3 trillion market, 500 million users, the live streaming e-commerce industry value chain is in urgent need of development!

All roads lead to Rome. How will the future of the live broadcast e-commerce industry develop? Starting from the origin of the live broadcast e-commerce industry, this article first explains the market development scale of live broadcast e-commerce, and then shows the various forms of live broadcast e-commerce and the development trend of live broadcast e-commerce anchors from multiple perspectives, objectively showing the diversity of the current live broadcast e-commerce industry. It is recommended for people who want to have a deeper understanding of the live broadcast e-commerce industry to read, and I hope it will be helpful to everyone.

All roads lead to Rome. Only by finding the right position in the industry value chain can we better explore the 3 trillion dollar gold mine of live streaming e-commerce !

“It is hard to find a young person in China who has not purchased goods from live-streaming e-commerce.” This was the comment made by Wang Qian, head of operations at an MCN, after watching this year’s 315 Gala exposing the false advertising of Oriental Selection.

She told the Community Marketing Research Institute that live streaming e-commerce is not just about the anchors seen by consumers. Behind it there are multiple roles including the live streaming operation team, the e-commerce team, the live streaming platform and the enterprise. It is a complete industry with a scale of over one trillion yuan, and it is also an emerging industry with an industrial value chain in the blue ocean. As long as you find a suitable position in the industrial value chain, you can still make good profits.

1. Live streaming e-commerce with a market of 3 trillion yuan and 500 million users

The development history of live streaming e-commerce in China can be traced back to 2016. In 2016, live streaming e-commerce came into being along with the live streaming trend. Its original intention was to try to connect "live streaming + content + e-commerce" , increase user stickiness, that is, the time users stay on the platform, and monetize traffic.

After nearly seven years of development, my country's live streaming e-commerce industry has gone through the start-up and rapid development stages. In the future, it will continue to move towards maturity and eventually achieve differentiation into different models.

At present, my country's live streaming e-commerce is in the fifth stage. Before this, it has gone through four stages of development:

In the first stage, live broadcast platforms came into being. 2016 was the first year of live broadcast. In that year, there were more than 200 companies in China providing Internet live broadcast platform services, and the total live broadcast market volume exceeded 25 billion yuan.

The second stage, in 2017, was the stage of industry differentiation and development towards refinement. In that year, the transaction volume of the domestic live e-commerce market was 19.64 billion yuan, and the market began to take shape;

In the third stage, the industry began to integrate resources upstream and downstream of the industry chain. In 2018, Kuaishou e-commerce and Douyin live broadcast were launched, and anchors rose to prominence. In 2019, Taobao live broadcast users reached 400 million, with 117 anchors with annual transaction volume exceeding 100 million yuan, more than 40 million live broadcast products, and a year-on-year increase of 268% in participating merchants, with annual transaction volume exceeding 200 billion yuan;

In the fourth stage, in 2020, Wei Ya and Li Jiaqi sold goods worth 31.09 billion and 21.86 billion respectively. Live streaming e-commerce developed rapidly during the epidemic, and different live streaming e-commerce models gradually differentiated.

In the fifth stage, as an important form of business, live e-commerce has been highly valued by relevant departments, and a series of support policies and regulatory norms have been introduced. In 2021, the traffic of top anchors will shift to mid-level anchors and corporate self-broadcasting. At the same time, the transaction scale of the live e-commerce market has reached 2361.51 billion yuan, completing a trillion-yuan growth in just four years since 2017.

At present, the live e-commerce market has two obvious characteristics: large scale and large user scale. Based on the live e-commerce user data disclosed by CNNIC and the live e-commerce market size disclosed by iResearch, Cinda Securities has calculated the forecast values ​​of China's live e-commerce market size in 2021 and 2022, and believes that the scale of China's live e-commerce market will be 2 trillion in 2021, and it is expected that the scale of China's live e-commerce market will reach 2.84 trillion in 2022, a year-on-year growth rate of 42%.

At the same time, according to data disclosed by CNNIC, as of the first half of 2022, the scale of live e-commerce users in my country has reached 469 million, an increase of 1.15% compared to 464 million at the end of 2021; the annual GMV of a single user of live e-commerce has grown steadily. The GMV of a single user in 2020 was 3,191 yuan, and the GMV of a single user in 2021 was estimated to be 4,309 yuan, a year-on-year growth rate of 35%. Cinda Securities expects that the user GMV in 2022 will reach 5,982 yuan, a year-on-year growth rate of 39%.

2. Live streaming e-commerce industry chain with four parties playing a role

Participants in the live broadcast e-commerce industry chain can be divided into merchants, platforms, users, and service providers including MCN organizations, anchors, etc. Among all participants, the platform is in a core position, and the service providers are the main participants.

