Video accounts have changed: Who makes money? Who gets hurt?

As a live e-commerce platform embedded in WeChat, Video Account focuses on relationship chains and private domain traffic. Compared with platforms such as Douyin, Kuaishou and Taobao, Video Account has a wider user base, including middle-aged and elderly people and new users not covered by other platforms. This article details the development of Video Account and its e-commerce potential, which you can learn more about.

When returning home for the Spring Festival this year, Jessie deeply felt the penetration of video accounts among middle-aged and elderly people in second- and third-tier cities.

Because their phones have limited memory, they don’t download Douyin, Kuaishou, or Xiaohongshu, but they will take videos of each other “getting together” at the dinner table, upload them to the video account, and send them to the family group to click on each other’s hearts. When relatives meet, they will also discuss what jokes they have seen recently on the video account, which are very similar to what happened in someone’s family.

To some extent, these middle-aged and elderly fans on the video account are similar to Dong Yuhui’s “mother-in-law fans.” Because they have money and free time, and have a high degree of trust in influencers, they support a kind of “spectacle” on the video account: users cannot see the number of fans of influencers, and the number of red hearts in the video is not over 10,000, but during the promotion period, the GMV of a single influencer can reach tens of millions of yuan.

Compared with when the video account was first opened for internal testing in 2020, the current video account has grown into a complete e-commerce platform: it has launched the live streaming sales function and the video account store (product showcase); it has incubated native influencers, but has not concentrated traffic too much on top influencers; it has opened more public domain entrances (such as Look, Search, Ask, and Subscription Account Message Bar), and set up commercial traffic tools.

According to reports from multiple media, the GMV of video account e-commerce in 2023 is about 300 billion yuan, the GMV of Douyin e-commerce in the same period is more than 2 trillion yuan, and the GMV of Kuaishou e-commerce in the first three quarters of 2023 is 780.5 billion yuan. According to data from WeChat Open Class, the GMV of video account e-commerce in 2023 increased by 3 times year-on-year, and the number of orders increased by 244% year-on-year. No wonder Ma Huateng repeatedly emphasized that video account is "the hope of the whole Tencent". Some practitioners analyzed that compared with other platforms that started earlier, video account still has a gap, but compared with itself, it has made great progress.

In many merchant groups, there are discussions like this: Traffic on other live e-commerce platforms is becoming more and more expensive, and users have been "washed" too many times. Video accounts are seen as platforms where novices still have opportunities. "No matter what the final result of Video Accounts is, the current bonus period is visible," said one merchant.
Video accounts, which rely on the WeChat ecosystem to do business, have not been running fast, but have quietly completed their transformation. The focus of merchants and influencers has also changed from "whether to do it" to "how to do it". Can you really make money on video accounts? What changes have taken place in its traffic mechanism? When video accounts start running at full speed, which platform will be the most hurt? This article attempts to discuss these issues.

1. Who is making money from video accounts?

Looking back at 2020, most of the influencers on Video Accounts were traffic-seeking people who promoted popular content and attracted handsome men and beautiful women, or technical people who were good at popularizing knowledge and design aesthetics. Many of them were not entrepreneurs native to Video Accounts, and user stratification was also very obvious.

But by 2024, there have been native influencers on video accounts, such as Guo Yiyi, stylist Qiao Jiaozhu, Bao Ge and Bao Sao couple, Yan Jun couple, Shunzi Talking about Tea, Xiao Li Feidao-Li Yang, etc. However, the current video account influencer world is still changing, and the ranking of the top influencers is not stable enough.

Top 5 best sellers in the industry from March 4th to March 10th

Image source: Baizhun Data

These influencers have a lot in common. Their content is down-to-earth, they show real life, and they set up the image of a good mother-in-law/daughter-in-law/couple. "They often rely on a single hit video to increase their followers by hundreds of thousands. A single video has tens of millions or even hundreds of millions of views. Once they have influence, they can monetize it through big promotions," said Zilu, head of the video account business of Zero One Digital Technology, a private domain digital operation service provider.

