Businessmen who make a living on WeChat are turning to short videos

Nowadays, the income of micro-businesses is not as good as before, and more and more people are turning to live streaming to sell goods. WeChat has launched video accounts, and Douyin has launched a chat function. Douyin and WeChat are "learning" from each other. The public domain attracts customers, the private domain accumulates, and the public and private domains circulate traffic. WeChat and Douyin are becoming more and more similar.

"I can't continue my WeChat business, so I want to try live streaming to sell goods."

Liang Qing (pseudonym), who started a micro-business right after graduation, has never worked a day. "Working? It's impossible for me to work."

In 2016, Liang Qing, a sophomore, tried to do micro-business like countless other fresh college students, selling things in WeChat Moments to earn pocket money. It happened to be the time when micro-business was easy to make money. When she graduated and looked for a job in 2018, she found that her salary was not as much as that of selling goods, so she plunged into micro-business and has been doing it for 7 years.

But at the end of this year, Liang Qing finally decided to "run away." She explained, "The income has been declining by about 10% every year, and I can't hold on in 2022."

Liang Qing is not the only one who has been affected. After the “micro-business brand” TST was secretly involved in a pyramid scheme dispute, other brands have been “avoiding” the micro-business channel. Hansu, which also had experience in micro-business, has returned to people’s attention this year after a sharp decline, thanks to the live streaming e-commerce on Douyin.

In addition to Douyin and Kuaishou live broadcasts, video account live broadcasts have also been favored. Zhong Weiping, the founder of Beishi Jewelry, told Business Data that Beishi has accumulated more than 20,000 member users through live broadcasts by celebrities, attracting consumers to video account stores and ultimately completing transactions.

Micro-business has been defeated by short videos, but the era of joint operations between public and private domains has just begun.

On December 30, the penultimate day of 2022, Douyin quietly launched the "Douyin Chat" application, allowing users to search for other Douyin usernames and directly initiate chats, which was seen as an attack on the private domain of WeChat.

At the WeChat Open Class on January 10, the WeChat team also revealed that the number of viewers of video account live broadcasts increased by 300%, the viewing time increased by 156%, the GMV of video account live broadcasts increased by 800% year-on-year, and the average customer price exceeded 200 yuan. "Currently, private domain transactions account for a high proportion, and merchants and experts have linked community users, public accounts, fans and video account scenarios to expand the number of private domain users." The WeChat team said.

Attract customers in the public domain, accumulate data in the private domain, and circulate traffic between the public and private domains - WeChat and TikTok, the two behemoths are becoming more and more similar.

1. WeChat business is no longer selling

"The annual turnover is 1 million, and the bad thing is that it decreases by 10% every year."

In Tangshan, where the average salary is less than 5,000 yuan, Liang Qing's monthly net income is over 10,000 yuan, which should have made her somewhat satisfied. However, the trend in recent years has made her feel anxious about the future.

Since its rise in 2013, WeChat business has been around for ten years. With the slogan of "freedom, low threshold, and flexibility", it has attracted students, mothers and other people who want to make extra money. Liang Qing has persisted for seven years. From a sophomore who tried part-time, he has gradually become a source agent with more than 300 WeChat business offline.

In 2016, because she had relatives and friends who owned factories and had first-hand sources of goods, she tried to sell them in her circle of friends. That year, Pinduoduo was just one year old and on the eve of its rise, while Taobao and JD.com began to sell more and more expensive products. Liang Qing relied on the advanced "M2C" concept to easily start the "daily income" model.

Today, Liang Qing has more than 3,000 clients, but her main source of income has shifted to agency income. One part is agency fees: Liang Qing will charge each person an agency fee of 300 to 500 yuan. She has compiled a micro-business manual herself and will also give them some guidance; the other part is the difference earned from selling products to agents.

300 agents can bring in more than 3,000 customers, which is obviously much better than Liang Qing selling alone. But Liang Qing's team is growing, but the annual turnover is declining, which makes Liang Qing feel a crisis.

In addition, Liang Qing sighed, "Most of my agents are only doing it in stages, or as a side job. They don't do well, so they leave quickly." People always see that "wechat business agents make money", but they can't hear their silent exit confession. As a source of wechat business, Liang Qing can see this, which makes her want to "transform" more and more.

