---
title: "Deep Dive | I Was Screwed Over by Livestream E-commerce"
description: "Six industry insiders recount the pitfalls of livestream e-commerce for anchors, MCNs, and brands. From fake sales and subpar products to disappearing merchants and unscrupulous MCNs, the frenzy hides a web of traps."
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published: "2020-06-20"
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# Deep Dive | I Was Screwed Over by Livestream E-commerce

> Six industry insiders recount the pitfalls of livestream e-commerce for anchors, MCNs, and brands. From fake sales and subpar products to disappearing merchants and unscrupulous MCNs, the frenzy hides a web of traps.

**Six industry insiders recount the pitfalls of livestream e-commerce for anchors, MCNs, and brands.**

A four-hour livestream generated over 72 million yuan in GMV. That was the result of Ding Lei's livestream debut, and before him, entrepreneurs like Zhang Chaoyang and Dong Mingzhu had already made tens of millions or even hundreds of millions in sales in a single session. This year's 618 shopping festival turned into a livestream e-commerce carnival. Besides the billion-yuan subsidies, the three major e-commerce platforms—Taobao, JD.com, and Pinduoduo—invited celebrities to hawk products in livestreams. MCN agencies, riding the livestream e-commerce wave, have surged in a short time. Content creators saw the dawn of monetization and rushed in. **Livestream rooms have become one of the core conversion channels for many brands.** But the parties involved are not resting easy just because they've entered a "quick money" industry; instead, they often fall into a series of traps.

First, the relationship between anchors and brands has become very delicate. Luo Yonghao's 520 flowers turned rotten, and he called out the brand; Chen He's crayfish in the livestream were complained about by consumers for spoilage; Kuaishou top anchor Liu Ergou was exposed by the media for colluding with merchants to sell fake goods. Netizens joked, "Livestream e-commerce reveals one's character." Whether celebrities, stars, or top anchors, once they "crash," they at least find themselves under the magnifying glass of public opinion in the short term.

Conflicts between MCN agencies and brand merchants have also erupted. Some MCN agencies have suffered losses due to merchants who delay payment, switch goods, or sell defective products, leading to huge compensation payouts. Some small and medium-sized brands, eager to jump in, have trusted "black-hearted" MCN agencies, only to find their return on investment not guaranteed, losing hundreds of thousands of yuan.

Furthermore, the binding interests between MCN agencies and anchors are being challenged. Some MCN agencies have seen their performance plummet after a top anchor left, eventually being forced to "sell themselves." Others have targeted the MCN business as a quick money-making scheme, using fake rankings to lure new anchors into paying hefty "IQ taxes."

Ran Finance interviewed six insiders in the livestream e-commerce industry, including a new anchor, MCN agency heads, an advertising agent, and a supply chain practitioner. Below are their accounts of how brands, anchors, and MCNs screw each other over, and how many traps lie behind the livestream e-commerce frenzy.

**Brands Screwed by Anchors:**

**-01- Collaborating with a top platform, we threw in 300,000 yuan and only sold 15,000 yuan worth**
Ye Ming | Advertising Agent

Livestream e-commerce has been on fire recently. Not long ago, we finalized a packaged promotion for a client with a top livestream platform. The package included three livestreams, plus information flow push, splash screen ads, and targeted push notifications to fans, all for a total price of 300,000 yuan (excluding commissions).

However, the client couldn't choose the influencer; the platform designated mid-tier anchors. We did some research beforehand and judged that these mid-tier anchors had decent selling ability, and the client thought it was cost-effective. The pandemic hit the client hard this year, and they wanted to make some money through livestreaming.

**Unexpectedly, it turned out to be a huge blunder for all of us.**

The product we settled on was a frozen food item with a low unit price of 50 yuan per bag, which should have sold well. We had three livestreams, each with 5-10 minutes of verbal promotion, giving the brand plenty of exposure.

But the final result was shockingly dismal. The first session sold only 50 bags, and the next two saw slight increases, but it was too little, too late. In the end, only 300 bags were sold across the three sessions, bringing in just 15,000 yuan—**a total loss.** The problem was that other products in the livestream sold well; only our client's product performed terribly.

Image / Visual China

During the livestream, we noticed that the anchors were too casual and unprofessional, unfamiliar with the product, and even got the product features wrong. Later, we reflected on whether the product selection was the issue, but the client then did a livestream with Viya, and the same product sold over 3,000 units in one session.

The client suffered heavy losses, and as the intermediary agency, we were in a tough spot, thinking about how to compensate. As for the reasons for failure, we later concluded: **First, the anchors were unfamiliar with the product; second, the selling ability of mid-tier influencers is questionable.**

Since the contract clearly stated that the anchors and platform would not guarantee sales, no matter how dismal the sales, they wouldn't be held responsible. The risk had to be borne by the merchant and us.