Lin Yi, founder of Kaiyan Content Technology, started incubating influencers last year, and she has the same feeling. Currently, video account users prefer to watch content in areas such as family ethics, health and wellness, traditional culture, fitness and dance. These real and original content brings stronger user stickiness. "We have tested that if we change the hot products on other platforms, with the same script and copywriting, and put them on the video account, the effect will be much worse." Lin Yi said that this is because many video account users have not been "washed" by Douyin or Kuaishou.

The style of these influencers is also different from the "lowest price" and "hawking" live broadcasts commonly seen on other platforms. Video account influencers have their own "flat broadcast" techniques: a calmer tone, a more relaxed state, more guidance, less pressure, more talk about product details, less emphasis on low prices.

One detail is that many people have never bought anything on the platform before. In the early days, video brands would jump to the mini program, and the address had to be filled in twice every time an order was placed. Therefore, some anchors would teach users how to buy after talking about the product, such as opening the shopping cart, how to choose the size, how to pay, and how to write the address. It might take 10-15 minutes to talk about one product. Later, the platform opened a product showcase, and the delivery information would be available after filling in the address once, but this habit of talking about products is still retained.

Xing Jia, an investor who studies Video Accounts, is optimistic about its growth potential. "Native influencers have advantages in content and fans." Users may not necessarily buy into influencers who switch from other platforms, and most of the native influencers on Video Accounts lack experience. Once they build mature business teams, the potential of Video Account e-commerce will continue to be activated.

Along with the expert side, the merchant side is also becoming richer.

In the initial stage of video account sales, most of the merchants were top brands invited by the official website, as well as public account players and small and medium-sized merchants with private traffic reserves. By 2023, white-label products with industry belts (white-label products that rely on the development of the industry belt supply chain) and expert distribution (expert sales) have achieved rapid growth on video accounts. Many industry insiders predict that this trend may continue. In 2024, the number of white-label products with industry belts on video accounts will exceed that of brand merchants, and the growth rate of expert distribution will be higher than that of brand self-broadcasting.

The former is because white-label products can help video accounts quickly attract new users and boost the monetization volume of influencers, and are currently developing the fastest. The latter is because brands are limited by the speed of new product launches and profit margins, and their growth rate is not as fast as that of influencer distribution, which currently relies on white-label products to grow.

Zero One Digital Technology has contacts with both brands and white-label companies in the industry. Zilu analyzed that video accounts need good content, good products, and good services, and brands can meet these three points. The government will still provide more support on the brand side. In view of the commercial efficiency and platform tonality of the video account ecosystem, some brands were previously in a wait-and-see state. As the video account continues to develop and mature, it will be supported, and the dividends of other platforms will end. A large number of brands will begin to enter the market in 2024.

On February 19 this year, Video Account launched the hourly ranking of goods sold, and placed shopping at the priority position in the live broadcast interface, increasing the public domain traffic entrance for influencers to sell goods and accelerating commercialization. However, most of the top ten live broadcast rooms are clothing. Some practitioners analyzed that enriching the bilateral supply of influencers, merchants and products is still the main task of Video Account in 2024.

The hourly ranking of products sold on the video account and the live broadcast interface

Next, video accounts also need to further balance the relationship between brands and influencers. Zilu said that brands need influencers to increase the brand's e-commerce presence on video accounts to make up for self-broadcasting, but they don't want to be "coerced" by influencers. Most influencers currently prefer to sell white-label products because they have better conversion rates and higher commissions.

At present, the hottest categories sold on video accounts are shoes, clothing, jewelry, daily necessities, snacks, food, agriculture, rural areas and farmers, knowledge payment, etc. Many industry insiders predict that the categories that will still have dividends in 2024 are tea and wine tonic, green plants and cute pets, etc. "Video accounts are better than other platforms at selling high-profit, non-standard products that require explanation (storytelling)." Xingjia said.

2. In addition to Douyin and Kuaishou, Video Account has taken a third path

When it comes to the current video account, some people always want to compare it with Kuaishou in 2019 and Douyin in 2020. This is not without reason. Kuaishou and Douyin basically started to promote e-commerce business in 2018, and by 2020 they had formed a three-legged tripod with Taobao; Video Account was launched in 2020, started to commercialize in 2022, and is likely to usher in an explosion in 2024.

