E77 – The Impulso Podcast – Why is live commerce in Southeast Asia so patchy?

In the latest episode of the Impulso podcast, we are joined by special guest Shawn Teow (who makes his podcast debut), diving deep into live commerce in Southeast Asia.

Shawn, the co-founder and former COO of Upmesh, now leads his new venture, Hitwave, which aims to connect live sellers in SEA with cross-border brands. With over five years of experience in live commerce in Southeast Asia, he has a wealth of insights to share. 

Tune in as Shawn discusses the current state of live commerce in Southeast Asia, describing it as “patchy” due to different stages of development and category focuses; explores the competitive landscape between major platforms like TikTok, Shopee, and Facebook; as well as the critical factors needed for live commerce to thrive in the region – audience growth, content quality, and the role of mid-scale domestic brands.

Is Southeast Asia at the tipping point of live commerce? Check out our latest episode for more insights and our predictions on the future of live commerce in Southeast Asia:

Also available on Spotify and Apple Podcast.

Featured materials: 

Is MCN a good business model?, The Impulso Podcast

Why you should join MW Live Commerce immersion to Hangzhou, TheLowDown

 

[AI-generated transcript] 

[00:00:00] Sabrina

Hello everyone and welcome to episode 77 of the Impulsa podcast by Momentum Works. So today we have a special guest joining us, Shawn Teow. And this is also Shawn’s first ever podcast. So we’re very honoured to have him today.

So Shawn was previously in Aspire as an early employee, before leaving to co-found UpMesh as its CEO, leading the commercial direction to grow and expand. across four countries, while processing over US 150 million GMV annually and raising US 11 million in the process. So his latest adventure, which is also in the live commerce space, is HitWave, a B2B startup that connects live sellers in Southeast Asia with cross border brands.

So Shawn has had a lot of experience in live commerce in Southeast Asia, which is why we thought we would invite him today to have a conversation about the current status of live commerce in Southeast Asia, what are some of the challenges Faced in the region as well as who are some of the key players.

So hi Shawn So, let’s start with the first question, so what do you think is the current status of live commerce in Southeast Asia?

 

[00:01:00] Shawn

Progress actually of live commerce across Southeast Asia is very patchy. All right, you have different countries practising effectively different forms of live commerce Different qualities of live hosts and basically the back end operations as well as their own front end operations, and you also have different categories in play. There are some generalizable trends that you can see across the board, but it’s still very patchy right now. 

 

[00:01:27] Jianggan

When you say things are patchy how long has this status been? I mean, you got involved in live commerce way before TikTok shops started actually sort of pushing this big time in Southeast Asia.

 

[00:01:38] Shawn

Yeah, so a bit of background here is that we started 2020. In 2020, there was already a small, but I think I’ll call it thriving live commerce scene across Southeast Asia. Right. COVID did a lot to help to boost the performance as well as its viewership. And thankfully, unlike other industries, right, like for example, food delivery, the GMV didn’t dip after the COVID lockdowns were lifted.

So. Sorry, what was the question again? 

 

[00:02:09] Jianggan

We say things are patchy, right? So has it always been the status or it sort of evolved into this patchy state? 

 

[00:02:14] Shawn

It started out patchy and it has just continued being patchy. That’s what I argue, right? Because everybody started more or less with clothes.

This was how the whole Southeast Asia started. Everybody started more or less with clothes, right? But at different ASPs. 

 

[00:02:30] Jianggan

You mean selling like fashion items? Yes. Okay. 

 

[00:02:32] Shawn

Different ASPs and also different hosts who are doing it and so on and so forth, right? And over time, it has become even patchier because they started to experiment with other categories or some people didn’t bother to experiment with other categories and they focus on growing the ASP of the products, right?

 

[00:02:50] Jianggan

So ASP means average selling price? 

 

[00:02:51] Shawn

Yes. 

 

[00:02:52] Jianggan

Okay. 

 

[00:02:52] Shawn

Okay. And also some of them started to experiment with different content formats, right, as well as maybe expanding their back end operations or their front end operations, different models of development. Even within just Singapore, it’s such a tiny market in and of itself, right?

There are effectively, I think, two or three different models that are ongoing right now. Then, not withstanding also, there came the entrance of TikTok shop, followed by the consequential decision by Shopee to kind of, you know, fight back against TikTok shop. Right. And it has caused certain countries like for example, Vietnam to leapfrog ahead of everybody else.

Like previously in the past when you were talking about things like Facebook live selling or live selling in general, it simply wasn’t really much of a thing in Vietnam. Right. Yes, you do have kids who are doing live on Shopee live in Vietnam, right? But that’s more of the side hustle. It’s a hundred percent all in kind of effort to make a career or business out of it.

But in the past one, two years, after all the investment in this space, whole MCNs are emerging inside Vietnam where they are doing closest to the China style, doing things like 12 hour, 16 hour lives. Entire factories of studios that are ongoing and doing live. So, very interesting environment that we are in now, right?

Ultimately I do believe it will still cohere into a few standard models across the region. How long is it going to take? What form is it going to take in the end? Will it end up looking like the China form or something else uniquely? We’ll see. I think the question is still up for debate. 

 

[00:04:40] Jianggan

So, we’ll say that, I mean, you think it’s a natural sort of evolution, right?

When a new thing comes out, some people get excited, they try different things, and obviously because there’s no sort of standard playbook that people can follow, that’s why it sort of evolved into different things. And of course, I mean, different countries, they also have different, Some kind of relative isolation in how the ecosystem is forming.

 So that’s why you have, like, even more varieties of different models, different permutations. And you believe that I mean as a natural progression, right? Either you would always have in this, like patchy state where, I mean, it’s always chaos, right? But you could also become A case where a few sort of models, a few guys managed to sort of standardize, managed to like do it more efficiently compared to the rest, and they become top, and their model becomes sort of dominant.

, you think about it. 

 

[00:05:32] Shawn

If I had to bet, I would bet that a few standard models Would evolve, right? Because I’ve really seen the diffusion happen. When I say the diffusion, I mean the diffusion of say for example, diffusion of live streaming operations or the live stream itself.

Thailand was always the first pioneer in lifeselling 

right? 

They have always the best GMV, the highest participation rate amongst the buyers. Effectively largest. Live seller by GMV back then in 2021 would be a lady named Pimrypie. 

But after some time, everybody started to see how Pimrypie was doing her own live streams.

People started to copy it as well. Yes, bubbles do exist. You have the Thai social media bubble, the Vietnamese social media bubble, Indo social media bubble, but it will filter out inevitably. Right. And people will start saying, okay, this looks interesting. I can copy this. I can copy that. So there will start to be that. Kind of, I would say that kind of coherence towards the standard few models, right? And notwithstanding as well, the fact that so here’s a very interesting phenomenon that I don’t think many people know when we talk about diffusion. There’s one channel of diffusion for Chinese practices to enter Southeast Asia, which is people who are from Southeast Asia selling into China.

There’s actually a shocking number of them. If you go to Bangkok for example, you walk into the big city, there are a number of people who will be inside there at any one time, doing live selling. Not all of them are from China. There are Thais who can speak fluent Chinese, and are selling into China.

Right, you can go, like, okay, so for example, myself right, I go to Chiang Mai pretty often, you can go to Chiang Mai, And there on the walking street, or in JJ market, or all that, you will see a lot of Thais, speaking fluent Chinese, streaming on Douyin into China. Or Kuaishou, into China. 

 

[00:07:31] Jianggan

What are they selling?

 

[00:07:34] Shawn

Fashion items, random curiosity things, right? Like a small carvings and all that. A lot, a lot of Thai food items. 

 

[00:07:43] Jianggan

Thai food items. 

 

[00:07:44] Shawn

A lot. 

A lot.

 

[00:07:47] Jianggan

But that’s interesting because the last few years, you look at the Thai food restaurants in China, it actually started spreading. I mean, I remember in 2014 when I was in Beijing, to look for a Thai food restaurant, you literally have to, like, work hard to look for it.

