Three years ago, no one would have believed that Douyin could overturn Tencent and become China's largest Internet company. Last year, Douyin's revenue reached $110 billion, and its net profit was twice that of Tencent. Almost everyone believes that Douyin will be the sole hegemon until a new giant rises.
But I think Tencent has a chance to turn around, and private domain e-commerce is the killer feature.
I have been investing in live broadcast e-commerce for two years, and I withdrew all of my investment at the beginning of this year, for the simple reason that it is now difficult to make money in the live broadcast e-commerce system based on the Douyin ecosystem. Live broadcast e-commerce is chasing the explosive model, using the sales skills of anchors, and at the same time cooperating with streaming and live broadcast room operation methods to concentrate on selling goods. One of the biggest features of this sales method is that there is no repurchase.
The business model without repurchase is a pain for all merchants, but this is also the trick that Douyin can make huge profits.
In the major live broadcast platforms, whether it is a talent or a merchant, no matter how many fans there are, it doesn't matter how many sales, because traffic is always the platform, and brands and repurchases do not exist. As long as you don't spend money on streaming, the traffic data will collapse immediately, even if it is a talent with millions of fans.
Therefore, as our professional investors, even if it is an expert account with millions of fans and a live broadcast e-commerce company with hundreds of millions of sales, it is worthless. Because you never know if the platform will block your account tomorrow.
However, private domain e-commerce based on the WeChat system can perfectly solve this problem. So what exactly is a private domain? To put it simply, the private domain is a business field that directly establishes a real-time connection with users without secondary payment, and can be re-marketed and continuously realized.
According to Tencent's official definition, a private domain is a long-term and loyal relationship between a user and a brand, and a private domain user is a user owned by a company or brand that can be used for free, at its disposal, and repeatedly reached.
Through the private domain, enterprises or brands can carry out personalized operations for users, spread brand influence through users, accurately analyze user behavior based on data, and realize the application and monetization of user data.
Seeing this description, I think all the bosses of public domain e-commerce will be tempted, so I think that in 2024, private domain operation is a rigid need for every public domain e-commerce, whether it is a talent or an e-commerce company, it is urgent to learn about private domain e-commerce.
I just saw this business opportunity and began to invest in private domain e-commerce in the second half of last year. The first project I invested in was the private domain e-commerce of calligraphy and painting.
My partner, one is the owner of a live broadcast e-commerce company in Heze, Shandong, he is a lifelong member of my Hangwan Club circle of friends, TOP1 in the Douyin calligraphy and painting live broadcast category, and in the past three years, their family has sold 1.3 million copies of calligraphy and painting.
Another partner is a private domain operating company in Hangzhou, a team of dozens of people, relying on private domain sales of tea in the past year, with sales of hundreds of millions.
The project was going well, and we estimated that we could reach 50 or 60 million in sales a year. It's a pity that in the end, because of the drastic change in the rules of the Douyin platform, the live broadcast room of the boss of Heze was blocked, and the project was stillborn.
Looking back now, if I had done this project a year earlier, the outcome would have been completely different. The millions of customer data in the hands of Heze's boss will not be wasted because of the platform's ban.
The failure of that project not only did not disappoint me in this direction, but made me firm in my determination to invest in the direction of private domain e-commerce.
The reason is simple, no one wants to leave their fate to someone else. Almost all live e-commerce companies and influencers urgently need to get rid of the status of "slaves".
As long as you find a reliable project and cooperate in the private domain, the income will far exceed the investment in live broadcast e-commerce. This became my most important transformation of the year.
Speaking of which, I would like to share my thoughts on Tencent as a company. Although many people don't like Tencent, especially parents of primary school students, from an investor's point of view, I am very much in favor of Tencent and Ma Huateng. Unlike Alibaba's high-profile, Tencent is very low-key, and Tencent has always been very restrained about making money, although Tencent has invested in many companies, but most of them are independent and not controlled by Tencent.
Tencent also cherishes feathers very much, and is relatively more cautious about the profit of traffic. To give a very simple example, on Tencent, there is no super Internet celebrity, and Tencent will not be like Douyin, which keeps taking the god-making movement and inciting the people at the bottom to start businesses blindly. Moreover, Tencent is also unfriendly to some so-called knowledge bloggers. Knowledge bloggers like Samgo, Dalan, and Zhang Qi can't eat in the Tencent system. A Tencent insider once talked to me about Zhang Xiaolong's belief that these knowledge bloggers are cutting leeks, which makes me agree.
Tencent and Douyin are both traffic businesses on the surface, but the underlying logic is not the same. One is more focused on long-term interests, and the other is more focused on short-term benefits.
To put it simply, Douyin is more explosive and Tencent is more stable. Reflecting that the same is true for e-commerce, the live broadcast e-commerce relying on Douyin has an amazing starting speed, and the miracle of getting rich overnight is staged every day. Relying on Tencent's private domain e-commerce, many unknown small private domain e-commerce companies have made a fortune.
Take women's clothing as an example, I talked to a women's clothing private domain e-commerce company in Ningbo, three years ago, their company hesitated to take the live broadcast model, and then thought twice and gave up. Many of my peers went on Douyin live broadcast, which was once very brilliant, and the sales of finding a talent were worth their sales for several months. For this reason, they are also entangled and shaken. Fortunately, they resisted the temptation and did not switch to live streaming in the end. Because those peers who were once very brilliant, in the end, because the gross profit was too low, the return was too high, and the traffic cost was too expensive, they spit out all the previous profits, and now they are losing a lot, and due to a large amount of inventory, it is difficult to ride the tiger.
And their current small team, accumulated more than 100,000 private domain users, a small team of more than 20 people, sent a circle of friends, chatted with customers and did business, and there are also 10 million or 20 million sales every year, although they did not get rich overnight, but the stability is excellent.
The biggest benefit of private domain e-commerce is that it has established trust, and once the trust is there, it can not only greatly reduce the return rate, but also greatly reduce the cost of sales.
In the future, private domain e-commerce based on WeChat mini programs is very likely to surpass Douyin e-commerce, and as more and more merchants begin to pay attention to the operation of private domain e-commerce, Douyin's control over traffic will drop significantly.
Once Tencent takes back control of the traffic, then Tencent's counterattack against Douyin will begin.
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Gao Hongye: An e-commerce investor, he has conducted due diligence on hundreds of e-commerce and supply chain companies, and participated in dozens of project investments. Founder of the Entrepreneur Club Hangwan Club, join the Hangwan Club, make more friends, and step on the pit less