Live e-commerce "kills" 618

Under the general trend of the integration of content e-commerce and shelf e-commerce, the iconic e-commerce promotion festival will become increasingly normalized, and "618" will eventually become a thing of the past. This article interprets the situation of this year's 618 by analyzing the competition between platforms and the support policies for merchants. Let's take a look.

At the beginning of 2023, all topics surrounding consumption are changing. Tourism is changing, from global travel to rural day trips; catering is changing, from light meals to pre-prepared meals; consumers are changing, the middle class has tightened their wallets, but the "new poor economy" is rising; live broadcast e-commerce is also changing, the anchors have experienced several rounds of major reshuffles, and only a few of the once glorious ones are left, while the unknown ones are now making money.

Such turmoil broke out around June 18th.

As for the promotion itself, 618 in 2015 has also reached a critical point. Whether it is the changes in the external macro-consumption environment or the development cycle of the industry itself, in 2023, the world is no longer the same, and the promotion is no longer the same as it was back then.

"In the past few years, it feels like the popularity of 618 has been decreasing year by year. No one discusses this topic in the merchant group."

"The official has been calling on merchants in the group to participate in 618, but basically no one responded. It's very quiet."

618 is becoming less and less popular, and the first big promotion after it can hardly arouse the long-dormant passion of merchants.

Even though the e-commerce platforms are still having fun and made bold statements before and after 618, saying that this will be the most exciting 618 yet, it still seems to have failed to make a splash.

Dai Shan, CEO of Taotian Group, announced that this will be "the 618 with the largest investment in history"; Xin Lijun, CEO of JD Retail, shouted that "this year's JD 618 has the largest investment in the entire industry"; Douyin and Kuaishou e-commerce have also launched unprecedented huge subsidies.

On one hand, merchants are pessimistic, while on the other hand, platforms are celebrating themselves. In fact, the platforms are celebrating themselves because they feel that merchants' enthusiasm for the promotion is gradually fading, so they are trying their best to touch the nerves of merchants. The root cause is that consumers have become numb to the e-commerce festival promotion. If users don't buy it, merchants will naturally not be enthusiastic.

Three years ago, live streaming e-commerce became popular. In the early days, it relied on traffic dividends and content information gaps, and price and gifts were the magic weapon to win. This new business model gradually replaced traditional shelf e-commerce and became the protagonist of the "618" promotion.

The data of daily sales of hundreds of billions in the live broadcast rooms of super anchors has refreshed the market's new perception. The entry of stars and celebrities has pushed live e-commerce to a climax. Not only during the 618, "every day in the live broadcast room is 618" has been deeply rooted in people's hearts.

After experiencing explosive growth, live streaming e-commerce quickly entered a period of elimination. Super anchors gradually retreated behind the scenes, store broadcasts emerged, and the industry became more mature, ending the wild growth era of live streaming e-commerce, and shifted from competing on low prices to competing on content, products and services.

Entering the "post-live streaming e-commerce" era, the old ways of traditional e-commerce are on the verge of collapse, and a new order is being rebuilt.

1. Platforms are fighting, and live broadcast rooms are "crazy about low prices"

This year's 618 is recognized as the most active one for the platform. During the promotion, Taobao Tmall listed short videos and live broadcasts as key tracks, saying that they would promote comprehensive content with far more investment than in the past. In Taobao Mobile, "Taobao Live" was also placed in the C position, alongside Taobao Good Prices and Taobao Shopping. Taobao Live has made an indelible contribution to driving the growth of Taobao data.

▲Image source: Taobao APP screenshot

As early as 2015, mobile Internet traffic began to slow down, and Taobao, which has 400 million active buyers, began to see a decline in traffic growth. After Taobao officially launched its content strategy at the end of that year, it proposed a shift from traditional shelf e-commerce to one that caters to each individual customer. Taobao Live was officially launched, and four months later, it welcomed two super anchors, Viya and Li Jiaqi.