The front-end part of the service provider is the expert anchor, who sells products for the brand with their own traffic and influence; the MCN agencies in the service provider provide full-chain services for the anchor, including product selection, live broadcast process management, and traffic investment, and charge service fees from the merchants. At the same time, a large number of merchants will outsource their own store broadcasts, and most of them seek professional operation services through annual framework cooperation agreements or payment by duration.

From the perspective of the core platform of the industrial chain, the platform mainly obtains revenue by providing functions such as product exposure, transaction guarantee, commodity management, demand matching, and traffic distribution. The revenue mainly comes from buying volume income and transaction service commissions.

So how do the various parties perform in this industrial chain?

First, from the merchant's perspective, live streaming can be an option. Regular store live streaming can take over private domain traffic, helping merchants achieve more controllable cost investment and more stable sales growth.

Since 2019, the proportion of self-broadcasting by enterprises (store broadcasting) has increased year by year. According to iResearch, in 2019, the proportion of self-broadcasting by enterprises in my country was 30.5%, and the proportion of expert broadcasting was 69.5%. In 2022, the proportion of self-broadcasting by enterprises reached 47.3%, and the proportion of expert broadcasting dropped to 52.7%. It is expected that the proportion of self-broadcasting by enterprises will reach 49.8% in 2023, which will soon exceed the market share of expert broadcasting. The store broadcasting ecosystem has entered the fast lane of growth since 2021, with a significant increase in store broadcasting accounts and sales, and the market share has increased by 4.1 percentage points in one year.

Brand self-broadcasting can help brands continue to grow while reducing dependence on traffic, and is increasingly becoming an important choice for corporate marketing.

Take the beauty brand "Han Shuixian" as an example. The brand's main product "color-changing lip balm" relies on the brand's own live broadcast to bring goods, accounting for as high as 97%. At the same time, on the official account homepage, a large number of video materials are posted on the screen and traffic is directed to the live broadcast room, achieving hot sales in the way of "products bringing brands".

There is also the medical and health care brand "Renhe" which has seized platform traffic by establishing multiple self-broadcasting matrix accounts. Among them, the "Renhe Health" account has the best sales, with sales of nearly 250,000 orders in 30 days, and the remaining matrix accounts have maintained a sales level of 50,000 orders. The promotion effect brought by the brand's self-broadcasting accounts for more than 50%, helping key products to remain stable at the top of the list for a long time. According to QuestMobile, the proportion of brand self-broadcasting live broadcast rooms on Douyin increased by 8.8 percentage points in the first quarter of 2022, and Kuaishou increased by 2.1 percentage points.

Secondly, from the perspective of the platform, the turnover rate of the entire e-commerce industry can be improved by releasing the KOL's sales ability . Typical platforms include Douyin, Kuaishou, Diantao, etc. The three major live e-commerce platforms are committed to creating "interest e-commerce", "trust e-commerce" and "discovery e-commerce" respectively.

Different from traditional shelf e-commerce, the interactive experience, visual upgrade and discount brought by live broadcasting are very attractive. Live broadcasting e-commerce has made important model innovations to address some of the shortcomings of the shelf e-commerce model, creating a differentiated shopping experience and is developing rapidly.

Next is the anchor's perspective. Virtual anchors have a promising future. In recent years, due to the continuous iteration of technologies such as AI, China's virtual human industry has developed rapidly. According to iMedia Research survey data, compared with 2021, Chinese netizens have a higher level of understanding and attention to virtual humans in 2022, rising from 63.6% in 2021 to 87.8% in 2022.

More than 60% of netizens are more concerned about virtual anchors, which shows that virtual anchors are releasing huge commercial value. At the same time, 47.5% of the users interviewed believe that real anchors and virtual anchors will coexist in the future, and 45.7% of the users interviewed believe that virtual anchors will replace real anchors in certain fields. With the diversification of consumer groups' needs and the rapid development of virtual reality technology, the application of virtual anchors will be more extensive in the future.

Finally, from the perspective of MCN, the B-end path is still the only choice to increase GMV to net profit margin. For B-end merchants, revenue is mainly obtained through derivative sales, celebrity e-commerce, live broadcast rewards, content e-commerce, knowledge payment and other methods.

For example, Yaowang Technology is committed to becoming a live-streaming e-commerce super channel connecting celebrities, internet celebrities and suppliers in 2022. It will accelerate the layout of celebrity matrices and IP accounts, launch digital virtual humans and twin anchor technologies, actively enter non-standard fields to expand growth, and create its own SaaS platform to promote the development of new businesses, doubling its GMV. In addition, profit models such as self-created brands are also opportunities, and Dongfang Zhenxuan is a good example.

In short, all roads lead to Rome. Only by finding the right position in the industry value chain can we better explore the 3 trillion dollar gold mine of live streaming e-commerce.

Author: Editorial Department of Community Marketing Research Institute

Source: WeChat public account "Community Marketing Research Institute (ID: Community_Marketing)"