A friend who went public on the curve in July this year handed over its first "answer sheet".
Recently, Jiaojiayou Holdings disclosed its financial report for the first half of 2023, with revenue of 433 million yuan, a year-on-year increase of 215.5%; adjusted net profit of approximately 94.635 million yuan, a year-on-year surge of 1798%; the total GMV of the entire network exceeded 5 billion yuan.
Source: make a friend financial report
Making a friend can achieve such impressive performance, which reflects to a certain extent that the potential of the live broadcast e-commerce industry is still being released, and making a friend has also tapped more commercial value through a multi-platform layout.
However, it is worth noting that as the domestic live broadcast e-commerce industry has completed its sinking and reach, industry players are also facing considerable competitive pressure while gaining scale advantages. How to explore a larger increment?
In order to "solve the problem", most domestic players in the live e-commerce industry have set their sights on overseas markets. So, in the new overseas market structure, how to make friends and "make more friends"? Can this achieve new performance breakthroughs?
Make a friend with outstanding performance and make outstanding contributions to cross-platform operations
It is undeniable that the current live broadcast e-commerce track is still hot, but after several years of hustle and bustle, as the live broadcast e-commerce business meets the potential consumption needs of most consumers, the industry dividends have also begun to narrow.
According to the research data disclosed by Mama Cicada, in the first half of 2023, the number of likes, bullet screens, and followers on the Douyin e-commerce live broadcast platform decreased by 29.6%, 18.5%, and 25.0% year-on-year, respectively. In addition, the average number of goods in the live room of the Douyin platform is only 21.2, a year-on-year decrease of 16.2%.
Source: Cicada Mother
In this context, although the performance of most e-commerce live broadcasting companies is still quite large, the growth rate is not as good as before.
Taking Yuanwang Technology as an example, the performance forecast shows that in the first half of 2023, its social e-commerce business will achieve a GMV of about 6 billion yuan, of which the Q2 GMV will be about 3.4 billion yuan, a year-on-year increase of only 11%.
Coincidentally, even the leading companies in the live broadcast e-commerce industry have signs of decline in core data. According to the research report disclosed by Tianfeng Securities, in the first three months of 2023, the GMV of Dongfang Selection fell by 16%, 5% and 9% month-on-month respectively.
In contrast, the revenue and profit of making a friend have risen sharply, and the performance of GMV exceeding 5 billion yuan reflects its development resilience and increasingly significant scale advantages.
The reason why the performance of making friends has soared is mainly due to the synergy effect of the business sector, especially the new media service business has become the main driving force. The financial report shows that in the first half of 2023, the revenue of the new media service business of making friends was 392 million yuan, a year-on-year increase of 640.7%, accounting for 90.5% of the total revenue, a year-on-year increase of 51.9 percentage points.
In comparison, in the first half of 2023, the business revenue of making friends application solutions, self-developed product sales, and system operation and maintenance services accounted for 6%, 3.2%, and 0.3% respectively. Obviously, making a friend has been "all in" to the new media service business.
Source: make a friend financial report
This can also be seen through the cost. In the first half of 2023, the sales cost of making a friend's new media service business was 164 million yuan, a year-on-year increase of 298.2%, accounting for 87.2% of the total sales cost. The cost of sales of other businesses showed a downward trend in both absolute value and proportion.
Source: make a friend financial report
As far as the development of the new media service business is concerned, in order to tap more commercial value, making friends is no longer limited to Douyin, but has realized the cross-platform operation of Douyin, Taobao and Jingdong, and the scale advantage has gradually expanded.
For example, on May 30, 2023, make a friend and enter JD.com. Then in the 618 event, making a friend showed a strong ability to bring goods. The 618 Jingdong live broadcast battle report disclosed by a friend shows that the total sales of the 618 show exceeded 32.65 million, the number of orders exceeded 100,600, and the cumulative number of viewers exceeded 4.717 million.
Earlier, on October 24, 2022, I made friends and settled in Taobao Live. During Double Eleven, I made a friend to conduct more than 20 live broadcasts on Taobao, sold more than 5,000 kinds of products, and surpassed 10 million fans, "creating the fastest fan growth record for Taobao live broadcasts".
The reason why making a friend can achieve outstanding performance on platforms such as Taobao and JD. On the one hand, it is of course because it has opened up brand recognition on the Douyin platform by virtue of the matrix measures of the layout of wine and food, beauty makeup and skin care, outdoor sports and other categories. Knowing that, on the other hand, it is also because of the upsurge of the shopping festival, it actively cooperates with the platform to complete the drainage, so that subsequent operations can be refined.
Of course, the choice of making a friend to operate across platforms is not an isolated case. As the traffic on a single platform is exhausted, most live e-commerce companies are targeting other platforms. On August 22, 2023, 36 Krypton quoted people familiar with the matter as saying that Dongfang Selection has planned to enter Taobao Live, and is currently building a team related to Taobao Live, and has initially found product suppliers, and the broadcast will start at the end of the month at the earliest. As soon as the news came out, Dongfang Selection’s stock price opened 3% higher.
