Thread: Looking at China illuminates just how nascent the US “influencer stack” is. While the US continues to debate whether influencer marketing is
even effective, China has an entire industry of influencer incubators who work end-to-end to turn individuals into big businesses.
even effective, China has an entire industry of influencer incubators who work end-to-end to turn individuals into big businesses.
These influencer incubators do everything from selecting and grooming talent, managing and growing social profiles (including teaching how to apply makeup, pose, and livestream), to helping their talent launch their own brands and e-commerce stores.
Like VC firms that pool risk among different startups, these incubators–which take a cut of influencers’ sales–work with dozens or hundreds of
influencers, though much of their revenue comes from the top few who gain massive traction.
influencers, though much of their revenue comes from the top few who gain massive traction.
These incubators can be extremely lucrative. The Hangzhou-based incubator Ruhan Holdings, which manages about 50 influencers, surpassed $158M GMV in 2017.
Its biggest star is Zhang Dayi, a fashion blogger who signed with Ruhan in 2014. Under Ruhan’s management, Zhang Dayi’s Weibo account grew from 250K to 4M+ followers in the first 18 months.
Her Taobao store–for which Ruhan manages all of the design, manufacturing, logistics, customer service, and inventory–is often among the top 10 grossing on the e-commerce platform. Her 2016 earnings: over $46M.
There are hundreds of such incubators in China, managing thousands of influencers. The recipe involves a combination of Weibo for growing social
influence, Taobao for e-commerce, and a network of local manufacturers
for producing products.
influence, Taobao for e-commerce, and a network of local manufacturers
for producing products.
Contrast this with the dearth of turnkey options for US influencers today: While top influencers like Kylie and Rihanna have access to resources to help launch their own product lines, the mid- and long-tail of influencers
are neglected by existing solutions.
are neglected by existing solutions.
Influencers in the US today have to do the complicated, fragmented work involved in bringing their own products to market–including finding designers or cosmetic chemists, manufacturers (potentially in other countries), logistics providers, and other parts of the value chain.
Part of the reason for the gap between the influencer ecosystems in China and the US is proximity to manufacturers, and social platforms and marketplaces that make it easy for influencers to promote and sell products.
In the US, while Instagram enables users to build a following, it lacks features to help them monetize that audience–like easily linking out to
stores/products, integrated purchasing, or direct follower monetization.
stores/products, integrated purchasing, or direct follower monetization.
If the past few years were about brands & retailers turning to influencers as a new marketing channel, the next few years will be about influencers
bypassing 3rd party brands/retailers entirely, spurred by new platforms
that let influencers take charge of their own monetization.
bypassing 3rd party brands/retailers entirely, spurred by new platforms
that let influencers take charge of their own monetization.
That could take the form of launching their own branded products, monetizing fans directly, or something else.
With consumer affinity for influencers only growing, I’m bullish on the future of companies in the “influencer stack.” Would love to chat with any entrepreneurs who are working on this!
Originally published as “Tweetstorm: The “influencer stack” and China’s influence incubators"