**Anchors Screwed by Brands:**

**-02- Selling big fruits but shipping small ones, the merchant disappeared after complaints, and the anchor paid over 100,000 yuan in compensation**
Zhang Teng | Founder of Tengda Incubator

I've been in the MCN business for five years. Our incubator's anchors often encounter unreliable brands when cooperating with merchants.

Among them, poverty-alleviation projects with agricultural fruits have more problems. Last year, one of our trainees connected with a poverty-alleviation project in Gannan to sell oranges.

Our product selection is quite strict, with two rounds of screening. The first round eliminates 50% of products. After confirming cooperation intent, the other party sends samples, and we conduct another round of screening. Products with poor packaging, easy damage, or bad taste are eliminated again, leaving only 30%-50% of the categories from the second screening.

**But the project leader was dishonest—the samples were good, but the shipped goods were defective. The merchant's explanation was that there were no oranges of the exact same appearance.** When we heard this, we didn't know what to do, so we had to bite the bullet and implement "anchor-first compensation" based on the situation.

Image / Pexels

This is a red line in the industry. Once a situation of "received goods differ from livestream samples" occurs, the merchant is "wanted," and anchors across the internet become wary of such merchants and goods.

Another trainee sold a batch of cherries. It was the first time dealing with a fruit farmer. During product selection, the merchant sent large fruits, but when it came to shipping to buyers, they sent small fruits. **After receiving user complaints, the merchant disappeared, and the trainee had to bear the loss alone, paying out over 100,000 yuan in compensation.**

Signing contracts with fruit farmers is a big issue. Some cooperations can't be directly signed with the farmers, and even if signed, they might not honor them. Therefore, most anchors avoid agricultural products. If they must sign, they require the other party to guarantee product specifications and after-sales service.

Doing fruit livestream e-commerce is basically a big pitfall, like Yantai cherries and Dalian sea cucumbers, which are prone to problems. **Top anchors generally only sell standardized products.** In the first half of this year, the categories of luosifen (river snail rice noodles) and self-heating rice saw a big boom, partly because they are highly standardized, so fewer problems arose.

**-03- The biggest pitfall in livestream e-commerce is not having the lowest price online**
Qi Shuo | E-commerce Operations at an MCN Agency

Having been in the MCN business for so many years, we've heard many stories of peers being screwed. Especially in the early days when livestream e-commerce was just emerging and the industry was unregulated, without platform contract constraints, everyone traded privately, making it easy to get ripped off.

Cooperation often requires prepayment, but after sending the prepayment to the influencer, they disappear and become unreachable. Additionally, **Kuaishou's earlier influencers were more native and not MCN-created; they had no经纪公司, operating solo, with friends or relatives handling their business, unconstrained and unregulated, so many people were screwed by them.**

Some people are scammed by influencers, and some influencers are scammed by others.

At the end of 2018, Kuaishou had just started commercializing, placing e-commerce ads for influencers on the platform, with particularly high ROI. Some scammers would change their WeChat avatars to the official logo of an e-commerce app, pretending to discuss cooperation to deceive influencers. After gaining trust, they'd steal their ID and bank card information, and also trick them into paying a certain "introduction fee."

Many influencers were scammed at that stage. Now, with everyone doing livestream e-commerce, the pitfalls are just as numerous.

For example, the product samples shown in the livestream may not match what the merchant actually ships. Some top anchors with higher bargaining power can demand direct refunds from merchants, but in most cases, after-sales service is virtually nonexistent, and consumers have to accept the loss.

Additionally, we've cooperated with poverty-alleviation projects. Some local enterprises don't have as good control over the supply chain as big brands, so when consumers complain about quality issues after purchase, we require the enterprise to refund directly, or resend or compensate. But this damages our relationship with the influencers and our own brand.

**If the product quality is bad, frankly, the anchor gets screwed**, because fans buy products in the livestream based on the anchor's credibility. Once the product quality is poor, fans blame the anchor for being unreliable, not the merchant.

**Anchors also fear one thing: not being the lowest price.** If a top anchor promises fans the lowest price online or gives fans a deal, but it's discovered that it's not the lowest price online, it directly affects fan loyalty.

Image / Visual China

For example, Kuaishou influencer Xiao Yiyi once did a brand event for La Chapelle. A Taobao store maliciously listed the same product at a lower price than her livestream, and the event was immediately halted.

As for the relationship between influencers and MCNs, for newcomers wanting to enter the industry, it's hard to succeed without experience and a team. MCNs and trainers will at least tell you about the detours they've taken. Later, when the anchor grows big, they will inevitably negotiate with the MCN, but in the early stage, the MCN spent a lot of money to pave the way and build the account. Once the anchor gains fans and wants to terminate the contract, it's unfair to anyone.