But now it’s everywhere. Like, every mall would have like one or two Thai places, and Vietnamese places started proliferating in Shanghai as well. 

 

[00:08:10] Shawn

So, when was the last time you went to Chiang Mai? Have you ever been to Chiang Mai? 

[00:08:14] Jianggan

I’ve been to Chiang Mai. The last time I was in Chiang Mai was probably 20 Oh gosh.

2012. 12 years ago. 

[00:08:21] Shawn

Chiang Mai today 

 

[00:08:22] Jianggan

It’s very polluted, I know. 

 

[00:08:23] Shawn

It looks like China. 

 

[00:08:26] Jianggan

I do hear lots of things about that, right? Because , I personally know lots of people from Shanghai who moved to Chiang Mai. Yeah. So, the living cost is cheaper. I mean, air quality is bad.

Right. But It was not that bad when they moved there. And international schools are cheap. Yes. And life is much more relaxed compared to what you would have in a top tier city in China. 

 

[00:08:47] Shawn

2018 was the first time I went to Chiang Mai. 

Right. 

 

[00:08:50] Jianggan

I went there earlier than you. 

 

[00:08:51] Shawn

Yes. But after COVID, I only went back in 22.

Yeah. 

18. When I went there, everything was written in Thai. 22. When I went there, everything was written in Mandarin. . And to make things more extreme, there is a Chinese restaurant inside Chiang Mai, right. That’s built like a Tulou 

Mm-Hmm. . 

And it’s just called Tulou Restaurant, and it’s huge. It’s sitting at outskirt.

 

[00:09:16] Jianggan

Okay. To give a context, Tulou is kind of in the past, this, this particular part of China in the South, which were frequented by bandits and they build this kind of fortresses where different generations of the same clan would live in. 

 

[00:09:29] Shawn

It’s mostly by the 

Hakka, right? 

 

[00:09:30] Jianggan

Yeah, it’s mostly by the Hakka.

 If you watch the movie Mulan and they lived in the, in the Tulo, right. But anyway, so, so we diverged a bit. 

 

[00:09:37] Sabrina

Let’s not diverge too much. 

 

[00:09:39] Jianggan

I think when I was in Hanzhou like two weeks ago, I was speaking to some of the MCNs and they said that some of their hosts are selling like Thai themed stuff.

Like, you know, , the unique and the novel kind of items and sometimes something related to food, agricultural products, right. And they said, Oh, we figured out it’s much better for our host to be in Thailand, actually walking the market and doing a live rather than being stuck in a studio in Hangzhou.

I mean, the conversion is higher when you put it for the host into a real setting. 

 

[00:10:08] Shawn

This is a global phenomenon. It’s a global phenomenon. I’ve seen this across Southeast Asia. Every live seller, wherever you’re based, right, if you’re based in Philippines, Indonesia, Vietnam, you can be importing goods and selling it and say that, oh, this is very unique and everything, right?

Maybe your session GMV is between 5 to 10. The moment you just go overseas and you just, you know, pan the camera and show I am overseas. Overnight sales. It’s insane, right? One I arranged was they were selling, you know, Cosmetics made from so called mud from Mount Fuji, right? We imported samples and we convinced some live streamers to do it.

Maybe 1K, 2K in sales. Nothing to write home about.

 

[00:10:50] Jianggan

In which currency? USD. Okay, USD. 

 

[00:10:52] Shawn

USD, right. What changed was we brought one, put him by the leg, at the foot of Mount Fuji, 

80, 000 US in sales. One hour. 

 

[00:11:04] Jianggan

How do you see how AI can play in this? Like creating like an artificial environment that you are in?

 

[00:11:09] Sabrina

But if people know that it’s an artificial environment in the background,

 

[00:11:12] Jianggan

People wouldn’t know. I mean, 

 

[00:11:13] Sabrina

But simply you have to disclose it though. If you are using AI. 

 

[00:11:15] Shawn

No, but they will find ways to prove it. So like this one, they pan the camera. They show that it’s true. Yeah. They say can you hear the wind sound on the microphone?

Right? So that, I don’t 

know. 

 

[00:11:25] Sabrina

Yeah, I don’t know. Why do you think that? I don’t think that’s the case though, like why do you think when they are at the actual location, is it a consumer mindset thing or? 

 

[00:11:35] Shawn

Okay, I used a bit of a more complicated English to explain this. It’s living vicariously through others.

So by seeing them there and it’s there, it’s like, wow, it’s so interesting. They are really there, they really has that whole atmosphere of the feel to the live stream, right? That it’s as if I’m doing virtual tourism. My bet. 2 0 was during the COVID lockdown period and 2 1 and 2 2, actually travel was still quite restricted, right?

My bet was this kind of travel streaming would actually have died down after 2 2. I was totally and completely wrong. If anything, the GMV has just gone up. 

 

[00:12:16] Jianggan

Yeah. 

 

[00:12:17] Shawn

It’s also because my theory here is that simply because people have become accustomed or expect this kind of travel entertainment Together with their live streams.

 

[00:12:28] Jianggan

I do have some friends who live in Europe. They’re Chinese. They live in Europe. And a few years ago they just started recording their daily lives in Xiaohongshu. And recently they have started selling stuff. Yes, and some of the sales is staggering. I mean, like one person is selling like half a million RMB worth of like your trinkets every month.

 

[00:12:48] Shawn

Yeah. 

 

[00:12:49] Jianggan

Yeah, 

 

[00:12:49] Shawn

it’s ridiculous. But if so, okay, I mean from a standpoint, right? Xiaohongshu’s Livestreams, right, are actually, as I understand on operating margin basis, a lot more affordable, a lot more sustainable for Xiaohongshu. Because they don’t have to do that much price support. Because at least for just that audience, right, on Xiaohongshu, it’s all about Seeing other people in other countries And also maybe potentially buying things from them right, and that has always been xiaohongshu’s thing right from the start right being effectively a travel log 

 

[00:13:22] Jianggan

and I was actually talking to a friend yesterday She came to the office a friend of mine who used to be a vc investor in beijing and since the pandemic she built a cosmetic brand Out of shanghai and I was asking her.

Isn’t that very like Red red ocean, right? It’s very competitive and stuff. So no, I mean I started doing Xiaohongshu I have a good following and I’m profitable every month. I don’t spend almost anything on marketing I just spend on content creation Sometimes I will do a bit of live and she said if I went to Douyin Things would have been very different.

I would have to spend probably a lot on marketing Yeah, but also she doesn’t know that because Xiaohongshu now is Trying to focus on commercialization. You just don’t know how long this will last like this kind of good times 

 

[00:14:03] Shawn

Yeah, yeah, that does make sense 

 

[00:14:05] Sabrina

Well, we’re talking about platforms maybe because I mean we’re talking about xiaohongshu xiaohongshu is more prevalently used In china and amongst the chinese community, right?

But in southeast asia, it’s a little different because not every country here can read Chinese. 

 

[00:14:18] Shawn

Only the malaysian chinese use xiaohongshu 

 

[00:14:20] Sabrina

Singaporean also like if they can read chinese is I don’t use Xiaohongshu because I cannot read Chinese, but in Southeast Asia, the platforms that we look at most often when talking about live streaming or live commerce is TikTok shop, Facebook as well, right?

So how do you compare these two in terms of the live streaming space in Southeast Asia? 

 

[00:14:43] Jianggan

Let me also add a second layer of this question. I’ve been talking to lots of investors and of course, from investors point of view, one question that people always debating is that is it worth for Shopee to subsidise live so much?

Because I think in Q3 last year, I think almost all their sort of subsidies and way into life. So that was a big bet. 

 

[00:15:05] Shawn

I think it’s a bit of a rude question.

 

[00:15:08] Jianggan

It’s a what? 

