Image source @ Visual China
Wen | Chopped Pepper TMT, author | 24
"Wang Yibo, Yang Yang, Yang Mi, Di Lieba, Ji Fei... He is the favorite Chinese star of Young Indonesians in recent times. I said in the short video or live broadcast that the lipstick used by Ji Fei in the play I have the same color, and this lipstick instantly became a hit. TikTok Indonesia station anchor Celine told the owner.
Celine is an Indonesian, an international student at Tsinghua University, and a part-time anchor of Nanyangqiao Culture. With one year of experience with goods, she already has more than 1 million followers on TikTok.
From 2021 onwards, e-commerce has become a key direction of TikTok, and a team code-named "Magellan XYZ" is fully responsible for TikTok's e-commerce business.
Indonesia and the United Kingdom were the first two countries for Tik Tok to open an e-commerce business. Once the Uk runs through, it will lay a solid foundation for the development of the North American market. Why Indonesia, another experimental country?
With a population of 271 million, Indonesia is the world's fourth most populous country, with a young population structure and an e-commerce penetration rate of only 4.26%. This developing country with a high-growth economy is also the Southeast Asian country with the highest concentration of TikTok users.
At present, the Southeast Asian market does not yet have the existence of "Li Jiaqi", and the live streaming with goods is still in the market cultivation period. But a number of brands tailored for Southeast Asian consumers have quickly taken a race along Tiktok's "shipping lanes".
Including a number of Chinese teams such as the former OPPO team, they began to create the DTC brand of beauty and skin care in Southeast Asia, and they have become the most eye-catching "capital darlings" in the Tik Tok e-commerce industry chain.
TikTok made a large subsidy, and hundreds of MCNs rushed into Indonesia to broadcast live goods
"hello friend friends..... Today we will talk about Chinese dramas, trending weibo, and there will be a massive live sale for makeup products!! The products here I have tried, and everything is really recommended! ”
(Hello friends, today we will talk about Chinese TV series, entertainment hotspots, and so on there will be cosmetics LIVE SALE!) I have used all these products and are really very useful, highly recommended! ）
This is a unique opening phrase on Celine's live stream.
Celine broadcasts live twice a week for more than two hours at a time, with more than a dozen products. She said that before each live broadcast, she would go to Weibo hot search, and perhaps half the time in the live broadcast room was outputting China's latest entertainment topics, interspersed with goods.
Among them, the category with the most goods is beauty. "I like to watch Li Jiaqi's live beauty on Taobao, very professional, very expressive, I will also learn to put lipstick on the hands to show everyone, whether it is durable, fading or waterproof." Celine said.
Chinese social media are also the source of inspiration for Indonesian anchor novi short videos and live content.
"I like to read the Little Red Book, and I found that Chinese girls like to post ootd (recently worn) in the Little Red Book, so I took a few selfies in makeup and made a short video to send out, and everyone liked the jacket I was wearing and became a hit." Novi said.
Novi was originally a fashion designer, a few years ago due to the epidemic, the clothing business was dismal, leisure time is more, on TikTok to send a short video. One day, she sent a short video of learning Chinese, which rose to more than 6,000 fans overnight, and then transformed into a Chinese teacher, teaching Indonesians to learn Chinese.
Nanyangqiao Culture is a film and television overseas cultural exchange company, which has been responsible for the Southeast Asian distribution of iQiyi, CCTV and other content, the localization and overseas distribution of films such as "Tai 囧", and the co-production and distribution of Chinese-Indonesian co-production cinema films such as "Love in Zero Dimension".
When TikTok was first established, Nanyangqiao Culture introduced a lot of talent resources to the platform, helped the platform move the domestic brand challenge form overseas, and helped the brand promote advertising. As a result, when TikTok started the live streaming business, Nanyangqiao also became a talent to carry goods in the form of MCN.
Nanyangqiao Culture COO Kim said that TikTok subsidies are very direct, at the end of last year, TikTok had provided subsidies equivalent to 20% of GMV, and vigorously supported institutions to enter the live streaming market.