**MCNs Screwed by Anchors:**

**-04- Anchor left, performance declined, and I had to sell the MCN agency**
Zhang Nan | Former MCN Agency Founder

I was originally a Taobao merchant. In 2017, the Taobao platform invited us to become a Taobao livestream agency, so I closed my store and started an MCN agency.

We recruited anchors and gritted our teeth to pay base salaries. At that time, they were livestreaming in apartments and resting there afterward. It wasn't until we got funding that we moved to an office building.

Back then, Taobao had a lot of traffic, giving each agency some resource slots, and we decided which anchors to support. We signed over a dozen anchors, and after deducting costs, we split the net profit equally with the anchors. We worked hard together to build it up, but problems soon followed—**anchors were too unstable.**

Some anchors, once they had a certain fan base and strong selling ability, started negotiating higher commission splits. One anchor, after getting a boyfriend, was told by him, "Why earn so much money for the company?" So they planned to go independent and asked to terminate the contract.

There were also uncontrollable factors. For example, one anchor's husband was a rich second generation who didn't need the money and told her to stay home and have kids instead of livestreaming. Another anchor, after gaining popularity, had a change of attitude, became a bit arrogant, didn't livestream properly, complained about being tired, took a break, and when she came back, her traffic plummeted. Another anchor got plastic surgery and was attacked by haters, couldn't handle the pressure, and gave up.

Image / Visual China

When signing contracts, because we didn't have a clear understanding of the industry, we didn't make the breach penalties too severe, with liquidated damages of only a few hundred thousand yuan. Later, **some anchors were poached by other platforms, which offered higher commissions and even paid the liquidated damages for them.**

At that time, about 10% of our anchors were poached, 50% had high turnover, and at most 40% remained stable.

In the early days, when an anchor earned 100,000 yuan a month, we didn't make much money as an agency. Later, when the anchor's fan base grew and they earned 1 million yuan a month, they felt the company was taking 500,000 yuan for nothing.

Running an MCN agency is like gambling. The biggest risk is the cultivation of anchors and the relationship with them. **When an anchor isn't popular, you need to invest resources and effort to cultivate them; once they become popular, they might go independent or be poached. And the cost of incubating anchors is getting higher.**

By the end of 2018, besides the anchors who had left, the contracts of our first batch of anchors expired, leaving only six or seven anchors at times. People in other positions had nothing to do, and some core team members left to start their own businesses. As competition intensified and anchor traffic declined, by 2019, I judged that the traffic dividend was over, so I sold the agency and switched to livestream services.

**Anchors Screwed by MCNs:**

**-05- Under the stimulation of fake rankings, anchors pay for training, and black-hearted MCNs profit from both sides**
Nian Nian | Anchor

Based in Hangzhou.

I came into contact with the e-commerce livestream industry through work. Last year, my design company had business cooperation with some Taobao clothing stores, and I met some young girls who worked as models for Taobao stores and also livestreamed for the stores, occasionally taking on private gigs, earning 20,000 yuan a month. I was very envious.

At the end of last year, a merchant temporarily recruited a part-time anchor. I was short on money, and since I had decent looks, I gave it a try. I livestreamed half a day every weekend, four or five times in total. Although I didn't earn much, my camera presence and expression ability were recognized by the merchant. The operations supervisor thought I had potential. Seeing successful cases like Li Jiaqi and Viya, I started to have some ideas.

A person in the industry told me that livestreaming for merchants is more like being a salesperson, and it's hard to build your own influence or gain fixed fans. If I wanted to be an anchor, he suggested I find an MCN agency with a mature training system that could build my persona and provide resource support, like increasing followers and content operations. He recommended an agency to me, and without thinking much, I went.

As a newcomer, I didn't really understand the ins and outs. The person in charge told me that e-commerce livestreaming is different from show-style livestreaming; it requires strong professionalism and rich experience to sell products, and the returns are delayed. So in the early stage, I should learn more, endure the low earnings, and improvement would come quickly. He seemed sincere, so I wanted to give it a try.

In the first month, I didn't receive systematic training. They just threw a few training documents at me. After a few trial livestreams, very few people watched, and sales were dismal. But every day, the person in charge would rank the "battle results" of new anchors in the group. The people who joined with me were all impressive, and I was basically at the bottom every time.

The person in charge told me that the company had an "Elite Plan" that would provide concentrated resources for training, but there were certain selection criteria. If I didn't meet them, I could pay to sign up, and he said the later returns would far outweigh the investment. I have to admit, the introduction to this "resource package" was tempting, and the examples of "comeback" he gave were compelling. With the idea of not wanting to be left behind, I paid the company 10,000 yuan.

The effect was immediate. The followers on the Douyin account the company opened for me quickly grew to over 300,000, and the number of viewers in the livestream exceeded 10,000. But strangely, my sales remained very low, and my commission share was pitiful. Each livestream earned me at most 100-200 yuan, sometimes just tens of yuan, which was hopeless.

