative products.

After three months of polishing with the brand, the co-branded concealer was launched in the live broadcast room during the 618 period this year. The new product broke the circle as soon as it went on sale, with more than 40,000 units sold.

Finally, the brand was able to free itself from a single, hyper-head relationship.

In the past live broadcasts, brands were often the weaker party in the face of the top anchors. In order to win the slots, many brands had to pay huge slot fees to the anchors. In the buyer model, when the GMV of a single game is no longer the only goal of the brand in live e-commerce, the return rate, repurchase rate, and interactivity have become important factors for the brand's sustainable operation. In this process, low-fan bloggers and brands have a symbiotic relationship and create higher value together.

Conclusion

"Everyone who loves life can become a buyer for Xiaohongshu." This is one of the definitions of buyers given by Xiaohongshu COO in August last year. From a personal perspective, the buyer model of Xiaohongshu does give all ordinary people an opportunity to create a new career for themselves.

But from the perspective of the industry, it is more than that. As our consumption moves from incremental to stock, it becomes increasingly difficult to find traffic depressions. Brands have to face increasingly personalized demands and increasingly fierce market competition.

What brands can do is often to focus on "people" and make good products based on user needs. What Xiaohongshu does is to provide a more efficient matching method in this personalized competitive market.

From a future perspective, perhaps those low-fan buyers who have their own passions and aesthetics may become the foundation of live e-commerce, while leveraging high transactions and bringing healthier development to the brand.