 

[00:15:09] Shawn

It’s a bit of a pointless question. Yeah. Not to be rude here. Yeah. But, it’s not a bet. It’s, they have to make this an investment to continue to maintain parity against TikTok.

That’s my point of view here. Right. Because if they don’t invest in it, if they don’t try to grow the Shopee live space at all, right TikTok will take the pie. Right. I mean, maybe not 80, 90, 100 percent, but I’m saying significant enough to make them sit up lah. Before there was that regional decision by Shopee right, to actually do something about their life right, their live streams were okay, right?

You had a lot of precious stones, a lot of geomancy and everything. Nothing that most people actively want to watch or buy, except that kind of, the fanatical few who actively want to buy. So, if TikTok invests in live stream and uses live selling or live commerce as the primary pioneer to open up for the TikTok shop experience, right, Shopee inevitably has no choice but to invest in it.

Otherwise, TikTok will take away the bulk of the audience. 

 

[00:16:22] Jianggan

So you mean that for them, there was not much of a choice, right? They had to do it. I mean, whether it’s efficient or not this is something that they can figure out along the way, or maybe they can’t figure it out. We don’t know, but there was no strategy choice that to do it or not to do it.

 

[00:16:35] Shawn

Yes. It’s really inevitable. That’s why I would say it’s very simple parallel would be Taobao live versus Douyin 

 

[00:16:43] Jianggan

Taobao started earlier. 

 

[00:16:45] Shawn

Taobao started earlier. Yeah. Right. And then Douyin come and took quite a big chunk of the pie away from them. And Taobao now is stuck in this race. Right. They can’t stop investing in it because Douyin won’t stop investing in it.

It’s a Mexican standoff. And that’s the same situation that they’re both in right now.

 

[00:17:01] Jianggan

There’s another choice that Shopee can potentially make which is to convince Bytedance that it’s not worth investing in e commerce in Southeast Asia. But I think that’s a difficult proposal. 

 

[00:17:12] Shawn

Either way requires investing a huge amount of money, right?

It’s still, I mean, different outcomes, different strategic ends, but it still starts with the same means. Investing a huge chunk of money in it, raising the cap, right? And having some sort of modes effectively to have lower cap than TikTok. But I don’t think that’s ever humanly possible. Because TikTok doesn’t have to spend a marketing budget on TikTok shop.

 

[00:17:38] Jianggan

But TikTok has to do this internal calculation, right? The ROI that, okay, I, I put on life. But of course, eventually in a situation like what we have in China the MCAs, the live sellers. They pay a lot more to Tiktok in terms of advertising, but budget as compared to the commission, they pay to Douyin, for example. , so maybe, maybe that. make Tiktok, realized that, okay, I have to make the e commerce part big enough, big enough so that my advertising sort of income will increase a lot because there are lots of people trying to sell goods. But of course, one argument is that in Southeast Asia, there aren’t that much supply, there aren’t that many suppliers.

So we will not reach a situation where we, with thousands of different suppliers fighting for the same audience. And each of them would have to either cut the price. Or pay a lot of advertising dollars to Douyin, or both. 

 

[00:18:29] Shawn

By suppliers here, you mean merchants on the platform? 

 

[00:18:32] Jianggan

Merchants on the platform.

 

[00:18:33] Shawn

Merchants on the platform. 

 

[00:18:34] Jianggan

Merchants, and the merchants could be sellers, could be MCNs, could be, I mean, in certain instances, what Douyin is actively promoting now is manufacturers doing their own live streams. 

 

[00:18:44] Shawn

Mm 

 

[00:18:44] Jianggan

hmm. 

 

[00:18:44] Shawn

I take the other point of view. Mm hmm. The other half of this argument here, right?

Merchants were always multi home. 

 

[00:18:50] Jianggan

Oh, it’s what? 

 

[00:18:51] Shawn

Multi home. Hmm. Right? They will sell on whichever platform is able to give them that kind of volume. 

 

[00:18:56] Jianggan

True, true, true, true. 

 

[00:18:57] Shawn

Even if it doesn’t cost them anything to host. Because putting a product that is free, right? There are no listing fees. No one dares to actually put listing fees.

 

[00:19:03] Jianggan

But doing it active and live, there’s a cost. 

 

[00:19:06] Shawn

Yes. So that is where multi streaming comes in. Right. There are all number of sales solutions out there that allow multi streaming across TikTok live, across Shopee live at the same time. They will still actively seek to pursue that kind of multi streaming, multi homing, rather than committing all in on any single platform.

Right. So I don’t think it’s likely that it will ever hit a point where TikTok ROI is no longer worthy. 

 

[00:19:36] Jianggan

Interesting. 

 

[00:19:37] Sabrina

How about facebook Live? Because, I mean, we talked about, we connected, talked to Douyin and Shopee to Taobao, right? But of course, there’s also a player in this region that doesn’t close the loop, but there’s quite a few live streams going on there, which is Facebook Live.

So where do you think?

 

[00:19:51] Jianggan

Are they a player? 

 

[00:19:52] Sabrina

Are they? 

 

[00:19:53] Jianggan

I don’t know. 

 

[00:19:54] Sabrina

Will you count? People do streams on Facebook. They just have to close the loop somewhere else. 

 

[00:20:00] Jianggan

One thing I’ve been curious for a long time, is there anybody at Facebook who is actually in charge of Facebook live? 

 

[00:20:08] Shawn

I spent four years trying to engage with Facebook.

I haven’t found that person yet. 

 

[00:20:13] Jianggan

Okay. So which means that is a product that’s on Facebook? 

 

[00:20:18] Shawn

And I’m a meta investor, Upmesh was a meta investee. We had half a million bucks from Meta. Okay. We still couldn’t find that one person who was in charge of Facebook live. 

 

[00:20:29] Jianggan

So, I mean, how does that work?

So you have this product, you have the ecosystem around it, and nobody from Facebook is in charge of engaging with this ecosystem. 

 

[00:20:38] Shawn

Because they have broken themselves down into functional lines, right? So if, for example, if it’s about chat and monetization through chatbots, WhatsApp for business and all that, yes, you have a team there that’s actively building it, growing it out.

But Facebook Live, As a thing, nobody, I have yet to find that person. It could be my own efforts are not good enough, but I’ve yet to find that person who actively does anything about it. Because , when you look at Facebook Live as a customer, to you, it’s an experience, right? It’s a live stream, there’s something to watch, somebody must be the product owner.

 

[00:21:13] Jianggan

I’m sure somebody is. I’m sure that at least there’s somebody who’s in charge of the product and the tech aspect of it. Exactly. And that’s maintaining it, right? 

 

[00:21:19] Shawn

Exactly. But Under that one product, they carve out that functional line of messaging. So, every live stream, you have comments and everything that falls under messaging.

So there’s a separate functional group that’s looking after that. So you don’t genuinely have one person who’s taking charge of the entire Facebook Live product as is. 

 

[00:21:40] Jianggan

So as a result of that, do you think that the ecosystem around Facebook life is evolving in very interesting ways?

I mean, just, I mean, maybe unrelated, parallel, so Ant Group, Alibaba’s financial, sort of digital financial services affiliate, they invested in a digital wallet in Pakistan. For a long time it was not performing, until the pandemic hit. You know what happened? They couldn’t send anyone from China to that business.

So for a few years, that business was left to whoever was there to manage, and the business started performing exceptionally well. There’s no a KPI associated to that. 

 

[00:22:21] Shawn

I choose not to comment. Because there’s Lazada and all that can tell us. Give us very similar examples. Facebook live. 

 

[00:22:32] Jianggan

So obviously, I understand. I mean, Facebook’s not monetizing that, right?

 

[00:22:36] Shawn

I don’t think they ever will monetize that. 

 

[00:22:38] Jianggan

So you don’t have to pay, like, for advertising to get your live stream sort of viewed by more people. I think distribution is done in a different way. The distribution of traffic. Yeah. And you don’t pay a commission to Facebook because they don’t close the loop.

