Compared to the fanfare of other platforms, the video account is more like a companion runner, taking one step and looking two steps ahead. These two steps are Xiaohongshu and Kuaishou.

Written by | Lan Dong Business Zhao Weiwei

For WeChat Video Account's fourth Double 11, it is taking one step and looking two steps ahead.

This year's Double 11 campaign has been extended again, with mainstream e-commerce platforms launching their first wave of ready-to-ship products on October 21st. However, WeChat Shop's Double 11 Goods Festival has only just begun registration, and the entire event cycle is half as long as that of mainstream e-commerce platforms, running from October 31st to November 11th.

No rush, accompanying the race halfway may just be the superficial stance of WeChat Video Account's live e-commerce, with the underlying core strategy still being to take one step and look two steps ahead.

For example, during this year's 618 sale, the benchmark case for live streaming e-commerce on the video account was Zhong Liti, with Tencent Advertising officially entering the fray and starting cooperation and recruitment a month in advance. The result was: "The first live streamer with over 10 million viewers on the video account was born." Zhong Liti's MCN agency, Weiyu Times, also took this achievement as affirmation from Tencent and, for a time, Zhong Liti was mythologized as the "queen of the video account."

Should such a proud achievement continue during Double 11?

Four months later, Tencent Advertising is no longer involved in the operation of the video account, and Zhong Liti's popularity has diminished, but she remains active in live streaming on the video account, with only two live streaming sales confirmed for November so far. Meanwhile, her MCN agency, Weiyu Times, has chosen to prepare another celebrity, Jin Qiaoqiao, for a dedicated live streaming sales event during this year's Double 11.

The video account has nurtured native live streaming sales stars, but lacks superstars comparable to those on other platforms. This was once one of the biggest expectations for live streaming e-commerce on the video account. Now, Zhong Liti has proven that the video account has the ability to create superstar live streamers, and the re-employment of outdated celebrities in the live streaming sales market has become the most obvious path for Weiyu Times on the video account.

It is difficult to pinpoint the characteristics of the video account during this year's Double 11. Compared to the fanfare of other platforms, the video account is more like a companion runner, taking one step and looking two steps ahead. These two steps are Xiaohongshu and Kuaishou.

This step may be an accumulation or a detour, but the key lies in looking ahead and how far the next two steps can go.

More than just video account e-commerce

"The future of video account e-commerce is WeChat e-commerce. This year's adjustment is to establish a complete closed loop for commercialization within WeChat channels, not just video account e-commerce," said a video account industry service provider.

The product-driven nature of the video account is often more apparent than its operational drive. The most significant change after this year's 618 was in August, when the video account store began to be upgraded to a WeChat store. On the surface, it was just a name change, but behind the scenes, it connected various traffic channels within WeChat, enhanced brand certification and store naming systems, and lowered entry barriers and deposits.

This change stems from WeChat's emphasis on live streaming e-commerce, with team changes preceding product changes.

In May of this year, the WeChat Video Account Live E-commerce Team merged into the WeChat Open Platform Team, further integrating with the Mini Program and Official Account teams. This meant that the status of the store and live streaming e-commerce was elevated to be on par with the video account, Mini Program, and Official Account. The original WeChat Video Account Live E-commerce Team was transferred to the responsibility of the head of the WeChat Open Platform.

Two months later, the management and governance of live streaming sales on the video account were transferred from the Tencent Advertising department to the WeChat Business Unit. This series of moves has been widely viewed as elevating the status of live streaming e-commerce within WeChat, but have these changes had a significant impact on the video account ecosystem?

WeChat's e-commerce product form and infrastructure capabilities still need improvement. For example, this year, WeChat's ecosystem launched the intelligent advertising tool Quanyutong for video accounts, which was once considered a competitor to Douyin's massive advertising system Juhengqianchuan. This is a one-stop full-traffic marketing and promotion tool launched by Tencent for merchants and live streaming sales stars, which can change the lagging situation of video account e-commerce advertising tools and is therefore highly anticipated.

"(Quanyutong) hasn't changed much and has remained lukewarm," said a video account service provider to Lan Dong Business. Quanyutong's effect on business growth has not been particularly noticeable. This service provider has been a video account service provider for two years and currently connects with over 2,000 mid-tier video account stars. Last year, their GMV reached 100 million yuan.