In her opinion, the decline of micro-business is due to the changing times.

On the one hand, they have always been shrouded in uncertainty during the three-year pandemic. "At first, the factory couldn't make the goods, and then the courier couldn't deliver the goods. Some customers' local courier services stopped running, so they couldn't receive the goods," Liang Qing explained. The interlocking supply chain is always shut down at different links. And the shutdown means zero income, which is a devastating blow to freelancers.

On the other hand, consumers are leaving like crazy. "Customers either don't have money, or they don't want to spend it," Liang Qing said. "In the past, if customers liked several colors of a piece of clothing at the same time, they might buy all of them. But now, they will only buy the one they need most."

What’s worse is that many customers have spent all their budgets on other platforms such as Douyin and Taobao, and have no money to buy products from Liang Qing.

Liang Qing stimulates customers' purchasing needs by posting pictures and text messages about new products in her Moments and WeChat groups. She scrolls through nearly 10 product messages every day, and once a customer sees a product and is interested, they will chat with her privately to place an order.

The product advertisements embedded in the information flow of Moments are very similar to the e-commerce live broadcast rooms in Douyin short videos. But the difference is that nowadays, people spend less and less time browsing Moments, but more and more people watch short videos. According to Douyin news and Yuehu data, Douyin's daily active users exceeded 700 million in 2022, with an average daily usage time of 140 minutes per person, and the average daily viewing of the live broadcast room reached 3.2 billion times.

In addition, "factory direct sales" has become the "mainstream": anchors sell styles from the source factories, factories transform into self-broadcasting, consumers discover 1688, and there is also the low-price Pinduoduo, etc. Liang Qing's information gap advantage is declining.

The money and time did not disappear, they just transferred from WeChat businessmen to short video platforms.

Liang Qing thought of many ways to solve this problem.

The first thing she considered was expanding the user base. During the busiest time, she hired two customer service staff to connect with customers, but after a while, the number of customer inquiries and transaction volume dropped.

"Because I am an extrovert, my relationship with customers is more like that of friends. Even if they don't place an order, we will chat about our recent situation." Therefore, once customers know that the person on the other side of the chat box is no longer Liang Qing, their desire to consume decreases. In order to maintain the emotional connection between them, Liang Qing had to resign from the customer service department and continue to do the work herself. The size of her customer base has also remained at around 3,000 to 4,000 - the maximum volume she can handle.

Micro-businesses, which are linked by trust and emotion, cannot achieve the maximum one-to-many communication in private chat mode, which is one of the chronic diseases.

Then, Liang Qing started recruiting agents. However, due to the influence of the environment mentioned above, agents often did not sell well and left quickly. "I couldn't sell well, let alone them," Liang Qing added.

Relying on developing agents to pile up manpower is obviously unable to reverse the downward trend of "WeChat business is not selling well".

"People may still need to keep up with the situation." Liang Qing thought, "Since live streaming e-commerce has taken over the channels of WeChat business, I will do live streaming in 2023."

2. Live streaming is the key to the resurgence of old brands and the emergence of new brands

The brands entered the micro-business earlier than Liang Qing and other self-employed individuals.

From TV advertising to WeChat sales, in 2015, Chen Yuxin, then CEO of Hanshu WeChat, revealed that Hanshu received RMB 100 million in WeChat sales within 40 days, and the WeChat sales revenue reached RMB 3 billion that year, accounting for 50% of the total revenue. Other Chinese brands such as Qiao Shisui, Yiyezi, and Pechoin have also entered WeChat sales.

Due to the difficulty in supervision, fakes, inferior products and even illegal pyramid schemes have emerged one after another. The mixture of good and bad has planted a bomb for the WeChat business model and gradually stigmatized it. At the end of 2021, TST, the "top WeChat business brand", was secretly investigated. In April 2022, it was identified as a pyramid scheme and fined 21 million yuan. The business empire built by "Queen of WeChat Business" Zhang Ting for nearly 10 years collapsed. With the fall of the gavel, the era of WeChat business for brands is also coming to an end.