So Facebook is essentially not monetizing that directly at least. Yup. 

 

[00:22:57] Shawn

So, a bit of war stories here. When TTS first entered the picture. TikTok shop. Yeah, TikTok shop first entered the picture. They are primary, they only had two key sales to all live sellers. Number one no admin fee or low admin fee of about 1%.

Right? Shipping would be free. That was the first selling point. Second selling point was that they would deliver traffic to you. These two selling points, Facebook then and Facebook now, still has no means of combating whatsoever. But having said that, right, Facebook Live will always be a thing, Facebook Live will always be an impediment to the growth of Shopee Live and TikTok Live.

No matter what. Because it will always remain free. If you really are so stuck in your ways and you only want to do Facebook Live, you don’t even want to pay MDR, you still can build a large enough business around it, right? Even here in Singapore, you would think people are more advanced or more modern in thinking.

I know some MCNs doing 150K, 200K of GMV. USD, you know? A GMV a month, right? And still no payment gateway. 

 

[00:24:21] Sabrina

So, they just purely use Facebook Live?

 

[00:24:23] Shawn

Purely Facebook Live, payment collection through PayNow. No payment gateway, no 

 

[00:24:28] Jianggan

So, manual payment collection? 

 

[00:24:30] Shawn

Yes. Okay. And they are doing between, what? 50 60 thousand orders a month.

And still no payment gateway. They refuse to use payment gateway. Because to them, the 2. 8 percent is not worth spending on. 

 

[00:24:42] Jianggan

And also because, I mean, the effort to actually process all these payments manually is not as high as, I mean, for them to be paying for this, I need an automated solution, which costs me.

 

[00:24:55] Shawn

It is because they have to hire one whole person whose job is just to look at the bank account and check, tally it against every invoice that is sent out. So one human being who is just doing that every day. That’s the so called cost of doing things, which in the long run actually is, I think, quite expensive for them.

 

[00:25:13] Jianggan

But I mean, if you pay 2. 8%, I mean, if you do like 200k, I mean, that would be 5, 600. That would cost more than a, like, junior admin person, who’s meticulous. 

 

[00:25:24] Shawn

So that’s what they’re thinking. So that junior admin person, the whole job and all that. Of course, I’ve seen it break down in execution in a lot of ways, right?

Junior admin person, after two months, says, This is Crap, I don’t want to do it anymore. Then you have to find another junior admin person, and all that. Or the junior admin person thinks, starts to think evil thoughts of, Oh, shucks, actually there’s this much money in the bank account. How do I get some of it for myself?

Or they try to change the pay now code. I’ve seen all iterations of versions of 

this. Stupid ways of doing things, right? I’ve seen all iterations and versions of, of these things. So I’m still on the side of, of payment gateway. It’s not a simple like dollar to dollar kind of calculation. But no matter what, you can still build a business out there.

And so that means that if, for example, right? Like recently, TTS raised admin fee to up to 6. 5%, right? Shopee vife is somewhere around 10%. It will be a drag on them to continue to raise, because no matter what, Facebook live is always going to be free. You can’t jump it up to 15%, right? Because if you jump it up to 15%, then, well, there’s the other option, which is 0%.

Right? And, of course, I’ve heard this argument before all the way from TTS time, which is that we can give you traffic. No matter what, we can give you traffic, right? In the early days when they first started, they promised for every one hour, I think it was between 80 to 100, 000 visits per stream. That’s what they will always sell.

The problem here with that, okay, so two separate problems with that. The first problem is that it’s a defacto part of people’s lives, right? People have, at least depending on country, right, for example, Philippines and Vietnam and some parts of Indonesia as well. People already have this habit of using Facebook as their sort of WeChat. It’s their messaging, it’s their social updates, it’s their bulletin board.

Everything that is posted on TikTok, they also make sure to post it on Facebook, right? So it is a kind of part of their daily life. This part of the traffic will never leave. In fact, so much so to the extent that I was curious. So I personally went down into the coping spaces and everything and just spy on people’s computers.

I’m a bit creepy that way, forgive me, right? Almost all of them tend to have Facebook open, well, at least on one tab. on their script, on their computer. Because it’s their default messaging and updates and everything else. So no matter what you can promise of the traffic, Facebook will also be able to promise it, just that they won’t be able to manually trigger it.

Plus there’s the Facebook algorithm, I don’t know what they call it, my own way I call it is rule of 50, which is once you have crossed a certain size, I think a few thousand followers, every live stream you are basically going to get a minimum of 50 viewers. So if anybody leaves the stream and starts viewing, they’ll keep driving more traffic over to you again and again until you hit back to 50 again or more.

So no matter what, right, Facebook still is, I mean, it’s a slumbering threat, but it’s still there. So that’s the first reason. The second reason is on TikTok, when you drive more and more traffic over to that, the difficulty then, and I think to some extent now, is that. The conversions aren’t great.

The conversions aren’t great. You are seeing a lot of, okay, they drop in, they watch five minutes, and they drop out. I don’t exactly, I can’t claim to have the data or the numbers from the TikTok site to prove it. Everything I’m saying here is just anecdotal based on the live streamers that I work with who are selling on TikTok and all that.

But it’s a very different audience behavior as well. All right. On Facebook, for instance, Facebook, you can go and do a live streaming for long periods of time because more or less your audience, the audience that drops in within the first 10 minutes will more often than not stay on for at least an hour or more, right?

And during this period of time, you can keep talking to them, you can keep selling to them and keep increasing their basket size. But TikTok, their experience is very different. Every more or less, they need to take it as a given that every 7 to 10 minutes, that audience is swapping out. So they can’t do the usual method.

They can’t increase ABS and everything. They just have to count on increasing selling to the new audience that’s coming, new audience coming, new audience coming. And the conversion rate for that is not that great. 

 

[00:29:54] Jianggan

So the MCNs we visited in China, we have visited a lot over the last quarter or so, actually over the last half a year.

Many of them are telling us is that, I mean, the operations become more and more refined, right? I mean down to the second level, so every second that I mean, Douyin will give them the live sort of traffic information. And based on that they either have to actually probably both right.

They have to get the hosts. To engage at like every three second levels So if like there’s like three seconds of dull time people switch out. Yes this is one thing a second obviously is the advertising so they give you the the sort of the real trend of traffic down to the second level and you, you can decide that on the spot saying that, hey I want to push to more people and I want to pay a bit, I mean, just like step on the the pedal, right?

I mean, accelerate that, , put a bit of fuel and then more people will watch. So as a result, like lots of money now, I mean, inadvertently go to Douyin because, I mean, people want to. Sell more, and as long as the ROI is okay, they want to do more. But of course that’s on China’s scale, right?

 

[00:31:01] Shawn

That’s definitely China’s scale. You don’t get the kind of granularity, for sure you don’t get the kind of granularity on Facebook. On TikTok as well, I don’t, as I understand so far and having observed one or two live streams, that sort of granularity isn’t present yet as well. It may be a very Douyin specific phenomenon, but it doesn’t exist so far.

 

[00:31:26] Jianggan

So just to , summarize a little bit. 

 

[00:31:29] Shawn

Sorry, I just want to bring up one more point. So we were talking about audiences and conversion. I do believe that TikTok, if I had to put money on it, I would bet that TikTok knows they have this problem. Because for the past two years, their strategy has not changed.

Going to Facebook and IG sellers and giving them tons of money, giving their buyers tons of money, to drag them onto TikTok to start buying there. This hasn’t changed. This hasn’t stopped. And it’s still leaking back out. They are still going back to these Facebook sellers and still convincing them to go back onto TikTok, right?

Many of these sellers are actually just arbitraging between the two platforms. If this month price support is good, I’ll go on TikTok. If this month price support is not good, okay, I’ll stay on Facebook instead. , right? Because the whole process for the customers is very laborious. Plus there’s no real guarantee of conversion.