The opening of the public domain not only allowed Video Account to complete its evolution from 1.0 to 2.0, but also allowed it to officially participate in the war of bringing goods. Some industry insiders even joked that "the rise of Video Account has hurt the most the Kuaishou, which specializes in private domains, and the expensive Douyin."

In the 1.0 era of Video Account, the main focus was on private domain traffic. The traffic logic was to import from the private domain, leverage the public domain, and link the public and private domains. Most of the traffic was in the hands of private domain merchants, and users had not yet developed browsing habits. This resulted in a slow start and inaccurate traffic in the Video Account, whether it was operating short videos or live broadcasts.

By the 2.0 era, the user portrait of the video account has gradually become clearer, public domain traffic has been opened, and online delivery tools have been launched. The transaction speed within the platform has become faster, and a group of merchants without private domain accumulation have emerged on the video account.

According to many merchants, private domain accumulation on video accounts is no longer a must. The most common combination is natural flow + paid flow. Good short videos and live broadcast content will obtain a certain amount of natural traffic, and then attract users through traffic investment, and then use good goods to undertake it, and finally guide repeat purchases through private domains and services.

After the video account is opened to the public, the live broadcast room can also be used for traffic investment, which is mainly divided into two tools. One is WeChat Beans, which reaches users who follow the anchor or watch the live broadcast room, with the purpose of attracting repeat purchases; the other is Tencent ADQ advertising, which is used to tag and attract new users. This year, the video account will connect the two into a "global connection", and the traffic investment strategy of each category is still being optimized.

As competition becomes increasingly fierce, merchants with higher gross profits are more dependent on traffic investment and have lower requirements for ROI. Zilu gave an example, a merchant selling hair dye products, the product gross profit margin is as high as about 70%, ROI reaches about 1:1.2, then it can increase the volume of investment to start scale. However, because brand merchants have to give profit margins to service providers or channel merchants, the space for traffic investment will be compressed, and the ROI may not even reach 1:5-10.

Lin Yi's experience is that when the video account is first launched, there are very few users, but as long as you keep broadcasting steadily for a week, you will see obvious growth in natural traffic. The GMV may be only a thousand yuan a day during the ramp-up period, and even if you put in money at this stage, you won't burn much (consume) it. "No matter which platform, investing in traffic can only play a role of icing on the cake. If you don't build a good people-goods market, paying for it won't have much effect."

However, the threshold for bringing goods through video accounts has been lowered again this year - there is no limit on the number of fans for merchants to bring goods, the steps for opening a store are simple, and the threshold for live streaming for influencers has been adjusted from 1,000 fans to 100 fans. On the contrary, according to merchants, the traffic of Douyin e-commerce is becoming more and more expensive, and the merchants and users of Kuaishou are becoming saturated, which also means that the entry threshold of both is getting higher and higher, which to a certain extent stimulates more merchants who do not want to involute and have limited experience to switch to video accounts.

In addition, some Douyin and Kuaishou brands that had previously developed well have taken a fancy to the users of Video Account and are looking for incremental markets on Video Account.

Lin Yi said that although the scale of video accounts has not yet grown too large, the threshold is low, the gameplay is simple, and the GMV is relatively stable. In Douyin and Kuaishou, if you aim to make a profit, you must be a "hexagonal warrior" and make a comprehensive layout. Most of the merchants who switch to video accounts may have outstanding abilities in one aspect. Although they are "partial students", they can control their own profits.

The mainstream users of video accounts are called "sister fans", and users over 50% are over 50 years old. Many of them have no previous online shopping experience and are not fully penetrated by Kuaishou, Douyin and Taobao. They have high disposable income, ample disposable time, strong spending power and low price sensitivity, which makes them high-quality users for any platform. In addition, Zero One Digital found that since the end of last year, the video account consumer group has begun to show a trend of getting younger.

Lu said that the average customer unit price of video accounts in various industries is about 200 yuan, and the average customer unit price of products in the same category is 1.5-2 times that of Douyin and 2-3 times that of Kuaishou. Some customized products also sell well. In comparison, Xiao Gu, the former head of Kuaishou's e-commerce, once revealed that the customer unit prices of Douyin and Kuaishou were 90 yuan and 50-60 yuan respectively.