Wei Ya and Li Jiaqi created the myth of live streaming sales and were crowned with the titles of "No. 1 Live Streaming Host" and "No. 1 Live Streaming Host". In 2021's 618, the two topped the sales rankings with GMV of 5.9 billion yuan and 5.4 billion yuan respectively.

Livestreaming anchors have made great contributions to the rapid development of livestreaming e-commerce in the past three years. As the "field" linking "people" and "goods", professional livestreaming anchors and livestreaming rooms have built a new shopping scene and experience for consumers. Relying on platform data and traffic to find target users, actively reaching them through content, and bringing a new shopping experience that is more interactive and timely, the entire e-commerce ecosystem has shifted from the traditional "people looking for goods" to the more proactive "goods looking for people".

After Li Jiaqi and Wei Ya, Douyin and Kuaishou have gradually cultivated their own representative top anchors, Luo Yonghao and Simba. Luo Yonghao's first broadcast on Douyin brought 110 million yuan of goods, and Simba's single broadcast brought more than 2 billion yuan of goods. In the circle, they are known as the "Four Heavenly Kings of Live Broadcasting Sales".

The influence of top-tier anchors on the platform is obvious. The big anchors control huge traffic, and the platform needs to cultivate top-tier anchors. Under the leadership of Wei Ya and Li Jiaqi, the live streaming e-commerce industry was once dominated by Taobao.

Big anchors have too much say, which is not a good thing for platforms or merchants. For merchants, they pay high fees but get little in return.

Top streamers also have certain side effects on the platform. Once the streamer fails to sell goods, the platform cannot escape the blame. In the years of wild growth, the top streamers have never escaped this disaster. Simba was suspected of selling "fake bird's nests" in the live broadcast room and was fined 900,000 yuan. The live broadcast room was once blocked; Luo Yonghao's live broadcast room also frequently failed, and he once revealed that he sold fake wool sweaters; Wei Ya and Li Jiaqi need not say more. Wei Ya was written into the blacklist of bad artists for tax evasion of 1.3 billion yuan. Li Jiaqi hastily stopped broadcasting for nearly 4 months due to a sudden "backstage technical failure" on June 18 last year.

After losing two top anchors, the live streaming e-commerce world has changed in 2022, from a monopoly to a competition among multiple companies, and the status of top anchors has gradually declined. This year, we have witnessed the four kings of live streaming e-commerce lining up to "quit the Internet", a wave of celebrity anchors leaving the stage with or without dignity, and the supply chain ecosystem becoming increasingly mature.

The era of competing for the "lowest price on the Internet" in live broadcast rooms has long passed. Since last year, most anchors have been very secretive about the words "lowest price on the Internet". One trend is that it is not so cost-effective to buy things in official or big anchor live broadcast rooms. For example, the price discounts are not big, and more and more samples are given away. A more obvious trend is that even in e-commerce promotions such as 618, the price advantage is not obvious.

The Li Jiaqi 618 price comparison table posted by a blogger on Xiaohongshu sorted out the prices of many skin care products, and said, "It's not as cost-effective as last year."

▲Photo source: Xiaohongshu blogger

The content forms of live broadcasts and short videos represented by Douyin have normalized the discount consumption scene, which has greatly diluted and diluted the entire 618 promotion scene. "For consumers, the difference between buying on weekdays and buying during the 618 period is getting smaller and smaller," said Zhao Xin, COO of Chanmama.

Competing on low prices has become a thing of the past, and the pursuit of higher-quality content has become the main theme of live streaming e-commerce. Oriental Selection, which uses "cultural people" to bring products to the market, has replaced Make Friends and become the new top streamer on Douyin. Xiaohongshu has also figured out a "grass-planting" way of bringing products, and has made Dong Jie and Veronica Yip famous.

After a wave of changes subsided, the top anchors gradually faded out, competition among small and medium-sized anchors intensified, and live broadcast organizations also turned their attention back to the supply chain and their own brands.