 

[00:32:25] Jianggan

Mm-Hmm. . Mm-Hmm. . So, so, so when that happens do you think that I mean, how would you think that TikTok would find, I mean, what kind of formula they would have eventually for these people to actually stay on TikTok shop? Or, I mean, what needs to be done? 

 

[00:32:45] Shawn

What? 

 

[00:32:47] Jianggan

That’s like a billion, multi billion dollar question.

 

[00:32:50] Shawn

Yeah. I don’t dare to say too deeply because I don’t know the inner workings of TikTok and what they are doing, right? For all I know, they might already know this or they might already have their own plans. But from an outsider point of view, I would say the first thing they need to do is grow the audience.

They have the users, they have the mouth, they have the MAU, they have the DAU. That one, no doubt, no debate, right? I think they need to grow the audience. 

 

[00:33:18] Jianggan

What do you mean by growing the audience? They already have the users, right? I mean, and they have been trying to convert these users into e commerce users.

 

[00:33:26] Shawn

They need to grow the audience to be more accustomed to buying from live, to actively enjoy watching live. Right now, the entire process, what I feel, so far, when I look at, when I went with you, for example, to Shenzhen, right, and I see from the China point of view, what a live stream looks like, what it feels like, right, when I watch it on my WeChat when I borrow my friend’s phone to watch his Douyin, the quality is very different.

And the quality matters because right now the quality of all the live streaming being done on TikTok, even Shopee live, is just One camera, one man. I have this thing explained. It’s very good for you. Are you gonna buy it? Please buy. Right, next one. This thing I have is very good for you. Please buy. It is a vast difference from the kind of engagement, thought, right, creative, our production value, etc, that goes into a Chinese live stream, where you actually actively get engaged or, you know, we’ll say 入神（get engaged）, right?

And you feel like, wow, it’s very interesting. It’s very exciting. I want to continue watching it. That is a very big game changer in trying to get people used to buying from live commerce. Whereas right now, everything on live commerce, nothing about it leaks out at you to say that. I, as a viewer, I, as a buyer, I actively want to buy something from this.

Right? There’s nothing. There’s no reason for me to stay in the first place, much less give you the time to convince me that I should trust you, that I should be buying any of these products from you.

 

[00:34:56] Jianggan

I think in China, I mean, the content evolved to to what is today. I mean, if you look at some, like, you know, the streamers, the MCNs.

They put lots of effort in production, right? Yes. Some of them hire the best talent from TV stations, from studios. Yes. For like, not the live studios, but from the sort of production studios of TV programs, movies, to help them with, with the content. I mean, the SunChain MCN we visited in what’s that?

Guangzhou. Guangzhou, yeah. In Guangzhou, like almost the entire, like core team came from, like, TV background. Yes. And Joy Media, one of the top ones in Hangzhou. Like, all the senior management came from Phoenix TV, which is one of the largest satellite TV stations in China. So I was told that I mean, the content is so good, or has to be engaging, because of two reasons.

I mean, first is that production of video content sort of predates the live commerce era. I mean, there was lots of entertainment live in China, which we already like to know of some quality. And the second is that in China precisely it comes to the point of there’s so many people competing in every sector.

So as a result, traffic becomes more and more expensive. I mean, platform charges you for traffic as a result. I mean, how can you differentiate? And multiple people have talked to what I think running the MCN is that content is the only way nowadays. You have to have a continuous novel. 

 

[00:36:17] Shawn

So here’s the funny thing, and it is not unheard of, at least in the Singapore context, I don’t know so much about Malaysia or Thailand, right, but it’s not unheard of in the Singapore context for these so called TV celebrities to come out, to do their own live selling.

In fact, I can point you at two right now. There’s M. Dada, 

 

[00:36:32] Jianggan

Do you know who that is? 

 

[00:36:37] Sabrina

I don’t know any Singaporean celebrities. Wrong audience. Sorry, sorry. 

 

[00:36:42] Shawn

Young people problem. 

 

[00:36:44] Jianggan

I don’t know either, but yeah.

 

[00:36:46] Shawn

But this, this was when I was young, which was before you were born. Do you know Phua Chu Kang, right? Thank you for reminding me how old I am.

Right. But when we were young, these were all the mainstays. You always see them on like Channel 5 or Channel 8 or whatever, right? And they came out and they started doing live selling. So there’s M Dada, Ben Yeo has one as well, which is listed on the second board of SGX. Right. And then you have the third one, which is Sibei Shouk by Terrence Chow and his group.

Right. They are all coming out and doing this. But. Somehow, they don’t seem to have brought out the lessons from creating content or whatsoever that you are telling me that, you know, all these Sunchain and Joy Group have learned. They’re not. They’re still doing it like, okay, maybe they just have a bit of a better studio setup, maybe more investment in the equipment and everything, but in terms of content, it’s just not there.

 

[00:37:43] Jianggan

Oh because they’re actors. They’re not the producers and creators of content. And Celebrity actress that are used to a certain style of acting and which might be different from what is required or what is engaging in terms of having a live audience. Yeah. Maybe. I mean, I don’t know.

Maybe the sitcom actor would be better than the movie Actor. Yeah. Improv. Yeah. Exactly. Yeah. 

 

[00:38:07] Shawn

It is possible as well. I don’t know. I think maybe the sample size is too small for me to speak with more conviction. 

 

[00:38:15] Jianggan

So one of the MCNs we’re going to visit in the next time emerging Hangzhou is Yowant, right?

 Yowant signs, a lot of celebrities and we went to some of their studios. And I mean, we listened to one of the co founders explained to us, it was quite funny because the first thing they said that, that because nowadays there are so many people who made, I mean, so many hosts,

who made horrendous amount of money on live. Yeah. There many tv TV celebrities, they want to be part of that, especially those who still have a following. Right? Yeah. I mean someone they recently signed was someone who’s famous in early 1990s for a TV show. And you can get like I mean the average age of their sort of, so her core audience and she wants to do it, but the challenge is that first, first, I mean, you need to create a setting for them to be able to perform.

So, which means that they can’t do it alone. You need to have someone next to them. So, quite often they can engage with the audience, the other can supplement with the product information, with sort of the emotional engagement and stuff. So, just leave it to the TV celebrity alone quite often it’s not enough, because unless they are willing to sort of change the way they engage, which is a risky game, which is a risky game.

I mean, especially when you’re like in your 50s, right? It’s hard 

 

[00:39:28] Shawn

I actually have two points of view, two separate observations on getting celebrities to sell, right? The first observation I’ve had is that they can’t sell. They don’t have that skill set, right? Because selling is more than just it’s about that live engagement.

It is that two way interaction. They’re convincing of them. They don’t have that. They’ve never had to do that. Their entire professional career has been reading off a script and looking at the camera and letting it record them. So they don’t know how to do that interaction. So that’s the first observation.

Second observation I’ve made is that in this really going out on a hypothesis here, buyers see them as aspirational figures, right? Like George Clooney, if he sells like George Clooney.

 

[00:40:18] Jianggan

You know who George Clooney is, right? 

 

[00:40:21] Shawn

When George Clooney endorses, say, Nespresso, right, he’s endorsing everything about it, the feel that goes together with a Nespresso and everything is aspirational.

But generally, more or less, when you’re doing live streaming, if it’s a more unknown brand, right, that kind of aspirational doesn’t really play much of a part. It’s about convincing them of course. Why this thing is important to them. And there is also a second area where I think audiences generally don’t really have that kind of trust in them to be able to sell it.

 

[00:40:49] Jianggan

So it’s hard for them to create this kind of relatability. Yes. Yeah. 

 

[00:40:53] Shawn

Yes. It’s very strange. I’ve seen it in, in Singapore. I’ve seen it in Philippines. Seen it, haven’t seen it in Malaysia yet, or Thailand. 