Improving the service provider system and enhancing supply chain management capabilities are key priorities for this year's video account live streaming e-commerce infrastructure, and are also essential for fierce competition in e-commerce today.

The above-mentioned service provider stated that live streaming e-commerce has entered a stage of high barriers to entry and super vertical competition, with less than half of merchants in the entire industry being profitable. For the current Double 11, they are not overly excited because one Double 11 cannot change much, and the value of marketing far exceeds that of sales. "The consumer base is already relatively stable, with customers simply buying more during Double 11 and less during Double 12," they said.

This Zen-like attitude towards Double 11 can be seen as the video account continuing to hone its internal skills. Behind these service providers nationwide are millions of stars and merchants live streaming, which already constitute the mainstream force of video account live streaming e-commerce.

According to a third-party data cited by Huxiu, in the third quarter of this year, there were over 1.2 million video account merchants, with over 60% of them making sales each month. Active e-commerce buyers exceeded 70 million, with an average of 2.5 orders per month. The video account has stabilized the merchant ecosystem, with rapid growth in user scale and conversion efficiency, but WeChat responded that the data was inaccurate.

Therefore, the current Double 11 may not be as important for video account live streaming e-commerce. Live streaming e-commerce is first and foremost a systematic project, and complementing the underlying infrastructure to address shortcomings is the direction for steady progress.

First, a clear definition is needed

Every day at 2 pm, ICICLE's video account live stream, "ICICLE-Xiaohe Show," goes live on schedule, featuring over 60 clothing products in a broadcast lasting four to five hours.

At the same time, ICICLE's official live stream on Xiaohongshu also goes live simultaneously, with the same products, hosts, and content. The only difference is the number of viewers, with more people watching the video account live stream than Xiaohongshu's.

Brand merchants are one of the key focuses of support for the video account, and WeChat's public course showcased ICICLE as a representative of video account e-commerce in August this year. It was mentioned that this "serene" live stream is one of ICICLE's main channels for product sales, and quality is the foundation for ICICLE's monthly sales of 2 million yuan on the video account. "It is estimated that ICICLE's annual sales on the video account will exceed 30 million yuan," it said.

ICICLE is a high-end women's wear brand, and its high customer price point is one of its distinctive features.

However, in fact, ICICLE also attaches great importance to its live stream on Xiaohongshu. During this year's 618 period, ICICLE collaborated with Xiaohongshu on the "Brand Red Day" to launch a new joint series with the Shanghai Museum, with sales exceeding 780,000 yuan on the first day. Less than 10 minutes after the broadcast began, it topped the brand ranking in the live stream room. Among them, new product sales accounted for 80% of the total, with a customer price point exceeding 3,700 yuan.

Although the data dimensions published by the two parties differ, the sales figures displayed on the storefront pages do not lie.

As of now, ICICLE's flagship store on Xiaohongshu has sold 10,000 units, while its store on the video account has sold 12,000 units, making them roughly equal in sales. In comparison, Douyin, with a more complete e-commerce ecosystem, lags slightly behind, with ICICLE's official Douyin flagship store boasting 155,000 followers and sales of 60,000 units.

It can be said that high-quality brand merchants like ICICLE are eagerly sought after by both Xiaohongshu and the video account. For merchants like ICICLE, both Xiaohongshu and the video account represent new growth channels.

Live streaming e-commerce is the inevitable path forward for both the video account and Xiaohongshu. Their commonalities lie in their late entry into the market but strong growth momentum, making them key breakthroughs for their respective businesses. Both seek to carve out a unique path amidst the mature e-commerce landscape of Douyin and Kuaishou.

The biggest lesson Xiaohongshu offers the video account is to first give its live streaming e-commerce ecosystem a clear definition, which determines how far-sighted the platform will be.

From proposing "buyer e-commerce" last year to evolving its e-commerce business into "lifestyle e-commerce" this year, Xiaohongshu's e-commerce business changes first express a differentiated concept and then diversification of lifestyles, with increasingly segmented user needs. Buyers and curators essentially showcase professionalism, serving specific demographics and breaking through the cliches of live streaming e-commerce.