Currently, video accounts are accelerating the development of public domain traffic. In January this year, WeChat Ads said that it has supported the promotion of video account live broadcasts in Moments, and users can jump to the video account live broadcast room by clicking on the main material. As Tencent's ecosystem is upgraded from private domain to global domain, merchants may also need to be more "involuted".

3. Video accounts still need to make up for the lessons

Today, Douyin, Kuaishou and Shibao each have their own ecosystem.

Kuaishou is mainly based on big anchors (people) and emphasizes trust e-commerce; Douyin emphasizes interest e-commerce, mainly based on traffic and recommendations. Compared with the number of fans, anchors need more abundant inventory; and Video Account is mainly based on relationship chains, and the future development may be relationship e-commerce.

Among these three forms, Douyin has the highest commercialization efficiency. The distribution of traffic depends on ROI, and the traffic is tilted towards e-commerce; Kuaishou's commercialization efficiency is second. On the one hand, the traffic is in the hands of the top anchors, and on the other hand, the platform traffic is tilted towards content; because the development of Video Account is related to e-commerce, the overall traffic tends to be content, and the traffic investment mechanism needs to be further opened up, and the commercialization efficiency is relatively low.

In order to improve the commercialization efficiency, one of the important actions of video accounts is to open up the public domain. However, it seems that the public domain has not been fully released, which will restrain the development speed of e-commerce and affect the speed of evolution of the commercial investment system, because the investment labels are not segmented and accurate enough.

Therefore, in 2024, Video Account still has homework to do.

Every live streaming e-commerce platform has experienced the process of supply chain from scarcity to abundance, and Video Account is no exception. Lin Yi said that in the product selection center on Video Account, some categories are not yet open, and some can be seen in the Preferred Alliance, but the store ratings are low and they dare not bring goods. Currently, the ones who are doing well on Video Account are manufacturers or brands with their own supply chains, or experts with strong supply chains.

Unlike Kuaishou, Douyin and Taobao, which promoted big anchors in the early stage, Video Account actively weakens the ranking of platform anchors and the role of top anchors. In this case, if some influencers with strong monetization ability and high fan stickiness want to be seen by more merchants, the platform needs to continue to improve the ability of influencer operation and category expansion, and build opportunities for merchants and influencers to match. With the participation of the WeChat payment team in the construction of Video Account at the end of last year, this sector is expected to accelerate improvement.

Like all live e-commerce platforms, when the platform's early management rules were immature, the video account was relatively loose, but in order to improve the overall e-commerce environment, the rules and restrictions on the video account began to tighten. In 2023, a group of categories that relied on live broadcasts to attract low-priced traffic to private domains and harvest at high prices were directly banned or had their entry barriers raised.

A jewelry merchant told Dingjiao that his industry encountered policy changes last year, with the entry threshold for categories raised and restrictions on the number of offline stores and off-site sales for merchants who want to distribute through influencers. The jewelry category is actually very suitable for video accounts, with high customer unit prices and few returns. "The biggest change in video accounts is to see the direction of platform rules. Only by operating in a standardized and long-term manner within the scope allowed by the platform can you make money.

"To some extent, the risk awareness and risk control ecology of Video Account are stricter than other live e-commerce platforms. Video Account is embedded in WeChat, and there are naturally more concerns and shackles in terms of traffic openness, monetization efficiency, and content operation.

However, Video Account is one of the few platforms that still has dividends to be reaped. WeChat is 13 years old this year. Tencent products have a long life cycle and their development speed is not achieved overnight, which also means that Video Account cannot grow fast.

A video account service provider joked that he would tell his customers every year that "video accounts will take off this year." The actual feeling is that the company has gone from losing money in the past few years to making a small profit in 2023. The same may be true for merchants and influencers. If you want to run a video account, you must also be determined to make long-term investments and make steady progress.

At the request of the interviewee, Xingjia is a pseudonym in this article.

Author: Su Qi

WeChat public account: Dingjiaoone