 

[00:41:01] Jianggan

Well, in China, what we see that, how Yowant does things is that, okay, if one celebrity comes to sign, I mean, they do this, I mean, it’s slightly differentiated, but essentially it’s the same methodology as if they have a new KOL fresh out of university, whatever, they train them up.

It’s that they will quickly assess what this person is strong at. And maybe strong at a niche product, strong at a niche audience, strong at a niche set of like demonstration skills. And , then they were basically get that person to specialize. 

 

[00:41:32] Shawn

Yeah, but that’s China. I mean, the scale is different. 

 

[00:41:36] Jianggan

So we specialize, I mean, yeah, so one of the studios we went to in Yowant is that it’s one like minor TV celebrity and they realized, okay, that person is only, somehow, I mean, they don’t know why, they just figure it out, right? But they don’t bother to explain exactly why.

They probably don’t need to, right? And so it’s really good at selling this specific brand, the specific line. So they just create a studio of that person for this brand and for this line. 

 

[00:42:05] Shawn

So actually, that’s also a very important thing that you brought up, right? It is the level of ecosystem and infrastructure support, right?

If you are a new KOL, exactly like you just mentioned, you’re a new KOL, minor Television celebrity, you’re entering this space. There are people who are more experienced than you, who are experts in this field, who are able to guide you and teach you. This thing does not exist in Southeast Asia at all, right?

Everybody is just feeling their way forward together and copying from each other. 

 

[00:42:32] Sabrina

So I have a question. So you say like, somebody needs to know what to do. Who do you think should know? The platforms? Are we talking about the brands who want to do live sellings or the MCNs in the region? 

 

[00:42:41] Shawn

I know, I mean, candidly, in Southeast Asia, I think everyone’s just feeling their way forward.

Very candidly, I think everyone’s just feeling their way forward. There is one seller , in Singapore called Queen J. She’s one of the TTS top sellers right now, started in Facebook, like. She and her husband spent eight years in China, right, during the 直播 (live stream） boom and everything, right, and they believed that they can import all those techniques from China into Southeast Asia, into Singapore context, and sell and earn tons of money.

They were correct for a while. A while, maybe six months. In that six months, everybody else copied what they were doing and that’s it. The competitive advantage faded away. And then it just, all it did was, everybody learned how to copy them, do the same thing, everybody grows their GMV, and then they are all back to the same, you know, market share vis a vis each other all over again.

 

[00:43:37] Jianggan

So which means that whatever they learn that’s demonstrable is superficial, right? And it doesn’t create enough sort of advantage over the others. 

 

[00:43:46] Shawn

Yes. Yeah. Yes. So really here, why I’m bringing this up again, and why everybody’s market share more or less is the same, is back to the question that you asked me way back, what’s the first thing to do?

Get the audience first. Everybody is just fighting for the same audience. Back in UpMesh, I ran this study. The name of the study is a bit incorrect. It’s a bit politically incorrect. We called it the Buyer Slutiness Study. 

 

[00:44:12] Jianggan

What? 

 

[00:44:12] Sabrina

Buyer Slutiness Study. 

 

[00:44:15] Shawn

Right, because we wanted to see, because we had unique customer IDs for every single buyer that executes a checkout.

Right, on any one of the sellers that we’re supporting. So what we did, we tried to see how many, on average, how many people were actually buying. Buyers, right, each buyer they are watching on average how many of these live sellers. Number is somewhere around 2. 6, 2. 7. That’s pretty much it, right. And the entire unique number of buyers that we were servicing at the time, 50, 60 thousand.

That’s only what, 1 percent of Singapore’s population. It’s a far cry. It’s a far cry. Every time a new seller emerges or what have you, they are still fighting for the same 50, 60 thousand. Probably has grown quite a bit with the investments from Shopee Live and TikTok Live and everything, right? But it comes down to that.

So you ask me, sorry, going off on a tangent, , how should they fight and win over audience monopoly? Fight and win over traffic monopoly. 

 

[00:45:24] Jianggan

How to do that? 

 

[00:45:26] Shawn

That’s a great question.

I think the type and intent of the audience matters. If a Shopee buyer is on Shopee, their tendency and their preference to buy, right, the propensity to purchase is already higher than top. How you go further from that into, you know, monetizing it further or drawing more of their traffic further. I’ll let them decide around it.

But I think that there is a quite a vast difference between the two of them. But that monopoly, sorry, precondition for the monopoly and why this monopoly can take place is because when people who are viewing live streams, right, they are not going to multi home and find new places to view live streams.

It’s always going to be just that one usual platform that they are used to. So there is that opportunity or that advantage there that they can each start to kind of capture that audience. 

 

[00:46:17] Jianggan

and if you look at experience from China, I mean, there are two types of things which draw a lot of sales, right?

I mean, first is obviously big brands giving very, very big discounts, right? I mean, Li Jiaqi Viya, They were able to come on like huge discounts from the brands and naturally these kind of things will sell and it creates something self fulfilling, right? Brands know that, okay, I can get sales from this host and the host charged me a hefty sort of fee.

Placement fee, which is like a branding budget, so brands are willing to pay for it. In fact, some of the smaller brands are willing to pay for it because it sort of gives them the visibility. I mean, less so now, but for a few years, smaller brands use this to basically get an audience because nobody else has like, you know, 10 million people, 15 million people watching.

And this is something that platform didn’t like, right? It’s too much power , from one host. If that host de platforms and go somewhere else, Then it’s hard to replicate that kind of audience, right? I mean, for the same platform. We don’t see that happening in Southeast Asia, right? We don’t see anybody who can command lots of sales, lots of, I mean, the celebrity, 

 

[00:47:18] Shawn

because audience is not there yet, right?

The audience is just not there yet, no matter what the primary blocker to whatever is happening here. And this is the only thing that I think really either the enablers or the platforms can do. is to expand the audience of live. That is the holy grail here. Not the holy grail of chasing after more sellers and everything, but the holy grail is going after that audience.

 

[00:47:45] Sabrina

How should brands, or how should platforms or enablers go after this, push the live videos? 

 

[00:47:50] Shawn

Eh, this answer can earn a lot of money on it. This answer can earn a lot of money. 

 

[00:47:55] Jianggan

You can give like 10 percent of the answer, the other 90%. 

 

[00:47:59] Sabrina

The other 90 percent you just share with us..

 

[00:48:04] Shawn

I think, I think the first most important thing is to improve the quality.

Everything else is secondary, right? I, once in a while I watch Shopee live. I watch TikTok lives a lot more, right? But the quality of the live between both of them is equally bad. 

 

[00:48:24] Sabrina

When you say quality, you mean like content wise, entertainment wise? 

 

[00:48:28] Shawn

Content, entertainment, on screen personality, production, value, right?

I can recognize the strategy, which is just get a warm body in front of a camera and stream. We can’t predict. Here’s my, this is my hypothesis, like what the strategic thinking behind it, which is we can’t predict who’s going to be a star. So we don’t bother predicting. We put a 10, 000, 50, 000 live streamers, whoever goes up, right, we lead about this, whoever goes up, we drive more traffic to them.

That’s my prediction, my hypothesis of how they’re planning and thinking about it.

 

[00:49:04] Jianggan

Isn’t what that Tiktokshop wanted to do, right, I mean, supporting the sellers, supporting MCN, supporting the host, I mean, building ecosystem are you saying that they are supporting I mean, in a way, not exactly sort of accurate way of support that they’re giving, because I mean, they’ve been giving lots of support to get people onto the platform.

They’ve been giving lots of support in terms of price, shipping and whatever. So what I’m saying that maybe they should just purchase bulk of like a professional sort of production Quality equipment and build a studios to support. 

 

[00:49:36] Shawn

Yes. That is like, that’s okay. To me, that’s bare minimum, right? So the heavy investment, like as I understand, TikTok is actively buying warehouses, right?