Now, there are nearly a hundred MCNs in Indonesia, half of which are from China, and the MCN agency behind Luo Yonghao made a friend and set up a live broadcast team in Indonesia last June. At the same time, some MCNs such as Make a Friend, WOTOKOL, and Nanyangqiao Culture also undertake the business of TikTok Official Partner (TSP, similar to the service provider system of Douyin e-commerce DP).
But when it comes to Indonesia's head live streamers, many MCNs say it's hard to answer.
Similar to Celine and Novi, most of the anchors are now Internet celebrities who are originally in a certain field of content, and slowly become anchors with goods. Different from China, anchors with goods are not their main business, for example, for novi, the current income of teaching Chinese is much higher than that of carrying goods.
Kim also revealed that at present, Indonesia's head stars basically will not go down to do live streaming with goods, do not make money, but also hard, at most in the short video to pick up a business advertisement.
Indonesian head Internet celebrities generally have tens of millions of fans on mainstream social media, the main source of income is still brand endorsement, live e-commerce has not become the main purchase mode of consumers, the head Internet celebrities will not use sales share as the main source of income for live e-commerce.
Hu Yu, founder and CEO of WOTOKOL, pointed out from the user's point of view that Indonesian users watch short videos are currently mainly based on entertainment, but they have initially formed a closed loop of large-scale domestic interest in planting grass - pulling grass, so the anchor live broadcast is basically referred to the script and script of domestic live broadcast, for example, two Indonesians will be some of what they have seen and heard in China, cultural stories, to trigger the interaction of the comment area, establish friendly relations with users, and then bring goods.
This means that TikTok's current content form needs to be slowly derived from the form of show live broadcasting to the form of vertical e-commerce or mixed live broadcast, and users will gradually transform from live broadcasting to watching the show and then into e-commerce users.
Hu Yu revealed that during the market cultivation period, MCN is only partially profitable, inseparable from platform subsidies, but platform subsidies are also gradually shrinking, giving some discount coupons or free mail.
"In fact, TikTok's current ecology is more lacking than that of high-quality anchors, which is goods." Hu Yu said that now MCN is not grabbing the anchor, but the source of goods.
In this state, the DTC brand may be the biggest opportunity for Tik Tok cross-border e-commerce.
Compared with MCN, the biggest opportunity is to do DTC brand
Nowadays, on TikTok, young users are highly sensitive to price, so the mainstream market is still a white card with a low unit price, and for Chinese merchants going overseas, policy restrictions, consumers only pay attention to price, low stickiness, and easy to fall into price wars and other challenges.
Driven by various problems and demand, some DTC (self-built channels directly facing consumers) brands have begun to become popular in the field of cross-border e-commerce, which can rely on China's supply chain and reach consumers through online platforms such as Tik Tok.
At the same time, limited by Indonesia's regulatory policies, most of the goods can not be shipped directly from China, but need to be exported to Indonesia, into the local overseas warehouse, and then online sales and offline delivery.
Zhou Lifeng, key account manager of Shipper China Branch, an Indonesian overseas warehouse service provider, told the owner that the cost of overseas warehouse hoarding is indeed high, but if the brand is bigger, it involves the problem of returning and exchanging goods, calculating the logistics cost, in fact, it is down.
According to the "2021 Cross-border E-commerce Development Report", 21% of enterprises are preparing for the layout and carrying out the DTC brand model.
For example, the development model of women's clothing brand SHEIN is a successful example of dtc brand going overseas. But by the end of July last year, SHEIN had pulled out of Indonesia. According to website analytics platform SimilarWeb, shein Indonesia received fewer than 5,000 visits since September 2020, while Zalora, Indonesia's largest fashion sales portal, had nearly 2.7 million visits over the same period.
A large part of the reason for the lack of market share lies in policy.
As a major textile industry country, Indonesia has introduced multiple policies to encourage its own garment industry.
This means that Chinese merchants who want to bring clothing in Indonesia are not preferred. Relatively speaking, heavy categories such as beauty, mother and baby, 3C, and small household appliances are more competitive.
Taking beauty as an example, Chinese beauty brands such as O Two O, Bio Aqua, NOVO and Y.O.U have a strong presence on TikTok Indonesia. The main business of the companies belonging to the first three is to do OEM processing in China, and the biggest advantage is the use of supply chains to drive down prices.