Brands that originally became popular through WeChat business are now trying hard to get rid of this label.

Shangmei Group, the company behind Hansu and Yiyezi, is one of them. After gradually fading out of the WeChat sales channel, Shangmei's "sets" were mainly sold through offline counters, online Tmall, JD.com and other mainstream e-commerce platforms, and fell out of the best-selling list. However, with the advent of the live broadcast era, they returned to people's attention by investing in marketing on Douyin, Kuaishou, Xiaohongshu and Weibo, and even completed the listing of Hong Kong stocks in December 2022 while the iron was hot.

According to the prospectus, in recent years, Hansu has established a full-time live broadcast team, combined with KOL live broadcasting to drive online retail sales. In 2021, Hansu's monthly GMV on Douyin increased from RMB 5 million to RMB 160 million, a 32-fold increase. Annual online sales increased from RMB 1.505 billion in 2019 to RMB 2.698 billion in 2021. From TV advertising, WeChat business sales, to live broadcasting, Shangmei has experienced ups and downs over the past 20 years.

Moving from private WeChat domain to public live streaming is an opportunity for old brands to become popular again, and it is also an opportunity for a new round of white-label brands to "leap over the dragon gate."

Zhong Weiping, the founder of Beishi Jewelry, a brand that was just founded in 2020, feels this deeply. He told Business Data that Beishi mainly sells in the "S2K2C" model. In short, Beishi has its own jewelry foundry, cooperates with designers to produce styles, and sells products through special live broadcasts through cooperation with mid- and low-level anchors on video accounts, completing transactions in video account stores.

According to Zhong Weiping, facing the consumption downgrade and logistics jams under the background of the epidemic, it is already quite good that new jewelry brands with high customer unit prices can survive and make profits. Especially at the end of 2022, with the lifting of the lockdown and the increase in commercialization measures for video accounts, a new turning point has emerged.

"In November, the video store opened a selected alliance, similar to the selected alliance of Douyin, and the anchors who came to contact us directly flocked to us." Zhong Weiping couldn't hide his smile. Under the pressure of the new crown infection, their team maintained the rhythm of broadcasting 1 to 2 shows a day, with monthly sales of millions, and the sales directly supported the annual sales.

According to WeChat, currently, goods sold through the Select Alliance account for 15% of the total GMV.

Zhong Weiping defines Beishi Jewelry as a private domain brand, because transactions mainly take place on WeChat mini-programs, and not much investment is made in public domains such as Taobao, Douyin, and Kuaishou. As a private domain brand, it has strong repurchase power, but the premise is that it can find traffic introduction in the public domain, and live broadcasting is undoubtedly the best tool.

"Each show is worth tens of thousands to hundreds of thousands of yuan, and the anchor gets about 30% of the proceeds," said Zhong Weiping. Live streaming is a game of trust between anchors and fans, and the key to private domain repurchase is also to build trust between consumers and brands. Liang Qing's "one-to-many" problem was solved in the live streaming room.

Through the recommendation of experts, Beishi has also initially established a brand effect and has a "name" in the circle. Recently, there has been an increase in news about video accounts, and Zhong Weiping suddenly received many interview invitations and consultation exchanges. "Video accounts change very quickly, and merchants must keep up with the changes, otherwise it is easy to 'die'."

3. Integration of public and private domains: Douyin and WeChat learn from each other

"Video Account is the hope of the entire company." At a recent Tencent employee conference, Ma Huateng criticized multiple business lines but placed high hopes on WXG (WeChat Business Group).

In December 2022, the media revealed that the monthly active users of Video Account had reached 800 million, surpassing Douyin and becoming competitive with Douyin and Kuaishou. In July 2022, Video Account Store was launched, native information flow ads were launched, Good Goods Alliance was launched in November, and technical service fees were charged in January 2023... A series of measures show that Video Account is accelerating its commercialization.

For the entire WeChat ecosystem, "subscription account + enterprise account + member group + friend circle + mini program + video account" forms an e-commerce ecosystem that connects the public and private domains.