What also make a huge difference is start actively buying proper studio facilities, right? Whole complex, like what we see in China, Indonesia also has quite a lot already, right? Actively buying that and then improving the production quality. That’s the first. The second is actually giving them a playbook to actively say, okay, this is how you’re going to do it.

Yeah. I don’t know how they’re doing in Indonesia to be very upfront with you because haven’t executed for TikTok in Indonesia whatsoever. 

 

[00:50:17] Jianggan

I think for TikTok in the early days, one thing they did is that they actually encouraged them in Douyin this top. MCN’s top sort of teams to actually even some of the brands to basically go to Indonesia because they know that, okay, these guys have already made money from Douyin I know a few of them personally. they don’t find it very challenging in Indonesia because they said, okay, we have a playbook in China, Indonesia. We know that, okay, we’ve sort of figured out this playbook doesn’t exactly work. So for instance, I mean, it is one thing, I mean, when I go to the U. S., it’s even worse, right? I mean, I sign 10 hosts, I expect everybody to report to work at like, you know, 8 a.

1. or whatever, 7 p. m. They don’t show up. So that kind of thing, which for them is that, okay, they have a process, they have a playbook in China, and it’s just for whatever reason, when it comes to people, when it comes to organizations, it just doesn’t work exactly the same way. And that creates problems for them.

 

[00:51:11] Shawn

This is normal. I have worked back then at Upmesh’s Peak with, you know, live Sellers. We worked with live Sellers across four countries, right? I tell you, working with Life Sellers is an art in emotional management. You will learn emotional management like never before. Because it can be incredibly frustrating at times.

So I share with you a personal war story. Back then when we were trying to figure out how to kickstart we were trying to figure out how to kickstart additional monetization by doing brand connection, like giving them access to brands, supporting them, providing them goods and everything. We were trying to find every lever that could work.

Even if it was not profitable on a gross margin basis, we were still going to do it. We were actively paying streamers, these live sellers, to go overseas and stream from there. There was one that sticks out in my mind till today. A Malaysian team, two separate MCNs, we paid cash money for them to go to Japan to stream.

So, first day, guai. There were cells put in front of them. 

 

[00:52:20] Jianggan

Guai means obedient. 

 

[00:52:21] Shawn

Yeah. I mean, we wouldn’t really say obedient. It means more like 

 

[00:52:25] Sabrina

Do their job.

 

[00:52:26] Shawn

Aligned. Aligned. Aligned. Second day, still okay. The third day, they disappeared. Yeah. We paid for their trip, we paid air ticket, we paid their hotel, we paid a little bit additional on top of that.

And they disappeared. They went radio silent, couldn’t contact them, couldn’t call them, they went radio silent. And then later on, when we only found out where they are, when they started doing live streaming from Don Don Donki. Not one day, but two, three, four days. And To them, the way they see it is very simple, and this is globally across all Southeast Asia, right, all the life sellers see it the same way.

What you want is what you want. But if what you want is not going to profit me, to the level that I expect to be able to profit, I’m not going to listen. What can you do to me? All right, for two separate reasons, you know. The first reason is this. You can sign a contract. How much does it cost you to enforce the contract?

They recognize it. They are not entirely stupid, right? They recognize that it’s going to cost you more to enforce the contract than to just ignore them. So they will ignore any, generally ignore all contracts lah. I’ve seen this, I’ve had my own contracts broken, broken before and no choice, there’s nothing we can do about it.

The second reason is that they know if you try to do or enforce anything about it, they have 10, 20 thousand viewers. They just go live and complain about you. 

 

[00:53:51] Jianggan

I think that’s the issue that Chinese MCNs going to the U. S. are facing. Yes. There’s nothing they can enforce.

 

[00:53:57] Shawn

There’s nothing you can do about it.

Yeah. There’s nothing you can do about it. The only solution that I have found over time, and this one I should be charging money for, right, is to work with a broad enough base. You expect, you set your failure rate to be higher than what you’re used to. You set a broad enough base so that at least you have that minimum number of streams and connections going up.

 

[00:54:16] Jianggan

Actually sort of just going off tension related point, , I’ve been talking to lots of manufacturers in China over the last year who are expanding their manufacturing base to Vietnam, to Cambodia, to different parts of Southeast Asia and increasingly over the last two years to Mexico and Turkey.

Quite a few people told me that. Mexican workers are much harder working compared to Southeast Asians. And I don’t know exactly what’s the reason. And they said Mexican workers are as productive and sometimes more productive than Chinese workers. Not because they’re smarter or whatever, but they just work all the hours they’re supposed to work, and they work longer hours.

 And one person who has built factories in, I think Indonesia and Mexico both, I mean two, obviously circumvent different kind of export rules, was telling me that, His theory about why Mexican workers are hard working is that they are building the factories near the U. S. border. So basically the workers you hire there are not locals. They’re migrants from different parts of Mexico, and they said and it was, I mean, in certain parts of, say, , for Vietnam, you know, certain parts, I mean, Vietnamese workers are already considered hard working in China standards.

They said, I mean, the workers we hire are from neighboring, sort of, towns, neighboring villages. And the motive of people who work in their neighborhood is very different from the motive of people who actually take active step to migrate and in search for a better life. Migrants are willing to put much longer hours and work much harder.

I mean, I’m not sure whether there’s like a relation there. 

 

[00:55:47] Shawn

I do agree, firstly, there is really that natural filtering effect, right?

If you’re motivated enough to move, you would want to do, Anything that you can to make it succeed, right? But I think the other half of it is general expectations around work on corporate culture, right? So for example, like in Indonesia, the expectations, 5pm means sometime today. You know? I mean, you’re operating in Indonesia, you know what I mean?

EOD means sometime today. Malaysia EOD means sometime today, if I come to work, right? And it’s more relaxed, right? The kind of hard hitting, this day, this timeline, the kind of discipline within the corporate culture doesn’t really exist. Even in Philippines, for example, right? In the Philippines, it’s just Okay, I’ll tell you, I’ll do it for you by 10.

You are lucky if you get answered by today. Alright. That kind of corporate culture, that expectation, execution, discipline, doesn’t exist. 

 

[00:56:54] Jianggan

I mean, there are sort of historical reasons for that. But actually

 

[00:56:57] Sabrina

I need to bring us back to life. Yes, yes, yes. Where are we going? 

 

[00:57:02] Jianggan

 So come back to the live commerce. So one question is that because whichever sector, I mean, in Southeast Asia, you see live commerce, I mean, you see like lots of people talking about it, you see lots of like people doing it, but at the end of the day, it’s still not as competitive as what you see in China.

 

[00:58:10] Shawn

No, it’s not. 

 

[00:58:11] Jianggan

But also because the market is so segmented I don’t know whether you could argue that it would ever reach that kind of competitive level.

 

[00:58:21] Shawn

It will if we hit 30%. So 30 percent of ecommerce transactions being true live, it will hit that level. I’m using that as a benchmark because that’s the benchmark from China, where it’s becoming competitive.

The difficulty is, the reason why it still doesn’t feel so competitive, is because the market is still very small. So more or less everybody knows each other. Even within the live sellers, the MCNs, more or less, everyone still knows each other, they still talk to each other. But if you study anything about industrial economics, industrial economics history and all that, the moment that industry size grows large enough to be worth it, right, when you have new entrants, right, that clubby atmosphere will disappear.

That’s when the competition will kick in. So, We hit 30%, it will become competitive. I’m very sure of this. 

 

[00:59:09] Jianggan

Will we hit that? Because, I mean, it’s kind of chicken and egg, right? Sort of, you need enough input for it to reach a critical mass. And after a critical mass, things evolve on its own. 

 

[00:59:19] Shawn

That’s why a lot depends on what happens in the next 5 to 10 years.

Yeah. Right? Whether or not investments are made in, as well as investments are made in the right direction, To grow the audience, to improve host quality, to make brands more familiar with live, and more willing to do live, right? These three things need to come together. 

