The live streaming e-commerce industry has been quite lively recently. Firstly, the top streamers of Kuaishou and Douyin, Xinba and Crazy Little Yangge (Three Sheep), got into a dispute due to selling voucher cards for hairy crabs of the same brand. Starting from simple accusations, they later exposed each other's secrets, eventually leading to the so-called "Lion-Sheep War." After that, Three Sheep was investigated for false advertising of Meicheng mooncakes.

Coincidentally, two other top streamers in the industry, Dong Yuhui and Luo Yonghao, have also been in the midst of public controversy. Dong Yuhui is well-known for his disputes with his former employer (Dongfang Zhenxuan). On the other hand, Luo Yonghao and Zheng Gang, an early investor in Smartisan Technology's startup, have also been embroiled in a debt collection controversy.

Behind these incidents lies the message that live streaming e-commerce has entered its second half. So, what are the characteristics of the second half compared to the first half?

01. Characteristic 1: From competing for traffic to competing for supply chains

Firstly, the second half of live streaming e-commerce will shift from competing for traffic to competing for supply chains. This is primarily due to the slowdown in traffic growth in the live streaming e-commerce industry.

According to iResearch's "2023 China Live Streaming E-commerce Industry Research Report," China's live streaming e-commerce market reached 4.9 trillion yuan in 2023, with a year-on-year growth rate of 35.2%. In the first half of the year, live streaming e-commerce GMV was approximately 1.99 trillion yuan, and relying on promotional events like Double 11 in the second half, the annual growth rate remained above 35%. In contrast, the growth rates for the previous four years were 227.7%, 189.57%, 83.77%, and 48.21% respectively, showing a clear decline.

Taking Kuaishou's financial report as an example, its e-commerce revenue increased by 21.3% year-on-year in the second quarter, compared to 47.6% in the previous quarter. Meanwhile, the GMV growth rate for e-commerce dropped from 28% in the first quarter to 15% in the second quarter. The average monthly active user count decreased from 697 million in the first quarter to 692 million, indicating a shrinking user base.

These figures subtly suggest that the era of wild growth in live streaming e-commerce is over. In the second half, competition will primarily focus on supply chain strength. Industry insiders point out that competition in e-commerce ultimately boils down to supply chain competition, or competition between digitization. Many top live streaming e-commerce players are putting significant effort into supply chain or digitization, viewing it as a decisive strategy for future development.

This is because regardless of how e-commerce evolves, the underlying software and hardware capabilities determine where live streaming e-commerce will go. To some extent, the longevity of a live streaming e-commerce player depends on its supply chain management, digitization efforts, and overall operational efficiency. Massive traffic and sensational promotional effects are not necessarily crucial metrics.

As the upstream link in live streaming, the supply chain directly impacts product quality and quantity. Furthermore, a well-managed supply chain drives sales and facilitates various operations.

02. Characteristic 2: From competing for streamers to competing for brands

Amidst sluggish traffic growth, the status of top streamers is also being reassessed. In the past, top streamers leveraged their strong personal influence and professional sales pitches to lead trends and significantly impact sales across multiple industries. Data shows that some renowned streamers can generate staggering sales of over one billion yuan in a single live broadcast. However, such feats are no longer common, and many top streamers have seen notable declines in their sales capabilities.

In the past, concentrated traffic gave top streamers bargaining power and even the ability to "break prices." Initially, they became unique channels in the e-commerce ecosystem by offering low prices. However, in recent years, various bottom-price agreements and streamer controversies have eroded their influence. Since last year's Double 11, merchants have increasingly focused on building their self-broadcasting capabilities to reduce dependence on top streamers. Notable streamers like Crazy Little Yangge, Li Jiaqi, and others have gradually reduced their live streaming frequencies, transitioning to more institutionalized operations. The live streaming industry is witnessing a "great retreat" of top streamers.

By this year's 618 shopping festival, top streamers had largely vanished from the headlines, with MCN agencies like Qianxun, Meiwai, and Wuyou Media failing to release specific sales figures. To some extent, the value of top streamers as e-commerce channels has diminished, and their business models are undergoing transformation.

The surface-level reason for this is the risk inherent in the tight bond between streamers and platforms. Deeper down, as traffic peaks, trust between streamers and users is eroding, leading to weaker purchasing power. Platforms may also weaken their ties with top streamers in pursuit of stability.

Market analysts point to multiple factors contributing to this shift. Firstly, consumer habits and psychology are evolving. After years of experience, consumers have become more rational and less susceptible to manipulative pitches from top streamers. Secondly, the rise of emerging live streaming platforms and new-generation streamers has dispersed traffic and market share from top streamers. Especially in niche areas, new streamers with professional expertise and unique perspectives have attracted dedicated followers, gradually building their fan bases.

As top streamers retreat, they are simultaneously exploring branding and self-operated channels. Having benefited from early trends, they leveraged their traffic to quickly monetize through live streaming. However, as the growth of live streaming e-commerce slows, they may need to adopt more circuitous paths to sustain their "initial capital," including mentoring successors and branding efforts.

03. Characteristic 3: From cost-effectiveness to compliance

In reality, low prices and consumer trust in streamers were crucial to the rapid rise of live streaming e-commerce. Most live broadcasts emphasize these points, claiming, "I only recommend products I've personally used and found to be excellent" and "Today, we offer the lowest price across the entire network.""To achieve this, consumers must trust that streamers can guarantee high-quality products at low prices. Theoretically, this is achievable, but in reality, the industry has repeatedly exposed instances where advertised low prices and superior products/services are not entirely truthful. Two notable events underscore this issue.

Firstly, "bottom-price agreements" revealed that live streaming does not necessarily lead to cheaper products. In September 2023, a consumer complained about the high price of a 79-yuan eyebrow pencil in Li Jiaqi's live stream, only to be rebuked. Subsequently, many consumers shared receipts on social media, confirming that the same product had indeed increased in price. Additionally, media reports revealed that Li Jiaqi earned an 80% commission on the sale of this product. Shortly after, Li Jiaqi became embroiled in controversies with JD.com and Haishi, and their "bottom-price agreement" was made public, shedding light on the truth behind live streaming e-commerce: the so-called "lowest price across the network" claimed by top streamers does not necessarily reduce product prices but rather monopolizes the market, preventing consumers from seeing lower prices elsewhere.

Secondly, the dispute between Xinba and Little Yangge also exposed the lack of guarantees for products and services sold through live streaming. For live streaming e-commerce enterprises, attracting customers initially relies on "cost-effectiveness." During this stage, customers are unfamiliar with the business and make "trial" purchases, often favoring cost-effective options. However, as the business develops, it must compete for customer satisfaction, adhering to stricter rules than in the first half.

04. Conclusion: To thrive, one must survive the long haul

From a business model perspective, the primary difference between the first and second halves lies in whether one aims to earn short-term or long-term profits. As the live streaming e-commerce industry matures, the era of wild growth and quick money is over.

From another perspective, live streaming e-commerce is essentially a content industry, and content creation is a traditional, long-term endeavor. Content companies rarely collapse overnight. In the content industry, survival over the long haul is key. As long as a company stays afloat, there's always a chance for success. Consequently, there's a consensus within the industry that stable long-term development trumps short-term profits. This means live streaming e-commerce practitioners must plan and develop their businesses with a long-term perspective, eschewing short-term gains.

Against this backdrop, a new value hierarchy may emerge among streamers, platforms, supply chains, and brands.

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