What Brands Need to Know about China’s Live Streaming eCommerce

Live streaming has been the most buzzing topic in China since 2019. As of March 2020, the number of live streaming viewers reached 560 million, which is 40% of China’s population, 62% of China’s Internet users, according to the data from China Internet Network Information Center. While most live streaming platforms in the West are focused on gaming and entertainment, live streaming is the “go-to” option for many Chinese consumers when seeking out new products and deciding on what to buy. It provides a range of rewards and discounts for customers, live streaming eCommerce has gone viral in China’s consumer market. The live streaming eCommerce market increased by 226% to RMB 433.8 billion (USD 61.24 bn) in 2019, accounting for 4.1% of all online retail sales, according to Boosted by the Coronavirus concerns, live streaming has penetrated various industries (Figure 1), and based on the data a new high is expected to reach in 2020.

Live Streaming Has Penetrated Various Industries – Do You Need Live Streaming?

Figure 1:

We have divided live streaming eCommerce products and services into four quadrants based on the unit price and online presence level, as shown in the Figure 1 above.

  • The most concentrated part falls in Quadrant 1, where the products with the low unit price and strong online presence, such as food, daily essentials, apparel, cosmetics and so on, have achieved rapid growth during the pandemic through live streaming. For example, Plum candy brand Liuliu Mei saw an increase of 264% in sales YOY, and Mengjie Home Textiles' Tmall store generated an 11% growth in sales YOY, as stated by Caijing Net.

  • Catering, pharma, gym and book stores in Quadrant 2 with a low price and low online presence have now partly shifting online in order to keep consumers connected during the covid-19 crisis. With the situation getting better, more and more companies fall in this Quadrant are likely to stick to the combination of both online and offline operation in order to provide the best service for their customers.

  • Traditional industries such as real estate, automobiles, and tourism in Quadrant 3 are actively attracting traffic via live streaming and then diverting the traffic to brick-and-mortar locations.

  • However, we see very few products in Quadrant 4 use live streaming to a great extent, these include products such as high-end jewelry, with high price and high online presence.

It seems that many industries have already invested in or are planning to invest in live streaming eCommerce, in other words, live streaming is becoming a must-have tool to integrate into the company’s overall marketing strategy in 2020.

Live Streaming eCommerce Ecosystem 2020 – Four Pitfalls Need Your Attention

Since live streaming has now become an indispensable means of communication for brands and retailers to engage with their audiences and drive conversion, getting to know how the live streaming eCommerce ecosystem(Figure 2) works and how to choose the right live streaming platform(Figure 3) is extremely important.

Figure 2:

The whole live streaming eCommerce chain is more complicated than a live streaming studio. Manufacturers, brand, distributor, logistics, MCNs, KOLs, different live streaming platforms and users work together to create an ecosystem behind the shows. There are four pitfalls within the whole ecosystem that brands and retailers need to pay attention to,

  • The supply chain supporting the show must be robust and ready to act immediately. This includes holding enough stock, proper quality checking and utilising fast delivery methods.

  • Choosing the right live streamers is key to bringing your products to life. You must choose the right partners based on their specialised expertise, follower base, conversion rate and interaction ability with audiences.

  • Utilising live streaming platforms in line with the nature of your products. There are eCommerce platforms, social commerce platforms, video-sharing platforms, e-sports platforms, info-sharing platforms and more. (check Figure 3 for more details about these platforms).

  • Always put the users, i.e. live streaming audiences first among all others. The most important part to consider by brands and retailers is how to attract the best target audiences to your live stream session and how to interact and persuade them to buy your product

The Comparison Between Live Streaming Platforms – Pick Your Right Platforms

Right now, more and more big players are jumping on the live streaming trend. They are from all industries, taking data from eCommerce, social-commerce, video-sharing, e-sports, info-sharing platforms, we have summarized and created the comparison table below (Figure 3),

Taobao has monetized from live streaming since 2016 and have created super streamers like Austin Li and Viya; the platform PinDuoDuo has dominated lower tier cities while has a larger consumer base in higher tier cities; WeChat has just launched its live streaming mini-program which will help brands access to the largest daily active users in China; RED and Bilibili have relatively younger and loyal consumer base who will lead China’s future; Kuaishou are focusing on lower tier cities with a higher live streaming eCommerce conversion rate, while Douyin are monetizing more from advertising; Douyu and Huya are mainly focusing on gaming but extending their reach to education and entertainment live streaming; Zhihu launched its live streaming last year and have been exploring ways of monetizing; China’s largest search engine company Baidu entered this battle field this May with the focus of sharing knowledge and experience with the public.

Figure 3:

Before you set up on a live streaming platform, making yourself familiar with the positioning, audience profiles and rules of the platform is a must. After you pick one platform and get used to the process, adding more platforms will help you access a wider range of audiences.

With a worldwide economic slowdown due to Covid-19, live streaming offers an opportunity for growth, especially for online brands & international brands. Before the pandemic live streaming was only regarded as an option for brands to reach customers, but now it has become an integral part to creating new revenue streams.

As live streaming becomes entwined with more and more industries, more diversified and vertical content will appear. Moreover, with the development of 5G technology, there will be more interaction approaches and scenarios, such as AR/VR fully immersive live streaming, where products can be vividly displayed in front of audiences. Live streaming will also bridge online and offline experiences together, for example, international brands can use cross-border live stream to showcase overseas stores, design studios or even brand events in the future to Chinese consumers. Brands and retailers need to keep updated about China’s fast-moving marketing environment and conquer their audience with the most suitable and up to date marketing strategy.

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