Later, I figured out the company's tricks. It turned out that the company recruited a large number of amateur anchors. **Each new anchor had a dedicated "newcomer group," and everyone was at the bottom of the group. This was to make newcomers feel anxious and grab at the "lifeline," paying high prices for the so-called "Elite Plan" customized services, which were then just thrown together.**

Image / Visual China

Most of the company's anchors were on a pure commission model, but once someone paid for customized services, the money was used to buy fake followers and viewers. Then the livestream room could charge slot fees. Even if one slot was 500 yuan, 20 slots a night could earn 10,000 yuan, but sales wouldn't change. **They specifically targeted small merchants who wanted to try livestream e-commerce, making one-off deals.**

These MCN agencies are good at "empty-handed white wolf" tricks, promising anchors high incomes and brainwashing them, while deceiving merchants with fake data. Of course, I was too impatient. **Li Jiaqi and Viya worked hard for years to succeed; how could I easily achieve it? Now it seems ridiculous.**

**Conclusion:**

**-06- From chasing big influencers, livestream e-commerce has become a show driven by personal IP and sales numbers**
Shen Ting | Livestream E-commerce Supply Chain Practitioner

I originally came from a supply chain background. In the past two years, due to the livestreaming of supply chains, I've taken this path. Now I have contact with brands, agencies, and anchors/influencers.

Why are so many pitfalls being exposed now? Because the path has gone astray.

The essence of livestream e-commerce is an ecosystem based on brands and products. Its origin was the brand's need for video promotional content. For example, Taobao Livestream was initially based on merchants' need to shoot product ads, and store owners began replacing models to sell products in the videos. The 1.0 livestream I understand was more about product material, like a more vivid product detail page.

It was only later, with the emergence of big influencers, that the whole livestream e-commerce momentum was driven up, gradually deviating from the needs of brands and products themselves, **becoming a show driven by personal IP or purely sales numbers. Many people's perceptions were led astray, leading to many pitfalls.**

In fact, MCNs are advertising agencies, with everything centered on advertising logic. But in the eyes of many brands, MCNs are just sales agencies, which creates a deviation. Brands ask them to do advertising and guarantee sales at the same time. MCNs, under business pressure, can only agree, but they definitely can't deliver sales.

The tricks between these two parties are usually in the business model. For example, brands, to get back the slot fee, sign so-called ROI guarantees or CPS pure commission with influencers, but in the end, it's hard to settle, and merchants feel they've been screwed.

In more cases, brands feel screwed because of their own brand fit and their choice of influencers.

Image / Visual China

Livestream e-commerce is particularly suitable for the creation and promotion of new products. It's like the brand transferring part of its advertising and marketing budget to big influencers and subsidizing the product, so the final price to consumers may be lower than cost, but the goal is achieved: the new product is promoted.

But for well-known brands, listed companies, and time-honored brands, livestream e-commerce is more uncomfortable.

First, livestream e-commerce disrupts the existing product price system. **The first element of livestream e-commerce is price, and many brands fall into the low-price trap.**

Some brands are initially persuaded, **but regret it midway, making changes, even altering price terms, and using some routine marketing tactics on consumers.** The result is that both consumers and anchors are disgusted.

But if they execute at low prices, suppliers, Tmall, JD.com, and offline supermarkets will all be affected. Moreover, pricing determines the brand's audience. If the price drops too low, consumers will lower their recognition of the brand.

The bigger the brand, the more it values its price and will control it, but it will negotiate a fixed marketing strategy with the anchor, **like buy 2 get 1 free, buy 3 get 1 free. But after the link goes live or the influencer executes, they often renege on the spot because they find the order volume is too large, and after giving away freebies, they're losing money, and more than expected.** This is a very common problem in the industry because most brands aren't adapted to this strategy, especially in industries with lower profit margins, like fresh produce.

Second, the chosen influencer may not understand the brand well enough, and the presentation may not match. **Some brands might be more suited to Andy Lau and Zhao Yazhi, but they insist on finding current top influencers.** In the end, sales are poor, they don't make money, and there's no growth for the brand, so they feel screwed.

Even some big influencers will promise **estimated sales volume** to merchants, telling the brand, "Give me a certain price, and I can achieve 10 million or 20 million in sales." The manufacturer then stocks up, but the influencer crashes, maybe selling less than 1/10 of the estimate. What does the brand do with the remaining products? They have to bear the loss themselves.

In fact, these are all because the industry is developing too fast, with information asymmetry. Many brands only see the glamorous numbers and don't hold the bottom line during operations, so many companies have suffered heavy blows in livestream e-commerce.

Source: Ran Finance (ID: rancaijing) Authors: Meng Yana, Zhou Jifeng, Tang Yahua, Zhao Lei, Su Qi, Jin Yufan; Editor: Jin Yufan

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