The platform has also begun to realize that returning to the logic of live e-commerce business, introducing more brand merchants and building an e-commerce closed loop within the site are the core essentials. Since last year, Douyin, which has been working hard to build an e-commerce closed loop, has poached a number of brand merchants from the big brother Taobao ecosystem.

Some "Taobao brands" that have escaped from the Taobao system have also found new growth in the Douyin ecosystem. According to the 2022 financial report of Winona's parent company Beitanni, the proportion of Douyin's main business revenue increased from 5.75% last year to 8.59%. In comparison, Taobao still contributed nearly half of its revenue, but the proportion of its main business was also changing, from 45.36% last year to 41.23%.

▲Photo source: Winona’s parent company Beitanni’s 2022 financial report

Brands are "leaving Taobao and entering Douyin", and the overall refined operation is the general trend. "However, Taobao is still the first choice for most big brands, but Douyin may be the first choice for small brands. In terms of importance, Douyin should be the first priority for all consumer categories." Zhao Xin said.

Currently, for new brands, the chances of becoming a hit on Douyin are much higher than on Taobao, and more and more brands are starting to "leave Taobao and enter Douyin". Douyin e-commerce, which is only three years old, has become a major threat to Taobao.

"Now the position of brand operation has shifted. The new platform has more opportunities for players. In the traditional e-commerce field, they can't compete with the players at all. It's like changing lanes to overtake." Zhao Xin explained to "Self Quadrant" by giving an example, "For brands, the growth in recent years really depends on Douyin. A brand whose performance on Taobao has been declining for 36 consecutive months spent 20 million on Douyin and miraculously achieved a rebound, which shows that Douyin does have a certain potential energy."

In the Douyin e-commerce ecosystem, a formula for "explosive products" has been created, which uses the live broadcast rooms of experts, KOCs, and celebrities to increase voice, and uses marketing activities to further expand influence, and finally brings traffic back to the store live broadcast rooms and shelves, forming a complete closed loop.

In the field of e-commerce, a trillion GMV scale means that it has obtained a ticket to compete with the top e-commerce platforms. It took Douyin three years to join the trillion GMV club. According to multiple sources, Douyin's e-commerce GMV last year was close to 1.5 trillion, a year-on-year increase of more than 70%. Wei Wenwen, president of Douyin's e-commerce, revealed at the Douyin E-commerce Ecological Conference held in May that Douyin's e-commerce GMV increased by more than 80% in the past year. Among them, the mall GMV increased by 277% year-on-year, the e-commerce search GMV increased by 159% year-on-year, and the shelf scene GMV accounted for more than 30% of the platform GMV.

It took JD.com 13 years, Taobao 10 years, Pinduoduo four years to grow its GMV from 0 to a trillion scale, and Kuaishou reached the trillion scale at the beginning of the fourth year. At the Kuaishou E-commerce Gravity Conference held recently, Kuaishou CEO Cheng Yixiao revealed that Kuaishou's e-commerce GMV has officially entered the trillion scale stage.

In essence, e-commerce is still a business that values ​​traffic, and greater potential energy is biased towards places with more traffic and users. In the process of rapid rise, the rise of live streaming e-commerce has broken the old order of traditional e-commerce.

In previous years, the 618 promotion was an important marketing node for platforms and brand merchants. However, as live streaming e-commerce has become the mainstream content ecosystem, traditional e-commerce has had to make up for its content shortcomings, and the "big promotion" has gradually been washed out in the shuffle.

In the current e-commerce ecosystem, the big promotion has been split up. The illusion of "every day is 618" is that you can buy things at a price better than the 618 big promotion when you enter the live broadcast room of a big anchor. " said Zhong Weiping, founder of Beishi Jewelry.

2. Platforms are happy with themselves, while small and medium-sized businesses smile bitterly

"The platforms are becoming less and less sincere." More than one senior e-commerce practitioner said that in recent years, the support provided by various platforms to merchants has changed from spending real money to formalism.

