「三只羊」下南洋,TikTok的题比抖音难解

Douyin has brought countless wealth-making myths in China, which accounts for 1/5 of the world's population, but what about the remaining 4/5 of the global market?

Written by Blue Hole Business Yu Weilin

Editor|Zhao Weiwei

The "Three Sheep" have found the right way this time.

Just last November, an industry insider revealed on social platforms: "Brother Yang of the Three Sheep has been doing TikTok for a while, but he hasn't done it, and overseas users don't seem to be able to get funny, and they are a little unsuitable."

Two months have passed, and there has been a sudden good news that as the "first brother of Douyin", the company behind it, "Three Sheep", won the first place on the TikTok list in Singapore, completed the layout of the 2 million fan matrix, and put the premiere of the next stop in Malaysia on the agenda.

"Earn foreigners' money", this is the layout that Brother Xiao Yang has publicly stated in the live broadcast room a long time ago.

Behind the sharp turn in the story is the overseas talent who works closely with the three sheep, and the pallet "Xiao Yang Selection" in its overseas layout. A number of TikTok cross-border service providers told "Blue Hole Business" that "due to the different cultural environments, domestic IPs cannot be replicated, and the key to the success of Three Sheep lies in the ultimate supply chain".

On the other hand, what is implicitly in line with the overseas development of the three sheep is the all-army attack launched by TikTok. In the past three months, this platform, which has always made a fortune quietly, has made frequent moves. In addition to resolving the ban on e-commerce in the Indonesian market through acquisitions, it was also revealed that it was accelerating the transfer of domestic employees overseas, and on the merchant side, in mid-January, TikTok began to collect deposits from fully managed merchants.

With the emergence of talents, tightened policies, and the acceleration of talents, the growth of domestic e-commerce has gradually peaked, and accelerating overseas development has become a common choice for leading platforms, some industry insiders have summarized: "2023 may be the most intense year for China's cross-border e-commerce in the past decade, but it will also be the mildest year in the next decade. 」

In the midst of the storm, TikTok has fired the starting gun for the acceleration of e-commerce. One of the "shortcuts" is to replicate the experience of Douyin. The demonstration effect of the benchmark is the growth engine that has been certified, and the overseas attack of the three sheep is indispensable for the lifting of the platform side, and the three sheep have become the best foreign aid exported by Douyin to TikTok's overseas market.

For the individuals on the platform, Douyin has brought countless wealth-making myths in China, which accounts for 1/5 of the world's population, and what will happen to the remaining 4/5 of the global market?

It's the supply chain

"Three Sheep is good at slicing content that can bring traffic, but it is not equal to commercial monetization," said Bai Xuelin, head of the Middle East business of cross-border service provider Shuaiku, "From our experience, the conversion rate of local native e-commerce influencers is higher, but our local team will be culturally unadaptable."

Three Sheep chose to work with local influencer @shop with Sasax in Singapore, which is one of the reasons why he has turned around in the past few months. Industry insiders generally believe that the underlying reason is in the supply chain.

Three Sheep has been preparing to build an overseas supply chain system since last year, and some of the popular products of its self-operated brand "Xiaoyang Selection" have been launched locally. "Their selection is biased towards mass daily consumer goods, as well as some beauty products," said Linda, founder of Huiyue Cross-border, "Southeast Asia and China are relatively close in all aspects of consumption, and 1/3 of Singapore are Chinese, so it is easy for these products to run out of a closed loop." 」

To a certain extent, Three Sheep is more aggressive in the supply chain than other head MCNs, and people familiar with the matter revealed to "Blue Hole Business" that some categories of Three Sheep do not charge pit fees, but they must have the lowest exclusive price. "One year, we sold hairy crabs, and the cooperation method of making friends was a bet, and the 5 million pit fee guaranteed 50 million sales, but the three sheep directly cut the pit fee, and the cooperation threshold and conditions were simpler. 」

The competition for the supply chain is bound to continue overseas and become the most critical decisive factor at present.

On the one hand, the era of great navigation of domestic head anchors has already begun, and Make a Friend incubated a local company in Indonesia in 2021, and began to do brand marketing agency operations in Thailand in August 2022. Another leading organization, Dongfang Selection, also began to plan to go overseas in 2022, and in January this year, it was revealed that it had launched recruitment for TikTok-related positions. In addition, Xinxuan Group, Yuanwang Technology and other leading institutions have a clear overseas layout.

On the other hand, these MCNs with "overhead" anchors have not yet achieved considerable profitability like in China.

According to sources, Make a friend makes money overseas through agent services, but cross-border self-operated TikTok e-commerce and training businesses are losing money. Even the "Three Sheep", which is gaining momentum this time, although the official announcement broke the record in Singapore, the data of a single live broadcast room is not significant, and the final result of the actual transaction volume still needs to be observed for a long time.