But on the whole, the domestic live broadcast e-commerce industry is already a red sea. According to iiMedia Consulting data, in 2022, the total scale of my country's live broadcast e-commerce industry will be 1,435.4 billion yuan, a year-on-year increase of 19.5%. From the perspective of industry growth, after brutal growth, the e-commerce live broadcast industry has gradually become rational from the hustle and bustle , parallel to the industry clearing stage. However, under the Matthew effect, leading brands still have sufficient "ammunition" to maintain growth.
Source: iiMedia Consulting
At the same time, with the recovery of consumption and the gradual improvement of cross-border logistics, the charm of overseas markets is gradually being released. It is estimated that the global live broadcast e-commerce market will reach 500 billion US dollars in 2023. Judging from the development of global live streaming e-commerce, companies such as Make a Friend still have a lot of room for expansion.
In this context, making a friend has actually told a new story of "going to sea". So, how much dividends can be tapped in overseas markets by making friends?
How much is the "new story" of going to sea to "sell lessons" and make friends?
Based on the advantages of local manufacturing, platforms such as ByteDance and Kuaishou are also gradually exploring cross-border live broadcast e-commerce along with the overseas expansion of short video products.
For example, in April 2023, TikTok Shop launched a marketing campaign with the theme of "Spring Sale not closed" in the Southeast Asian market. During the event, TikTok Shop’s total GMV in the Southeast Asian market increased by 130%, the number of live viewers increased by 110%, and orders increased by 115%.
Overall, China's cross-border live broadcast e-commerce market is indeed growing rapidly. According to research data from iiMedia Consulting, in 2023, the scale of China's cross-border live e-commerce market will be 284.58 billion yuan, a year-on-year increase of 155%. It is estimated that in 2025, the related market scale will reach 828.7 billion yuan.
However, it is worth noting that in the face of overseas markets, making a friend does not intend to continue the business model of selling goods for live broadcasts in the domestic market, but wants to be a "middleman" and become an aggregation platform.
At present, the overseas e-commerce business of making a friend is mainly undertaken by the "overseas business department of making a friend" and the "overseas e-commerce academy of making a friend" based on the TikTok ecology. Operation, the latter focuses on TikTok e-commerce training.
Source: Douyin account "Make a friend Overseas E-commerce Academy"
At the end of 2022, in an interview, Hao Xijie, head of the Overseas Business Department of Make a Friend, revealed that in the overseas e-commerce business of Make a Friend, marketing accounts for about 70%, agent operation accounts for 20%, and talent distribution accounts for 10%. "In the future, the marketing business will be reduced to 60%, and the remaining two items will each account for about 20%."
Such a business layout, on the one hand, can open up a new path and form its own differentiated competitive advantage. On the other hand, it is also conducive to meeting the needs of specific groups and realizing "professional people, doing professional things."
However, it is worth noting that since the consumption habits, supply chain and logistics infrastructure in overseas markets are very different from those in the domestic market, making friends as a cross-border live broadcast e-commerce "middleman" may also face challenges.
According to the "Global Cross-border E-commerce Brand Going Global Ecological Report" released by the Institute of Financial Strategy of the Chinese Academy of Social Sciences, 50% of European and American e-commerce retail scenes gather in independent brand stations. In China, more than 95% of e-commerce transactions come from e-commerce platforms.
Because the e-commerce retail scene in Europe and the United States is very fragmented, some social media platforms in Europe and the United States have begun to abandon the live broadcast e-commerce business. For example, on October 1, 2022, Facebook will shut down the live shopping function.
In addition, coupled with poor control of anchors, supply chains, and logistics, domestic e-commerce platforms have also suffered repeated blows in overseas markets. For example, due to high costs and insufficient cross-border supply chain infrastructure, since 2023, JD.com has successively closed its stations in Indonesia and Thailand.
In fact, making a friend has a clear understanding of the difficulty of the overseas live broadcast e-commerce industry. When talking about its own advantages and disadvantages, Hao Xijie said, "We are good at the methodology and implementation of live broadcast. They should all be able to achieve a score of 60 or more, but the disadvantages lie in the in-depth understanding of the market and the management of multinational teams.”
According to Hao Xijie, in the future, the overseas live broadcast e-commerce business of Make a Friend will focus on localized delivery, productize and standardize the business, and "improve efficiency through data and tools".
This is exactly the methodology for making great strides in the development of the local business of Make a Friend. According to official information, with the continuous increase of vertical accounts and live broadcast rooms, I made a friend at the end of 2021, came into contact with Fanruan, and adopted the BI tool "FineBI" provided by the latter. In this regard, Xu Yueshan, vice president and head of the information department of Make a Friend Group, believes that "the key to the success of a live broadcast is still excellent employees in all links, but the BI system can assist people in decision-making."
Apparently, making a friend is aware of the reality that the overseas live broadcast e-commerce market is full of thorns, and did not blindly apply the mature domestic business to the overseas market. Quantify the maturity of overseas business.
Looking forward to the future, Hao Xijie said that the goal of making friends next year is to "become the number one Chinese brand going overseas in the online celebrity marketing industry, with an income of about 100 million yuan." Compared with domestic business, this figure is not very impressive , but considering the complex reality of the overseas market, the conservative goal may also show the rational cognition of the top management of making friends.
Author: Tianyu
Source: Hong Kong Stock Research Institute