Crazy Xiao Yangge plans to expand into TikTok. Has the domestic live streaming e-commerce dividend peaked and is seeking to expand overseas?

Introduction: The overseas expansion of MCN organizations has been a hot topic recently. The stable development of the overseas Tik Tok e-commerce platform has also brought unlimited business opportunities to everyone. What is the overall significance of Xiao Yangge's overseas expansion? Can we seize the opportunity to gain the upper hand? The author briefly describes the current situation and hopes to give you some ideas.

Recently, "Crazy Xiao Yang Ge" opened a live broadcast base in Hangzhou Bodi Center. Xiao Yang Ge responded to the opening of a Hangzhou branch in the live broadcast: "We will change our name to Three Sheep Holding Group in July to earn money from foreigners, because TikTok will also have e-commerce behind it. The purpose of entering Hangzhou is to integrate better resources and introduce products, brands, talents and other resources to our hometown Anhui."

In fact, Xiao Yangge is not an isolated case in going overseas to develop TikTok. On the contrary, as early as last year, the company Jiao Ge Pengyou co-founded by Luo Yonghao had already begun to develop TikTok's overseas e-commerce training business. Of course, going further, many large MCN agencies and Internet celebrities seem to have almost tried to develop TikTok, and seem to be determined to go overseas.

If you think about it, it seems quite simple. As Douyin gradually grows into a huge giant in China, thousands of MCNs, Internet celebrities and brands have entered this narrow space. Moreover, in many interviews in the past, many interviewees have proposed a similar concept of Morketing. The growth of short videos in China has almost reached its limit.

So going overseas seems to have become a natural choice, but is the growth of an ecosystem really such a simple thing?

01 The overseas e-commerce ecosystem is gradually improving, and potential traffic opportunities are there

The first stop for the growth of the internet celebrity ecosystem is naturally the increasingly prosperous commodity trade.

In fact, whether in the past or now, the income of online video creators is almost inseparable from the development of various commercial trades. Even the subsidies provided by the platforms to creators are almost all from advertising revenue, of which YouTube is a typical example.

Now, the new dividends of this business model seem to be in front of many institutions. In February 2021, Tiktok Shop entered the Indonesian site and started its journey in Southeast Asia. In June of the same year, it opened a UK site and entered the European and American markets. In just one year, Tiktok Shop brought good news: official data showed that Tiktok maintained a rapid momentum of 90% compound monthly growth in cross-border e-commerce performance in the Southeast Asian market throughout 2022. In the same year, Amazon's growth rate was only 9%.

In Southeast Asia, which is closer to China, according to data from the Crawley Index Research Institute, between 2017 and 2022, Southeast Asia's e-commerce GMV grew from US$10.9 billion to US$131 billion, with a compound annual growth rate of 64%. Short videos and live streaming have become a new trend in e-commerce going global.

Combined with TikTok's growth rate overseas and its successful experience in China, it does not seem to be a very difficult task to directly copy the domestic live streaming experience to overseas markets.

What's more, similar cases have already existed. In October 2021, SKINTIFIC launched Tiktok Shop and quickly received a valuation of nearly US$500 million. Data from the third-party platform Tabcut showed that as of November 2022, the total sales of SKINTIFIC's Indonesian store alone exceeded 150 million yuan.

There are many more on the Tiktok Shop seller registration website - Tiglily Bag, the top brand in the women's bag category, increased its followers from 0 to 20,000 in 2 months; 3C electronic product This is Action used private domain traffic to drive public domain, completed ultra-low-priced single product traffic, and increased repurchase rate by 15% within a single month, etc.

As the domestic cross-border e-commerce environment matures, more and more cross-border companies are beginning to emerge, and a large number of logistics and transportation companies are also beginning to move from China to overseas, further expanding their business overseas. According to feedback from many overseas buyers who shop on TikTok, the time it takes to receive various "Made-in-China" products has now been further shortened to 3-4 days. Even in major cities in Southeast Asia such as Jakarta, some products can already be delivered within 48 hours.

Perhaps it is because cross-border e-commerce appeared much earlier than live-streaming e-commerce, or perhaps it is because the domestic dividends have not yet been fully reaped. Compared with the rapid growth and perfection of cross-border e-commerce, the development of live-streaming e-commerce or online celebrities in overseas markets has been much slower. Although TikTok's rapid growth overseas has shocked many people, the perfection of the live-streaming industry is relatively slow.

Most of the MCN companies that have grown up overseas are almost all developed by various big sellers and brands. Many beauty, fashion, and furniture teams have entered this industry after running products for a few years . The reason for this is that the entire MCN industry is relatively chaotic. If it is completely outsourced to a local MCN agency, it is almost normal to waste money.

In fact, such situations were not uncommon even in the early days of domestic live streaming e-commerce. At that time, high return rates, sky-high pit fees, and various types of data falsification were actually common, not to mention the Southeast Asian market thousands of miles away.

So a godsend opportunity tailor-made for MCN agencies seems to be right in front of us.

02 Compared with e-commerce, content ecology is the top priority for MCN

The problem is obvious. In most cases, the growth of the e-commerce industry is naturally accompanied by the rapid growth of short video content. That is, directly copying the overall growth logic of the domestic live e-commerce format, but this path does not seem to be so easy to follow overseas.