The extreme pursuit of the supply chain and the invalidation of the "overhead" traffic password together illustrate a problem, TikTok e-commerce is still in the stage of "goods" and "people".

Industry insiders generally believe that TikTok and Douyin have the same development path, but the difference is that the process is more urgent. "At the beginning, Douyin e-commerce was mainly cheap white labels, and later there was the first super-head anchor Luo Yonghao, and then thousands of sails competed, and Dongfang selected such a unique content to get out of the circle. According to Linda, the logical sequence of its development is "goods" - "people" - "content".

TikTok is still in the transition period from the first phase to the second phase, and Bai Xuelin gave the example of a contracted influencer from REVA, a leading service provider in the Middle East, who once left the group to work alone, but returned two months later because his selection "can't sell", and the selection of products also tests the supply chain capabilities.

If you use TikTok to benchmark the development period of Douyin e-commerce, it is similar to 2019 when there were no head anchors. In 2019, the GMV of Douyin e-commerce was only 10 billion. With Luo Yonghao becoming the first super-head anchor on Douyin in April 2020, the growth flywheel was launched, and the GMV in 2020 soared to 500 billion yuan. According to the data of "LatePost", the GMV of Douyin e-commerce exceeded 2 trillion yuan from January to October last year.

At the beginning of 2024, TikTok e-commerce announced its full-year GMV target of $50 billion, which is 2.5 times that of 2023. According to people familiar with the matter, its GMV target in the U.S. is $17.5 billion, which needs to be expanded 10 times year-on-year.

Under pressure, there must be action.

At the policy level, the ban on e-commerce in Indonesia in October last year has been basically resolved. Last month, TikTok officially announced that it had reached an e-commerce strategic cooperation with Indonesia's GoTo Group. Its Indonesian e-commerce business will merge with GoTo Group's e-commerce platform Tokopedia, in which TikTok owns 75% of the company. TikTok e-commerce, which was previously banned, was also relaunched on December 12, Indonesia's National Cyber Shopping Day.

Another measure to take a salary from the bottom of the compliance side is to relocate employees overseas, "Interface" has reported that from November 2023, TikTok's front-end and back-end development, data, algorithms and other employees working in China have been notified to transfer overseas, including Singapore, Australia, Canada and the United States.

On the merchant side, TikTok has begun to quietly marginalize the fully managed business with low margins and instead support brand owners. In January 2024, TikTok announced the imposition of a full custodial margin, an increase in commissions (from 2% to 8% per transaction), and the end of policies such as promotion subsidies, category subsidies, and freight subsidies.

"These adjustments mean that the platform will no longer spend money on the market as before, and will start to make profits," said Ah Xu, a cross-border seller.

TikTok has fired the starting gun for the growth of e-commerce revenue, and it is bound to find a leader to lead the team to run wild. Standing at the key node of the historical cycle, the global market is far more complex than imagined, and all kinds of players in the platform ecology also have different thoughts, and TikTok's problems are far more difficult to solve than Douyin, which is also one of the important reasons why it urgently needs three sheep.

Service providers are gearing up, and sellers are mixed

As early as 2021, Linda, who had operated hundreds of millions of GMV projects on Douyin, chose to follow TikTok to go overseas as a service provider, and in two and a half years, the team has grown from 3 to 15 people, from the UK to the US, and has gone through all the models of platform service providers.

Linda told us that there is not much difference between the profit model of overseas service providers and domestic Douyin service providers, which are mainly divided into three types: MCN, TSP and TAP. MCN is good at content creation and influencer incubation, and obtains revenue through self-produced content; TAP can be defined as a group leader business, similar to the intermediary between merchants and influencers, earning third-party commissions and service fees; TSP is a full-service provider that focuses on providing agency operation services for brand merchants.

Whether it is Douyin or TikTok, as a content and social media platform, its e-commerce sector is inseparable from the promotion and promotion of service providers, and as "shovel sellers", they will also be the first wave of platform dividends. Therefore, the overseas breakthrough of Three Sheep is indeed a key signal for cross-border service providers on TikTok to be happy.

"Platforms need good news like this to get all parties to pay attention to and be a facilitator," Linda said.

In addition to the top MCNs mentioned above, according to data from the Crowley Index Institute, nearly 30% of MCN institutions in China will begin to go overseas in 2023, and 14.9% are preparing and waiting.

Linda's team focuses on the United States, and she believes that 2024 will be the first year of TikTok's explosion in the United States, "the circle thinks that the goal of 17.5 billion GMV in the United States is conservative, maybe $30 billion is more appropriate", and the optimistic confidence of service providers is that since the beginning of this year, more and more brand merchants have begun to take the initiative to contact them to ship overseas, which is considered a signal that a hundred flowers are blooming.

