Hsu Cheng-yu / Live-streamed seafood auctions are super popular. Remember "Red Horse," the godfather of seafood auctions?

Text by Hsu Cheng-yu, founder of Yongsheng Ocean

One of the hot topics in the aquaculture and seafood world today is "live-stream seafood auctions," which, thanks to FB, has drawn many people's attention, including even the concern of the tax bureau. This topic directly brings back memories of "Red Horse," the market seafood auction guru who was popular all over Taiwan, China in the early 2000s. Years ago Red Horse's seafood auction empire had already lost its momentum, and Red Horse also died in an accident. It's just that no one expected the rise of FB live streaming to reveal Red Horse's tactics again!

I vaguely remember that Red Horse, who came from the Sanchong fish market, was named Chen Chih-hung, and Red Horse was his trademark. Back then he rented stalls in traditional retail markets all over and sold seafood (only seafood) using night market hawking methods. Because I had some business dealings with him in the early years, I also made a point of looking into his sales methods. In an era when the internet was not widespread, traditional retail markets were the main source for consumers buying seafood, and consumers who went to market were mainly those over 40.

Red Horse's sales tactics:

(1) Drawing a crowd: The auctioneer usually brings out some lower-priced seafood and sells it at 10 yuan per portion, and consumers will readily hand over 10 yuan to grab a bargain. Through these 10-yuan sales, the first batch of consumers is drawn to gather in front of the stall, arousing more people's curiosity to watch.

(2) Keeping customers: After taking the money for the 10-yuan seafood, Red Horse "absolutely will not" hand the goods to the consumer right away, and consumers mostly stay curious and watching, hoping to grab a few more bargains. The auctioneer pitches more seafood to this batch of buyers, and the people in the back break open whole boxes of frozen seafood (vacuum packaging was not popular then) and hand some out on plates.

The auctioneer instructs the backstage staff to bag the seafood that gets sold off one by one according to each buyer, but the bagging pace is "deliberately delayed," so the crowd gathered in front, having already paid but not yet received their goods, does not disperse, attracting even more onlookers.

(3) Rotating customers: After pitching for a while and seeing that the consumers in front no longer have the motivation to buy, only then does the backstage staff pack the seafood and hand it to the buyers. The first layer of consumers leaves, the second layer of consumers comes forward, and steps 1-2-3 are repeated.

(4) Shills: Planting shills at every auction venue is important; the shills can banter back and forth with the auctioneer to heat up the buying atmosphere and drive up prices. The shills create some fake transactions to make other consumers follow along.

Is cheap seafood really cheap?

Why are consumers willing to pay for seafood far beyond what they need? Because it's "cheap"! But is this seafood really cheap?

(1) The seafood Red Horse sold mixed high-priced and low-priced seafood, and since Taiwanese consumers generally do not understand seafood, they cannot tell the difference. The reasons for the low prices include having been frozen for a long time, or the original freshness already being poor, and so on. In Taiwan, China's traditional markets, where seafood labeling regulations are very inadequate, it is no surprise that inferior goods are passed off as good.

So you cannot say that all the seafood Red Horse sold was bad, but it did contain a large amount of cheap goods. Therefore Red Horse would buy up low-priced seafood in large quantities.

(2) Red Horse's selling prices did indeed adopt a low-margin strategy, with margins even lower than those of ordinary traditional markets.

The lessons of Red Horse's rise and fall: too much, poor quality, low margin, hard to turn over

Red Horse's business model could quickly generate cash, which was quite attractive, so many people joined Red Horse's ranks, and it also attracted many imitators. These disciples and grand-disciples spread from north to south across the whole province, and they also bought goods from Red Horse to sell, so Red Horse's sales volume grew larger and larger, his bargaining power in buying goods grew stronger and stronger, and his payment terms grew longer and longer.

When many consumers lost interest in this kind of auction, and after buying "too much" and "poor-quality" seafood caused them trouble, Red Horse's performance also declined rapidly. At this point the overly low margin became a fatal blow, so it quickly went bankrupt and closed down, also owing suppliers a lot of payment for goods.

Can today's live-stream seafood auctions blaze a new path?

Seeing today's popular live-stream seafood auctions, it is hard not to think of Red Horse in the early years, but today's internet transmission efficiency is completely beyond comparison with the old days of hawking from market to market, and the crowds FB gathers are also many more than in traditional markets more than ten years ago, while consumers' understanding of seafood has not increased much. Modern times also have the advantage of making it easier to plant shills online; but today seafood is still seafood, consumers' purchasing power is not stronger, and the emphasis on food safety has risen quite a bit. So will today's live-stream seafood quickly follow in Red Horse's footsteps?

Does a faster rise also mean a faster decline? Or can today's operators blaze a broad avenue that Red Horse back then could not? Let us wait and see!