Live-Streaming in China is Reshaping E-Commerce

17/04/2019

The live-streaming industry in China is not only booming but it is also fueling Chinese e-commerce with nearly 32% of customers now buying products directly on real-time video platforms

 

As the e-commerce sector evolves in China, new trends emerge around the industry. The recent online shopping boom thus brought along new customers’ behaviors, mobile payments, wanghongs, and daigous.

However, the trend that is fueling the e-commerce industry the most is certainly the live-streaming frenzy, which is spreading all over the Middle Kingdom lately.

According to statistics, more than 100 million viewers watch a live online video event every month while nearly 32% of users now buy products through live-streaming videos, especially millennials.

Since 2016, live-streaming, in fact, became one of the most popular trends in China and a huge boost for e-commerce that is now combined with entertainment and a glimpse into the lives and experiences of others.

At the origins of this success lies the rising of short-video apps such as Douyin, Kuaishou, and Yizhibo, which deserve credit for turning live-stream format into the new gateway to reach Chinese millennials audience.

 

live streaming is reshaping e-commerce - yizhibo - cifnews

© TechNode. Yizhibo 一直播. China has become the largest market for live-streaming, with 2018 revenue expected to reach $4.4 billion.

 

In late 2016, there were over 200 mobile apps in the People’s Republic that had live-streaming features. Thanks to the interactive nature, these platforms were created for almost every kind of audiences with different purposes such as education, social networking, gaming, and now even commerce. In addition, many Chinese short-video platforms have also incorporated live-streaming as a way to diversify streams offering users another way to connect with their followers.

Although someone thinks this trend will be just a fad, it really seems to have open doors to a new form of communication, so much so that China’s short video market is expected to hit around $14.08 billion by 2020, according to statistics. The country’s personal live-streaming market, instead, is expected to be worth $8 billion in 2019. Actually, of the over 800 million people with internet connections in China, nearly half have used real-time video apps.

A typical successful live-stream involves a trusted speaker or a celebrity and it takes place in real-time, usually filmed with a smartphone. As about 95% of e-commerce activity in China is made through mobile devices, live-streaming has indeed become a powerful tool for the online retail industry.

 

“On the Chinese mainland, you have big players like Alibaba and Tencent whose services are so intertwined in your daily life, where you depend on their ecosystem for services like ordering food, making payments and for e-commerce and entertainment. So it seems almost natural to blend all of this together,” said Tiffany Wan, general manager of VS Media, an agency that represents content creators and live-streaming stars in China.

 

Therefore, live-streaming in the PRC started as a non-commercial trend with young people sharing their lives and talents but it surprisingly started to influence the local e-commerce industry. In the Celestial Empire, what was once a niche subculture has now evolved into a brand-new “live shopping” experience with brands leveraging the whole potential of this new communication channel.

Today, e-commerce penetrates the majority of live-streams whether through fashion show broadcasts or via internet celebrities reviewing the latest cosmetic product, enabling consumers to buy what they see on the screen in real-time.

Even during the Single Day, China’s biggest sales event, the e-commerce giant Alibaba live-streamed a fashion show called “See now, Buy now”. The show was broadcasted live on 10 platforms including Taobao, Youku, Weibo and Toutiao giving to millions of consumers the opportunity to buy products on the spot, therefore giving birth to the first form of “entertain-merce”, a combination of entertainment and e-commerce.

 

live streaming is reshaping e-commerce - taobao live - cifnews

© Alizila. Women outnumber men as live-streamers, but most of the audiences are male.

 

Nevertheless, the main “live shopping” apps are Taobao Live and JD Live, which are the implemented real-time video features of two of the main Chinese marketplaces, Alibaba’s Taobao and JD.com.

These kinds of “parallel” marketplaces allow merchants to link a series of products to the stream. During the video, the user can interact with the streamer asking questions about the product he wants to buy. Then, by clicking on the “purchase” button, he can add the item to his cart and check out in just one easy transaction without clicking away from the live video.

For what concerns Taobao Live, when it started in 2016, there were about a thousand sellers doing live-streams to sell goods. In 2017, during the Double 11 event, over 330,000 live broadcasts reached over 3 billion customers. Taobao revealed that that year, its live-streaming platform realized more than 50% conversion rate, meaning more than 500,000 products were added to customers’ carts per million views. Today, the company generates more than $15.1 billion in gross merchandise volume through live-streaming sessions, an increase of almost 400% year-on-year.

 

During certain promotional periods, as much as 90% of sales for certain stores came from Taobao Live, according to the company.

 

Following Taobao’s impressive success, all the other e-commerce companies in China have added live-streaming features to their platform, making it their number one investment priority.

This live-streaming frenzy also led to the rise of a new category of Key Opinion Leaders (KOL), whose only goal is to promote products in their video stream.

One of the most popular Taobao Live’s KOLs is 南歌儿-Eva, a 23-year-old university graduate from Hangzhou, who collected over 300,000 fans in less than one year. Her job is to try on hundreds of outfits from brands she partners with in front of her smartphone’s camera while giving her followers tips on how to style the different items. During peak hours, the number of viewers tuned into Eva’s stream can be as high as 100,000.

Beauty KOL Jiaqi Li – the “Lipstick Brother,” instead, tries on 300 lipsticks a day. He once sold 15,000 lipsticks within 15 minutes and the cosmetics he features are often sold out across different e-commerce platforms not long after one of his broadcasts.

 

live streaming is reshaping e-commerce - farming - cifnews

© Unsplash. Even farmers sometimes stream while picking up vegetables or while catching fishes thus showing the origin of food on sale.

 

However, why is live-streaming so effective for e-commerce?

The answer is simple. Trust and transparency are the two concepts that make “live shopping” preferable to just online shopping.

On regular marketplaces, pictures of items often do not match customers’ expectations. But from the video, consumers can take a good look at the design, material, color, and size. It almost feels like they are handling the products themselves.

Moreover, live-streaming KOLs are seen as experts to which people can turn for advice. So, through their videos, influencers build special relationships with their audience. Here, these experts can show the product being used, give examples of how to use it, and to point out the results. And if customers still have doubts, they can ask questions and receive answers in real-time.

All of this allows room for spontaneity, just like when friends talk. In China, in fact, online shopping is not just an act of purchase but rather a way of getting in touch with people who share the same interests. This is particularly true in lower-tier cities and rural areas, where women treat broadcasters like their close friends, someone whose recommendation they trust.

 

After years of Western technological leadership, especially American, it is now Chinese digital innovations to export technological trends to the rest of the world.

 

The Chinese way of doing e-commerce is certainly a model that foreign countries are trying to copy, even if foreign attempts come slowly and have a less social impact. Launched last February, Amazon Live is just the latest example of how overseas competitors strive to incorporate Chinese ideas into their own strategies, albeit a three-year delay.

Today, the Dragon is definitely the forerunner of changing the buyer’s habits towards online shopping and there may be no other market in the world where commerce and entertainment are more integrated than in China. Therefore, not only the Asian country is the first and largest live-streaming market in the world but this market is also reshaping the e-commerce industry as we know it.

With the advent of the New Retail, China has demonstrated to be able to transform its own consumers’ habits often and quickly. And every time, the purchasing experience is more fun, more efficient, but mostly, more productive.

No wonder why foreign firms are striving so much to catch up with Chinese latest trends.

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