For most merchants, the big sales in 2015 have turned young girls into "housewives" and are losing their appeal.

"The 618 promotion has changed and turned into an endless war among platforms to compete for users and traffic. Under the impact of live-streaming e-commerce, various platforms have exhausted their promotional methods and can only return to the simplest 'low-price war' to tap into new data increments in the existing market."

Looking at this year's 618, the platform's support policies for merchants mainly focused on traffic subsidies and fee reductions.

Competing on low prices and supporting small and medium-sized businesses are the main themes of the platforms’ “promotions”, but if you look at their essence, you will find that behind the smiling faces is actually a “cold knife”.

At the Taobao Tmall 618 Merchant Conference, Taotian Group announced that it would launch the first small and medium-sized merchant marketing IP "Taobao Good Price Festival" during 618, and start the "Small and Medium-sized Merchant Star-making Plan" from the business link, starting from the business link, providing small and medium-sized merchants with a number of services such as free deposit to open a store, free business tools, and free door-to-door order pickup, further lowering the entry threshold for small and medium-sized merchants.

Alibaba Vice President and General Manager of C2M Business Unit Qi Gong said at the Taobao Tmall 618 Merchant Conference that "as long as you have a good price, this will become the place for the most popular products."

The user's perception is that within the Taobao mobile site, the most core position within the site is reserved for small and medium-sized businesses, and the "Taobao Good Prices" channel located in the center of the Taobao homepage serves as a long-term entrance and will continue to occupy the C position for a long time after 618.

At the third Douyin e-commerce ecological conference, Douyin e-commerce released four major support measures. On the one hand, it launched a commission-free product card activity to reduce the operating costs of small and medium-sized businesses; on the other hand, it launched the "0 yuan entry" rights to alleviate the financial pressure of small and medium-sized businesses.

At the beginning of the year, JD launched the "Spring Dawn Plan" to support more individuals, self-employed individuals, factories and other specialty merchants to open stores on JD.com, and to introduce white-label and branded merchants selling low-priced goods on a long-term basis to enrich the supply of low-priced products. In order to attract merchants to settle in, JD.com cancelled the platform usage fee for JD.com stores, and the technical service fee rate for about 60% of the merchants in the categories was as low as 0%, and the deposit of some merchants in some categories was reduced by 80%.

At the 2023 Kuaishou E-commerce Gravity Conference, Kuaishou CEO Cheng Yixiao proposed Kuaishou’s three major directions in the future, and “good products at low prices” is one of them.

For small and medium-sized businesses, the original intention of participating in 618 is to take advantage of the platform's benefits. However, judging from the actual subsidy effect, whether they can take advantage of the benefits remains a question mark.

For merchants, the challenges of participating in the 618 promotion are becoming greater, especially for small and medium-sized merchants. During the promotion period, it is difficult to obtain preferential traffic in terms of content effects and advertising strategies.

"The cost of acquiring customers has become extremely high, so participating in the 618 promotion is not that meaningful. But for the leading brands, the timing of the 618 promotion must be focused on, regardless of the cost, just to make a name for themselves." Zhao Xin analyzed, "For the current Douyin e-commerce, small and medium-sized businesses are still important. But at present, the participation of small and medium-sized businesses is not high. Overall, the 618 promotion is still played by the platform and the big brands."

Zhong Weiping told Zi Quadrant, "Big brands are reaping the benefits on various platforms, but for small brands like us, there are still fewer opportunities, so we can only persist in slowly accumulating and building the brand."

The original intention of the platform was to help merchants attract traffic by providing them with traffic support packages, but the reality is that during the promotion period, the core traffic is held by the top brands, and the living space of small and medium-sized merchants is severely squeezed. They spend more money to purchase traffic, but in the end the sales are not ideal.

"Although the platform has been loudly promoting its support for small and medium-sized businesses, it is actually not very stimulating. For many small and medium-sized businesses, the effect and significance of participating in such a big promotion are not great," said Zhao Xin.