 

[00:59:41] Jianggan

So that investment comes from the platforms?

Or who else?

 

[00:59:44] Shawn

The platforms, the brands themselves need to do the investment, the MCNs also need to do the investment. Right now, and, this is part of a larger problem with live commerce, right? Because the barrier to entry for live commerce is Actually zero. You just need a phone, sit there and go live.

All the MCNs or the larger agencies that I work with today, right, that’s how they all started. Fun fact is, almost all of them are husband and wife tips. Like easily 95 percent of them all started husband and wife tips. The wife is the talent, the husband is on the back end doing payment collection and everything.

All are like that across Southeast Asia. God knows why. All right. So because of that, it started to have an image problem. Live commerce started to have an image problem. Because who are the kind of people who willingly say, Hey, I want to take this phone and I want to take a video of myself and just keep selling products on a live stream, right?

People who generally don’t really have options, maybe polar educational qualifications and all that. So that’s the general problem, one overarching problem of live commerce right now, right? That it also becomes this place where. Only, you know, so to speak, low sales or low income people watch this thing.

Only low income people are selling on this thing. The whole thing needs to change. The MCNs need to upgrade their image, invest in themselves to upgrade their image, right? The brands also need to be willing to take a back and go all in on this. And there are cheap ways that the brands can do this, but the brands are so worried, right?

They’re more worried about their brand guidelines than about the actual sales performance. So all they are fussing about is, okay, okay, wait, first give me the MCN. And they don’t really have the applicable models to know what to apply here. Right, because they’re used to working with influencer agencies.

Yeah. So all the metrics and everything that they’re looking at is like number of followers, engagement purpose, all this kind of thing, right? They don’t even know how to begin to evaluate live commerce. Right, it’s ROI and so on. So they’re still applying the same frameworks over to live selling. And they said, okay, all these guys, the brand image don’t suit this one, the brand image don’t suit that one, the brand image don’t suit, right?

 

[01:01:56] Jianggan

But for brands, it comes back to, I mean, I, I’ve spoken a lot with the e commerce managers from different brands in China, mostly based out of Shanghai. And they said that, I mean, many of them told me that, I mean, compared to them, I mean, their counterparts within the same brand in Southeast Asia are like miles behind in terms of e commerce thinking and e commerce action.But 

 

[01:02:18] Shawn

Southeast Asia? 

 

[01:02:19] Jianggan

Yes Southeast Asia Is much less advanced, right? I mean, for a reason, they said, because they don’t face that kind of competitive environment that we’re facing in China. So in China, the domestic brands, I mean, you say international brand, so domestic brands adjust their price, like, Dynamically, anytime they can adjust the price.

Domestic brands do that 16 hours of live every day. Domestic brands undercut us on a lot of fronts. And we’re forced to react. We’re forced to do it. I mean, it’s not that we want to do it. I mean, nobody wants to do it unless you’re forced to. So, but in China, they don’t have a choice. It’s just so competitive.

 

[01:02:52] Shawn

That’s true. Yeah. That’s true. And actually, exactly what you said, right, where these household brands are so household, they can do this. I call it low ROI activities, right? By being more particular and fussy about their brand profile than worrying about things like sales. I’ll give you a very simple example, right?

Unilever, Nestle, and P& G. Almost any country you go to, Unilever, Nestle, P& G, people will still buy the brand by default because of their brand recognition. It’s like, how’s Baimao sales now in China? Baimao the washing 

 

[01:03:25] Jianggan

no idea. 

 

[01:03:27] Shawn

But it should be still a household brand, right? People won’t deviate, right?

So what it needs to shift is not really the MNCs coming in. I would say not at that scale yet, but the mid scale domestic large brands jumping in on board of it, threatening the large MNCs. I think that’s only the only way you can see it move. And also it still depends on the company culture. and their openness towards life.

That’s actually quite important.

 

[01:04:00] Jianggan

I think openness can be indigenous. It can also be sort of forced by external competition, if you don’t have a choice. Like the case in China. But that market condition doesn’t exist in China. I mean, just look at e commerce in general, right? How much percentage of e commerce sales constitute to brand total sales in each country in Southeast Asia?

I mean, if e commerce. Unless there’s certain condition which forces you to look at e-commerce more seriously. Otherwise, e-commerce will be always be like an innovation sort of fringe department in a whole brand sort of sales mix in this region. 

 

[01:04:36] Shawn

And this why I’m only know live commerce, because live commerce can unseat that.

Live commerce for the first time. There’s an actual track. Because the actual threat comes, you are Unilever, P& G or whatever, right? You spend literally millions a month on advertising. It’s not just about the advertising that you spend, right? In countries like Philippines or Vietnam, and I think China as well, right?

If you join one of these big MNCs, it’s like, wow, you’ve made it, it’s a badge of honor. So it’s so entrenched within the society. But for the first time ever, live commerce is allowing all these unknowns, right, upstarts to basically say, Hey, actually, just try it, because you trust me, you will buy it. And when you try it, you realize this is a superior product for perhaps a better price point or the same price point.

 

[01:05:23] Jianggan

It allows them an opportunity to break through. 

 

[01:05:26] Shawn

Exactly. Right? So that’s why I go back to how can MNCs join it. MNCs won’t start with it at first, right? But if a domestic large brand starts doing it or a mid tier brand starts doing it, even nibbling away at their sales, at some point they will realise. 

 

[01:05:43] Sabrina

So maybe the last question for this podcast.

So are you optimistic about the future of live commerce in Southeast Asia? Do you think that if these brands, if let’s say the brands do what they can, the platforms help to support, Do you believe that live commerce in Southeast Asia can grow to be very big? Let’s say hit that 30%. 

 

[01:06:01] Shawn

Well, to start with, I really spent 4, 5 years of my life in this place.

And I’m looking at investing more years of my life, so yes. So yes, you are. I do believe that live commerce can become big, right? But what there needs to be is through consensus, not sit down in a meeting room and everything, but through the consensus on market movements. The platforms, the enablers, and I’m bucketing MCNs on the enablers, and the brands, right, need to come to some sort of realisation around not just the value of live commerce, but also how to do live commerce, and also convincing people that they should start buying through live commerce.

These three things need to take place. And it will be slow. It’s not like China. It won’t be like China. No way, right? It’s still a bit of a cottage industry right now, but with improved investment in this, improved growing of the audience and everything, it will grow past that. I sincerely believe, right, that we are hitting the tipping point already.

We are in the middle of the tipping point already, right? Just from seeing how extreme some countries are doing live commerce right now. At some point, somebody’s going to break. At this, in this little Mexican standoff, somebody’s going to break. The moment that equilibrium breaks, right, everybody, who is this equilibrated must reach the new equilibrium point around what live commerce is.

Somebody will break. And I’m convinced that we are in the middle of the tipping point now. 

 

[01:07:33] Jianggan

Do you want to bet, I mean, Shopee Live versus TikTok Live, who will win?

 

[01:07:40] Shawn

I think they will fight each other to a draw. 

 

[01:07:41] Sabrina

So you think they will be stuck at this equilibrium? 

 

[01:07:45] Shawn

Yeah. And it’s good for us. I mean, as consumers, as stakeholders. It’s good for us, right? Let them keep, you know, investing and pushing against each other. Let them keep investing and doing all this. No one lands the knockout blow, we are fine.

We have consumer choice.

 

[01:08:02] Sabrina

Okay, so thank you guys for tuning in to another episode of the Impulso Podcast. And thank you, Sean, for joining us for your first ever podcast. So we hope that you guys, 

 

[01:08:12] Jianggan

The first in his life.

 

[01:08:13] Sabrina

Yeah, it’s his first. So we hope that you guys enjoyed today’s episode. And if you did do like our podcast and follow us on YouTube, Spotify, Apple Podcasts, or your preferred podcast platform to stay up to date on the latest happenings and trends in tech, new retail and the broader digital economy.

Thank you. And bye bye.