Although on the surface, the overall quality of local MCNs is not high, and the overall talent ecology is in a chaotic early stage, it seems to have a natural soil for domestic MCN agencies to move in. It can even be said to some extent that because of their experience in the domestic e-commerce environment and the explosion of live e-commerce, they have accumulated more experience in dealing with current situations and problems.

Entering the overseas e-commerce market at this time can almost be said to be a dimensionality reduction attack.

Unfortunately, the overall ecology of Southeast Asia may not be as simple as imagined.

First of all, the overall revenue is not as high as imagined. Compared with the tens of thousands, hundreds of thousands or even millions of dollars for a single advertisement by domestic Internet celebrities, the advertising quotes in regions such as Southeast Asia are almost terribly low.

According to feedback from many domestic brands going overseas, the cost of a celebrity’s one-on-one video in Southeast Asia is mostly in the 1,000-2,000 yuan price range. As a result, overseas business models are almost all based on the two ideas of low price and large quantity.

Secondly, the emergence of such low-cost videos is essentially a single market space, which is far smaller than the huge Chinese market.

Many practitioners who have gone overseas to the Southeast Asian market have also directly responded in interviews with some media that sometimes investing 500,000 traffic on TikTok can cover the TikTok audience of this category in a country. For many domestic MCN agencies that have gradually become behemoths, this low ceiling may not even be as much as the income generated by a single Internet celebrity.

Finally, the core of MCN's survival is still content, but in Southeast Asia, if you want to create in-depth content that conforms to the local cultural background, it means more investment. The complex cultural styles and complex religious situations among Southeast Asian countries are constantly increasing the cost of such content creation, and the income ceiling is not high enough, which means that even if a huge investment is spent in the early stage, the MCN agency may face the final result of not being able to recover the cost.

So will the European and American markets be a good path?

The answer may not be affirmative. After all, the term MCN is an imported product from Europe and the United States. The overall maturity of MCN agencies in Europe and the United States is much more mature than that in Southeast Asia. The energy invested by Internet celebrities in content creation is not comparable to that of Southeast Asia, which is still in its development stage.

03 TikTok is becoming more standardized, and the era of wild growth is over

Then why are there still so many institutions rushing to overseas markets?

This is probably related to TikTok's achievements in e-commerce in 2022. According to the "TikTok Shop Cross-border E-commerce 2023 Annual Strategy Report" officially released by TikTok. Looking back at TikTok Shop in 2022, although it has experienced twists and turns, it still achieved remarkable results.

Therefore, at the standardization level, we can also see that TikTok is also working with e-commerce distribution SaaS platforms to build a super channel similar to the domestic hot star selection to standardize and sort out the local mixed influencer business. Through SaaS distribution, "goods" and "people" are connected. The system will automatically match goods to the corresponding type of influencers, and at the same time, screen out influencers with higher completion and conversion rates based on data results to standardize the service process.

But compared to standardization, content is a more important issue. As mentioned above, TikTok is essentially still a platform that relies on content to attract users, rather than a full-fledged e-commerce platform. This means that for TikTok, it is almost an imperative option to support a better content ecosystem as much as possible and provide more traffic for those influencers or organizations with more outstanding content.

Furthermore, for TikTok at present, its penetration rate is far from reaching its limit. To a certain extent, only by attracting more users in the future can it bring more advertisements or a second growth curve at other levels.

After all, the early influx of e-commerce into markets such as Indonesia was still essentially about selling goods, and the logic was more like a large number of sellers riding on TikTok's two high-growth trains to meet their own sales targets, ultimately leading to wildly growing GMV.

For TikTok, high-quality content can not only give birth to the e-commerce ecosystem, but also has many other possibilities. After all, the quality and volume of content not only determine the number of users TikTok can target, but also determine whether TikTok can earn more profits in the future, especially the growth of O2O, local life, social networking and other aspects that it is currently trying to achieve in China.

Focusing further on the content level, there are still some benefits for domestic MCN agencies. Just as the viewpoint raised by White Rabbit E-commerce, which just received round B financing, in an interview, Indonesia has the strongest scale effect in general. In terms of breakdown, the population is nearly 300 million, which is a large population in the world. In terms of infrastructure, the logistics field is as mature as the domestic market, and TikTok itself has good logistics subsidies. At present, the cost of acquiring customers in Indonesia is relatively low, about 40% of that in China. "Everything is ready, only the content is missing, and content happens to be what we are good at."

In Europe and the United States, in fact, most MCN agencies in the past may also have some opportunities. When talking about this issue, an industry practitioner told Morketing: "Most MCNs in Europe and the United States are built around long video platforms such as YouTube. They also need some time to adapt to the ecology of short video platforms. In addition, in terms of content e-commerce, domestic MCN agencies may be more experienced than them."

04 Conclusion

From this perspective, the current overseas expansion of domestic MCN agencies is more of an early layout than a wave.

After all, the huge differences in culture, ecology and habits also require local companies to spend a long time to understand and integrate into the local environment. At the same time, if the content wants to attract the preferences of local young people, localization may be the first hurdle that all institutions and brands have to overcome.

Author: Innocent Roland

Source: WeChat public account "Morketing"