"TikTok's opportunities may be a thousand times different from those in China", a service provider told "Blue Hole Business", judging from the data, the growth space of domestic live broadcast e-commerce can already be glimpsed at the top.

According to Cicada Mother's "2023 Douyin E-commerce Semi-Annual Report", in the first half of last year, the number of likes and barrages in the Douyin e-commerce live broadcast room increased by -29.6% and -18.5% year-on-year, respectively. At the same time, according to Dianshubao data, in the first half of 2023, the transaction scale of domestic live broadcast operators increased by 30.44% year-on-year, while in the six years since 2017, the average annual growth rate of live broadcast e-commerce exceeded 75%, and the growth rate is declining year by year.

In contrast, data from iiMedia Consulting shows that in 2023, China's cross-border live broadcast e-commerce market is expected to be 284.58 billion yuan, with a year-on-year growth rate of 155%.

For TikTok-rooted service providers, the bonus is currently a first-come, first-served game.

The most direct is the platform's traffic support, "We rank third in the Middle East market, the official will give us each video to heat, and the policy support may be several times that of other companies", Bai Xuelin said, and such support is bound to be diluted when the platform development enters the next stage.

On the other hand, an earlier entry can give an earlier understanding of the local market and influencers, which represents an opportunity cost. Take the most typical Southeast Asian and American markets. The former is more mature, with hundreds of service providers, but it is also more involuted, while the latter has a higher threshold, needs to pass the language barrier, and has a certain content operation ability, although there are no head experts for the time being, there are already head operators.

On the user side, Southeast Asia has a large number of orders but a low unit price, while the United States has a high unit price, but the quality requirements for products are also higher.

Different market conditions will affect the choice of business model, and some service providers told "Blue Hole Business" that some overseas influencers have no sense of time, and the spirit of contract will be poorer. The scheduled live broadcast will also be "released pigeons", so compared with live streaming, they will choose a more controllable short video to bring goods.

In fact, according to the statistics of the FastMoss Research Institute, 80% of e-commerce sales on TikTok are linked by influencers, and only 20% are live streaming and shopping malls.

In addition, the pallets and marketing priorities vary greatly from region to region, and Bai Xuelin gave an interesting example of the Middle East, where men are allowed to marry three or four wives, and in order to avoid jealousy, they will buy three or four of the same homogeneous products. Women's goods, elderly and children's products will also sell very well.

The "shovel sellers" are gearing up, while the cross-border merchants who are considered to be "gold diggers" are more calm.

"From the perspective of service providers, of course, I hope that the development of the platform will get better and better, but as our sellers, the risks and benefits are the same," said Axu, who focuses on the United States, "The seller's focus is not limited to the front-end sales and operations, traffic is sometimes a double-edged sword, the higher the traffic, the higher the requirements for the front-end operation and the back-end supply chain." 」

Ah Xu talked about the ongoing "Red Sea crisis", which involved the Suez Canal, a major shipping route, and the conflict caused ships to detour, and the price of container freight soared to 600%. "When your supply chain is not local and the inventory is not enough, even if you encounter a big sale time, you can't send the goods and have to get a refund, and if you don't do it well, it may collapse. 」

Another difference is that for gold diggers, there are far more mines than just TikTok.

With the intensification of domestic e-commerce involution, going overseas has become an unanimous plan for the head platform. SHEIN, TEMU, TikTok Shop, and Ali International Digital Commerce are known as the "Four Tigers Going Overseas", and according to LatePost, TEMU's GMV in 2023 will be about $14 billion. The full custody that has been marginalized by TikTok is their secret weapon for their rapid expansion to 47 countries around the world.

For cross-border sellers, TikTok's advantage is that the conversion frequency is faster, and it can be completed in a very short period of time from generating the desire to buy to completing the order action, which is consistent with the advantages of Douyin in China. But another unavoidable problem is that it will also encounter the attribute problems of domestic platforms, "Although the traffic of shelf e-commerce such as TEMU is not as good as TikTok, the users themselves come for shopping, and the user quality and conversion rate are higher. Ah Xu said.

Relying on Chinese sellers and supply chains, the development of short video and live broadcast e-commerce in the Southeast Asian market is recognized as the most mature. Industry insiders believe that the main reason why Three Sheep chose Singapore is that the cultural environment is closer to each other, and the unit price is relatively higher. This means that its successful methodology can be better replicated in Southeast Asia, but in the global market, the competition will be more complex.

Opportunities always go hand in hand with challenges. A senior executive of a leading overseas brand once said, "This will be the last breakthrough battle for China's Internet e-commerce companies", and there is no doubt that 2024 is a critical year for TikTok and even China's cross-border e-commerce.