Y.O.U this beauty brand has attracted the attention of the owner, behind the scenes is the Chinese team, but the positioning is Southeast Asian local beauty, specifically for the skin characteristics of Indonesians, launched a series of skin base makeup, anti-aging essence and other products.
It can be seen that it is not easy for domestic cosmetics to go to sea in Indonesia, Indonesia since the beginning of last year, mandatory all cosmetics must obtain halal certification certificates, cosmetics need to strictly follow the local halal standards, the implication is that domestic cosmetics should be completely "localized" in the overseas market.
The Y.O.U brand was incubated in 2018 by the team organized by Li Jie, former CEO of OPPO Indonesia, which initially took root in Indonesia and has now expanded to southeast Asian countries such as the Philippines and Thailand, covering nearly 40,000 points.
Based on southeast Asian full-link retail experience, Li Jie and his team also founded J&T Express, the hegemon of Indonesian express delivery (as early as 2013, with the help of OPPO's mobile delivery business to gain a foothold in Indonesia).
Including jiang zhengzhen and Yang Yi, founders of the mother and baby brand MAKUKU, they all came out of the OPPO team and served in the OPPO overseas market department.
How can new brands in unfamiliar markets complete the "localization" of marketing? Kim told the owner that most DTC brands pursue the unity of product and effect, and the main way to reach users before is in Google and Facebook, through cooperation with local stars, KOLs or KOCs to open the brand volume and plant grass, and then pull grass through online e-commerce.
Channels have changed markedly today. Beluga whale went to sea to obtain information, Apple iOS privacy policy changes, Facebook advertising prices soared, within 2 years, Facebook's advertising costs can reach 3 times the previous, Facebook coverage of 1,000 users the cost increased from $6 to about $18.
At the same time, Meta's internal metrics and mechanisms for attribution produce a 30%-50% bias in results, which means brand effectiveness becomes difficult to measure.
It is for this reason that some DTC brands are moving from Facebook to TikTok to reduce marketing costs. At least from an ROI perspective, Tik Tok can give brands better conversion rates.
Capital layout TikTok industry chain: the opportunity to rise "global brand"
TikTok has been a series of climaxes, which has also aroused the expectations of investors.
Mach, vice president of Huaying Capital, said that Tik Tok has achieved 1/3 of the local population in many overseas markets, and the capital recognizes Tik Tok's operational ability and business expansion ability.
Therefore, many investment institutions refer to the development trajectory of the domestic Douyin ecology and try to lay out companies with high growth opportunities in the TikTok industry chain.
Back to the current situation of TikTok Indonesia station merchants with goods, most of the merchants are basically Guangzhou, Shenzhen, Hangzhou and other trade origins, because the dividend first to occupy a wave of highlands, supply chain and cost performance have advantages, but their ideas more stay in "selling goods", in terms of brand power or think too little.
And with Tik Tok going to sea, the brand has the opportunity to grow into a worldwide big brand. For capital, the team is required to understand both sales in overseas markets and how to build a consumer goods brand. In short, not only look at the growth of GMV, but also pay more attention to the brand repurchase rate.
Most of the teams that do overseas DTC brands are extremely familiar with the market situation because they entered the overseas market early, but the other side of the coin is that traditional channels such as Amazon and lazada are still the main battlefield, and TikTok is still in a supplementary channel, but the new traffic platform has new content logic and needs a new set of methodologies, which is the biggest constraint for them.
Of course, there are also many people who have received high financing, such as the above-mentioned Y.O.U, which just announced the completion of the RMB 250 million C round of financing in February this year, and as of now, the financing amount has reached 70 million US dollars.
In January this year, MAKUKU, a new retail brand for new mother and baby home furnishing, announced that it had obtained financing of up to $30 million, which would be used to explore markets such as Indonesia and the Philippines.
Mach concluded that TikTok live streaming is not mature at present, and market education is needed, but it also provides a time window for brand growth, and once the market matures, it is a huge advantage.
According to TikTok's official news, in April this year, TIkTok is about to usher in four new countries - Thailand, Malaysia, Vietnam and the Philippines. These emerging markets will also bring new opportunities to companies in all aspects of the industrial chain.