"If the traffic of the video account is good enough, we don't need to divert traffic from public social platforms such as Douyin, Weibo, and Xiaohongshu to the private domain of WeChat. It will be more efficient to convert traffic within WeChat." E-commerce person Zhou Ting (pseudonym) told Business Data Pie.

Before the arrival of video account stores, WeChat was just a synonym for private domain.

Between 2017 and 2022, brands of clothing, beauty, food, and trendy toys have flocked to mini programs. Especially during the epidemic, many brands have deployed live streaming and short video information flow on the one hand, and on the other hand, they are increasing their investment in private domains to make up for the lack of offline traffic.

Take Pop Mart as an example. According to the financial report, the mini program had a revenue of 271 million yuan in 2019, less than one-third of that of offline stores; by 2021, the revenue had grown to 898 million yuan, becoming the second largest sales channel.

Starting from the private domain, mini programs have found a suitable way to realize Tencent's e-commerce dream. According to financial reports, the annual GMV of mini programs maintained a high growth of more than 100% in 2020 and 2021. As a WeChat service provider, Weimeng and others have also boarded the express train. With the development of subscription account services, mini programs, SaaS services, and video account services, annual revenue has increased from 114 million yuan in 2015 to 2.687 billion yuan in 2021.

Ma Huateng once said that WeChat gave Tencent a "platform ticket" in the mobile era, and Video Account gave Tencent an entry ticket to live streaming e-commerce.

Public-private domain joint operations are gradually becoming the standard for WeChat merchants.

"In 2021, we began to experiment with video account services. After the video account was commercialized this year, the product gradually took shape, and the route of 'public-private domain joint operation' became clear. We launched the 'Video Account Marketing Assistant' and increased our investment in the video account."

An insider of Weimob told Business Data that from the initial live broadcast room to hang social groups and personal WeChat QR codes, to the live broadcast room directly pushing corporate WeChat business cards, all functions of the video account are serving the private domain. At present, the overall conversion efficiency of the video account live broadcast room in which Weimob participates is about 2%, and excellent merchants can reach 10%, which is much higher than the industry average. The overall merchant precipitation of the private domain through the public domain live broadcast of the video account is about 3-5 times higher than the precipitation efficiency of the pure private domain.

In 2022, the proportion of public domain transactions on WeChat is increasing, with an increase of more than 100%. "However, when the proportion of public domain transactions grows to a certain extent, these public domain users will become private domain members of merchants through the public-to-private link, bringing an increase in the proportion of private domain transactions. After that, the proportion of public domain transactions will need to be supported by paid promotion." Weimeng added.

Video accounts have allowed WeChat to break through its own bottleneck and bring in fresh traffic from the public domain. Douyin e-commerce has also been busy, frequently deploying private domain tools to make up for the shortcoming of not being able to retain public domain traffic.

One of Douyin's initiatives is to develop mini programs, which is exactly the same as the original WeChat mini program to build a private domain. In September 2022, Douyin first announced the Douyin open platform and business carrier Douyin mini program. Like WeChat mini programs, it started with games, and after games, consumer goods such as McDonald's and Nayuki, and platforms such as Ele.me and taxi-hailing have all settled in Douyin mini programs.

The second measure is the much-discussed Douyin chat. It will be launched on December 30, 2022. Although the current Douyin chat function is not perfect and is limited to the PC side, it is also regarded as an important attempt by Douyin to explore private domain operations.

The picture comes from TikTok

“No matter which platform you chat on, in the end it all comes down to ‘add WeChat’” This is a problem faced by all kinds of social platforms including Weibo, Xiaohongshu, and Douyin. Even if the words “WeChat (account)” are blocked, people still use various means to settle in WeChat groups.

The emergence of Douyin chat may change this dilemma. Like the Douyin APP, you can directly search for user nicknames in Douyin chat, follow them and send messages. Different from the "semi-closed" friend circle of WeChat, it is more practical for weak relationship scenarios such as live streaming.

Douyin and WeChat are both "learning" from each other, and both sides have realized that "public-private domain joint operation" is what businesses want.

Author: Huang Xiaoyi

Source: Business Data Party (ID: business-data), understand the value of the innovative economy and find the changing moat.