- The phenomenon of real-time online sales – also called “live commerce” or “livestreaming e-commerce” – took off in China last year after the start of the coronavirus pandemic, and is growing in other countries.
- The difference from last year is that it’s not as easy for livestreamers to achieve consumer sales volume, said Xin Yuezhi, a top livestreamer with 95.6 million followers on the video app Kuaishou.
- A measure of livestreaming transaction volume on Alibaba’s Taobao accounted for only 6.7% of total transaction volume for Alibaba’s China retail market in the 12 months ended March 31, according to an earnings release.
BEIJING — Even as China’s newly affluent Internet celebrities are breaking livestreaming sales records, businesses are finding other strategies that might work better for their brands.
Livestreaming is here to stay, many analysts say, but relying on a system of Internet personalities and opinions will no longer be enough.
The phenomenon of real-time online sales – also called “live commerce” or “livestreaming e-commerce” – took off in China last year after the start of the coronavirus pandemic, and is growing in other countries.
The difference from last year is that it’s not as easy for livestreamers to achieve consumer sales volume, said Xin Yuezhi, a top livestreamer with 95.6 million followers on the video app Kuaishou. This poses a challenge for the industry going forward, as it has grown in market size to nearly 2 trillion yuan ($312.5 billion) by relying more on sales volume than on focusing on product quality, he said. .
Xin now also runs his own company, Xinxuan Group, which has a staff of 1,400 people to screen goods, develop products, and train professional livestreamers. Shin said he hopes one day the company can have 1,000 product designers of its own.
Even before the pandemic, the trend of livestreaming sales in China has been dominated by Internet celebrities such as 29-year-old Austin Lee. He rose to fame by selling lipsticks, and set a record last month By selling the equivalent of $1.8 billion during a 12.5-hour livestreaming session on Alibaba’s Taobao for the Singles Day shopping event on November 11th.
According to industry research firm Hongrandianji, fellow livestreamer Via transacted about $1.3 billion in about 14.5 hours during the same promotional event. The firm said skin care products and makeup were among the most popular products.
Despite the massive sales volume that internet celebrities like these can work with, many companies are deciding to train their own employees to conduct livestreaming sessions.
“Collaborating with top live-streamers isn’t the only way, and sometimes it can be a ‘bad’ way, especially if [the company] One is chasing profit, as top players do not have brand loyalty and often bargaining power,” said Jialu Shan, economist and scholar in Asian and emerging markets at the International Institute for Management Development.,
According to Oliver Wyman’s Dave Zee, using in-house staff to conduct livestream sales sessions also helps businesses save costs, as influencers charge a commission and about 20% to 30% of transaction volume. comes back.
Especially for this year’s Singles Day, Internet influencers have made a selling point of boosting prices that are at least as low as last year, said Oliver Wyman, associate head of retail and consumer goods practice at Zee. Pedro Yip said.
But that means a small profit for businesses, and some of the brands Lee and Via worked with have ended up in lengthy negotiations over the final sale price for the products, Yip said.
Early livestreaming sales figures also make it less clear how much return on investment brands are getting.
“The number of views or transaction volume is no longer sufficient to evaluate the success of a livestreaming session,” said Xiaofeng Wang, a principal analyst at Forrester, adding that data on viewership could be “diluted.”
“Many brands have actually found that it’s just not profitable in terms of sessions,” Wang said. “There are a lot of strategies for learning them. Basically we don’t have a guide[e] Book yet for livestreaming commerce, but brands, they have to learn [from] past sessions, and if they keep those metrics in mind, they can quickly test, learn, and adjust.”
The market is still growing rapidly. For e-commerce giants like Alibaba, the earnings release shows Taobao live gross merchandise volume, or GMV — an industry metric that measures the total value of goods sold over a given time period — of 500 billion yuan in the 12 months ended March 31. reached.
That means the quarterly average grew more than 40% in less than two years, according to CNBC calculations of figures reported by Alibaba. In the 12 months ended September 2020, Taobao Live GMV averaged 87.5 million yuan per quarter.
However, Taobao Live GMV in the 12 months ended March 31 was only 6.7% of Alibaba’s China retail market GMV, during the same time period of 7.49 billion yuan, public records showed.
The rise of other e-commerce platforms and Beijing’s crackdown on monopolistic behavior among Internet tech companies give businesses other options.
Oliver Wyman’s Zee said businesses are now building teams for livestreaming across platforms, from Alibaba to ByteDance’s wildly popular video app Douyin. A cosmetics customer who is a top seller on Douyin generates about 10% of its sales from livestreaming, up from 1% three years ago, Xie said.
Outside of Taobao, the top three livestreamers based on sales in October are all Kuaishou – and from . were on Xinxuan according to Hongrianji.
The livestreaming market could double or more, but there will be more businesses to come and big changes, Jin said in Mandarin, translated by CNBC. “Whether this market can become 5 trillion yuan, 10 trillion yuan more in size remains to be seen after [industry] standardization.”
Looking ahead, Shin said it’s important for livestreamers to show customers where products come from, or how they’re made. This knowledge and engagement with the manufacturing supply chain will help livestreamers become more professional and develop more targeted brands – all of which Xin hopes to help his company remain competitive.
He added that he hopes, once the pandemic travel restrictions are lifted, he and his team can travel to Europe to find brands that can do well in China, as well as livestream their lives with the local market. Can share experience.