This more precise targeting of e-commerce positioning is distinctly different from that of the video account, given Xiaohongshu's younger user base.

Therefore, even though quality merchants like ICICLE can gain incremental sales on both Xiaohongshu and the video account's e-commerce platforms, for the latter, one ICICLE is not enough. A larger group of merchants that better fit its attributes is a more significant indicator, allowing it to differentiate itself from other platforms and turn the "possibility" of huge traffic into a "certainty" for merchants and consumers alike.

Of course, this will require the video account to take longer to validate.

Waiting to surpass Kuaishou?

At the end of each year, live streaming e-commerce platforms showcase their muscle and achievements.

At the end of last year, Douyin E-commerce's payment GMV exceeded 2 trillion yuan, while Kuaishou E-commerce's GMV surpassed 1 trillion yuan. The video account's e-commerce GMV was around 100 billion yuan. Based on the 3x growth rate mentioned in last year's WeChat public course, it is estimated that the video account's e-commerce GMV target for 2024 is 300 billion yuan.

In terms of revenue, video account e-commerce lags far behind Douyin e-commerce, but surpassing Kuaishou e-commerce may be the most feasible short-term goal.

From a user perspective, the video account has posed a threat to Kuaishou. Kuaishou's daily and monthly active users currently stand at 390 million and 690 million, respectively. According to a research report by Guohai Securities, the video account's daily and monthly active users reached 450 million and 900 million at the end of last year, while Douyin's daily and monthly active users were 760 million and 1.1 billion, respectively.

"The video account is somewhat similar to Kuaishou, both having strong trust and private domain attributes, but it's impossible to retell the story of trust e-commerce. A new definition needs to be found," said a video account service provider. He personally believes that the video account e-commerce will surpass Kuaishou within three years to become the second-largest player in the short video industry.

There are many reasons for his optimism, such as WeChat and WeChat Red Envelopes, both of which have achieved latecomer success in the social and payment fields. Tencent was not the first to enter these markets but has become a leader in the process of development.

However, Kuaishou's financial reports do not support this optimism. In the first quarter of this year, Kuaishou's e-commerce GMV grew by 28.2% year-on-year, and while there was a decline in the second quarter, it still maintained a growth rate of 15%. For the video account e-commerce to surpass Kuaishou, it must achieve a higher compound growth rate.

In fact, the video account's familiarity attribute predestines it to compete with Kuaishou in its ability to leverage private domain traffic.

Today, "follow-up purchases" and "repeat customers" are crucial indicators for the video account store. Some video account service providers believe that pulling users back into the private domain for conversion is a crucial capability of the video account, which can save merchants the cost of reaching public domain users.

Previously, a significant proportion of high-ticket video account live streaming transactions were roughly 3:7, meaning that for every 1 million yuan in sales made on the video account, only about 300,000 yuan was transacted in the public domain, with the remaining 700,000 yuan generated in the private domain.

The 70% share of private domain traffic in e-commerce revenue was Kuaishou's achievement in the third quarter of 2021, while the corresponding figure for WeChat's public course on live streaming e-commerce private domain traffic was 50%. It can be said that private domain traffic is both a barrier for Kuaishou e-commerce and a moat for video account e-commerce. From this perspective, Kuaishou e-commerce is a better benchmark for video account e-commerce.

Of course, Kuaishou's relationship with superstar live streamers is even more worthy of consideration for video account e-commerce. For example, Xinba made a comeback during this year's Double 11, achieving a GMV of 6.41 billion yuan in a single day. Earlier, Xinba and Xiaoyangge's public spat even pushed the competition among top live streamers to the forefront of public opinion. These actions prove that Xinba and Kuaishou are inseparable.

The retreat or downfall of former top live streamers heralds a new round of industry reshuffling, with more and more players vying for a slice of the pie. Are the video account's live streamers ready?

Earlier this year, Pony Ma praised the WeChat Video Account business at an annual meeting, hoping that WeChat would further "sprout new growth from old roots" and fully expand into live streaming e-commerce. Therefore, whether the video account live streaming e-commerce can achieve a GMV of 300 billion yuan this year may be the best time to validate this "sprouting of new growth from old roots."