It is no longer a new thing that small and medium-sized businesses are trapped in the 618. Small and medium-sized businesses have also begun to return to their essence, paying more attention to conversion and no longer participating blindly.

Zhong Weiping, who uses video accounts as his main channel, said that he has already given up on the 618 promotion. "The current economic environment is not very good, the input-output ratio may not be ideal, and we are not willing to compete for sales by offering low prices."

The 618 and Double Eleven promotion nodes are the most favorable to merchants in terms of policies among all the festivals throughout the year, but the requirements are also correspondingly higher. The more people participate, the more intense the competition for traffic will be, and the traffic will also rise. "This is the so-called "the wool comes from the sheep." Wenwen, a white-label merchant in the home furnishing category of Kuaishou e-commerce, told "Self Quadrant".

For many businesses, one obvious feeling is that the consumer market has started to decline since the end of March this year. Zhong Weiping said, "I am a very optimistic person, but I have become a little pessimistic since the beginning of this year. Sales in April dropped by half."

The overall environment is one aspect, and the sudden tightening of platform policies is another. Wenwen also feels the crisis. This year's GMV plan for 618 is half of last year's. "In fact, there is a budget, but we dare not invest. The big promotion started at the end of May, and the volume has dropped sharply in the past few days. It was all taken away by big anchors."

It is understood that Kuaishou's support for merchants is divided into two parts, one is traffic support, and the other is rebates, with GMV increment as the reference standard, and the highest commission can be 40 points. Kuaishou's support for merchants this year is indeed greater than last year, but overall, the performance is not as good as last year. This year, Kuaishou has raised the threshold for small and medium-sized merchants to attract investment.

"Last year, if you wanted to open a store on Kuaishou, you only needed a simple business license and qualifications to open one, but this year the requirements are higher. For example, the after-sales service of the product will be evaluated. If there are after-sales problems, the payment will be frozen." Wenwen further explained that starting from March this year, Kuaishou e-commerce introduced a rule of permanently banning accounts. If the store is blocked, you need to pay a fine to withdraw the payment in the account. "If you don't pay the fine, you can't withdraw the payment and deposit. The deposit for opening the store is 30,000 yuan, and the fine is 20,000 yuan, so you can only withdraw 10,000 yuan."

At present, the most serious punishment that Kuaishou e-commerce takes against merchants is to cancel orders directly. According to the standard of consumer praise rate, if consumers mention some relatively negative comments about a certain category in their comments, the platform will remove the product from the shelves. Once it is assessed as removed from the shelves, the relevant payment will be automatically returned to the consumer. Wenwen encountered such a problem because a product was removed from the platform and the money was directly returned to the consumer, and she lost 1.13 million in one second.

"We have another 2 million frozen by the Kuaishou platform because the category was identified as a risky merchant by the system and the platform needs to intervene in collaborative governance." Wenwen told "Self Quadrant", "It is becoming increasingly unsafe to put money in Kuaishou."

Another Kuaishou white-label merchant also said that in his opinion, for Kuaishou, although it supports small and medium-sized merchants on the surface, it is actually competing for big brands. During the 618 period, Kuaishou provided platform subsidies of up to 15% to some big-name products, which is higher than Taobao and JD.com.

The trend of platforms encouraging and suppressing small and medium-sized businesses has led to their low enthusiasm for participating in this year's 618.

3. 618 will eventually become a thing of the past

Today's 618 is more like the platform working hard to attract traffic, which is too dull for consumers and merchants.

The platform said that 618 was the most competitive year, but in fact it was a competition for traffic between platforms. Traditional e-commerce platforms and live streaming e-commerce platforms tested each other and attacked each other's hinterland. The traditional e-commerce platform "Mao Gou Pin" offered the lowest price on the entire network while making up for the shortcomings in content; the live streaming e-commerce platform "Dou Kuai Shi Xiao" worked hard to improve the e-commerce closed loop.

New and old e-commerce platforms are connecting with each other. Judging from the most popular anchor resources in live e-commerce, the dimensional walls between platforms are being broken.

Luo Yonghao, once the top influencer on Douyin, took the app "Make Friends" to "make friends everywhere". After entering Diantao last year, he officially entered the JD platform during the 618 shopping event this year. Data showed that the total sales of Luo Yonghao's "Make Friends" live broadcast room exceeded 150 million yuan that night, with a total of more than 17 million visitors.

▲Photo source: Screenshot of JD.com’s official Weibo

Last year, Qianxun's big anchor "Qi Er" also joined Douyin e-commerce. Douyin e-commerce big anchors "left Douyin and joined Taobao". Since last year's Double 11, many Douyin super anchors and top MCNs such as Luo Yonghao, Yu Minhong, Liu Genghong, and Crazy Xiao Yangge have switched to Taobao. In response, Douyin e-commerce vice president Mu Qing responded, "The Internet is a very open market. In an interconnected environment, we view this situation with a normal mind."

Douyin, which is positioned as a "global interest e-commerce", is becoming more and more like Taobao. In Douyin, the "mall" function marked with the words "618" is placed at the first-level traffic entrance, alongside videos and live broadcasts.

In November last year, Video Account officially began to build an e-commerce closed loop, cutting off external links to third-party service agencies such as Weimeng, Aiguang, and Weidian, and locking traffic and transactions in Video Account stores and mini-programs. The grass-growing platform Xiaohongshu also actively participated in the 618 promotion this year, launching the "Xiaohong Car" before 618, and promoting its own "top seller" Dong Jie. The number of fans increased by 500,000 in two live broadcasts, and the highest GMV exceeded 30 million, innovating the "grass-growing live broadcast with goods" style.

Compared with Douyin and Kuaishou, which have already reached a GMV scale of trillions, Video Account and Xiaohongshu are new forces in live streaming e-commerce.

Zhong Weiping, who was invited to open "Xiaohongche" before the big sale, mentioned, "I am optimistic about Xiaohongshu's e-commerce closed loop. More than 80% of Xiaohongshu's audience are young women, who are more friendly to jewelry and clothing categories." But he also has some concerns, "Although these elite women have strong spending power, they mainly consume big brands."

In Zhong Weiping's opinion, the users of video account e-commerce are more valuable. The user group of video account is older, the average order value is higher, and more importantly, the return rate is much lower than other platforms. "This is also because the video account e-commerce ecosystem is not yet perfect. Many users cannot find the return interface and can only solve it through customer service, which ends up in vain."

However, in the view of Ruo Yuchen, a leading e-commerce service provider, the big promotion mentality represented by "618" still exists.

"The allocation of resources mainly depends on the brand's development stage and the overall brand promotion rhythm, which vary from brand to brand and category to category. As consumption becomes more rational, the brand's daily sales are becoming more and more important."

Ruo Yuchen gave an example to "Zi Quadrant" to explain that according to the data on the first day of Tmall 618, all sub-categories of beauty and personal care products are on a growth trend, among which beauty and body care equipment grew by 173%, and beauty skin care/body care/essential oils grew by 157%. "

A new trend is that the rise of live streaming is an inevitable product of the development of the Internet era. Traffic fragmentation has become a trend, and brand growth can no longer be separated from a single channel to set goals and plans. More and more brands are choosing multi-channel linkage and comprehensive layout, from planting grass, building consumer minds, user asset accumulation and user life cycle management.

Under the general trend of the integration of content e-commerce and shelf e-commerce, the iconic e-commerce promotion festivals will become increasingly normalized, and "618" will eventually become a thing of the past.

Author: Loli, Editor: Cheng Xinxiaodou

Source public account: Zixiangxian (ID: zixiangxian), between the squares, there is a quadrant. Care about science and technology, economy, humanities, and life.