How Can Traditional Enterprises Embrace Live Streaming? – A Case Study of GREE’s Live-Streaming Trials

How Can Traditional Enterprises Embrace Live Streaming?

On June 18th, GREE’s CEO Dong Mingzhu cooperated with 30,000 offline stores nationwide and launched live streaming sessions, with sales of more than 10.2 billion RMB on the same day. However, as early as April 14 in a CCTV interview, Dong Mingzhu said that she would stick to offline sales and not let offline salespeople lose their jobs.

Why did Dong Mingzhu change her attitude and dive into the live streaming? How did she achieve extraordinary sales value? Where will the traditional enterprise go in the future?

1. “Miss Dong’s” eye-catching transcript

1.1 The sales performance of 5 live streaming shows
Gree Live Streaming
GREE’s CEO Dong Mingzhu opened five live streaming in two months, and her sales records climbed rapidly. Although her first live streaming in Douyin was unsatisfactory, she soon found a feasible formula for enterprises to enter the live streaming e-commerce. On June 1, she completed 6.5 billion single-day sales and opened new ideas and business models for live streaming e-commerce. During 618 Shopping Festival, her sales value achieved unbelievable 10.2 billion RMB.

1.2  From 0.23 million to 10.2 billion, step by step improvements

GREE’s first live streaming show is not well prepared. We can see from the above figure that neither the duration, mechanisms, nor KOL resources are as good as the next live streaming sessions. So how did GREE successfully reverse and become the industry’s live streaming benchmarking company?

1.2.1 Increase in low-priced commodities, contributing 90% of sales

For GREE’s first live streaming attempt, product selection was concentrated in the mid-to-high price range of 2,000-10,000 RMB, and there were no subsidies. This undoubtedly didn’t comply with the shopping desire of consumers who are used to live streaming with outstanding discounts.

In GREE’s second live streaming on May 10, low-cost appliances within 2,000 RMB accounted for more than 70% of 24 selected products. The sales data shows that products with an average price of about 2,000 RMB have taken the top 5 sellers, which accounts for 90% of the total sales. Thus, parity goods are more suitable for the sales model of live streaming.
Proportion of Sales Value on Kuaishou

1.2.2 Profit compromise + official subsidies, creating high cost-effectiveness

The live streaming on May 10th was also the first time Kuaishou platform tried the live streaming of the home appliance category. In this regard, Kuaishou officially sponsored GREE part of the subsidies, and Gree itself made some profit compromises, jointly creating the lowest price on the day of the live streaming. This business model has also been extended to the GREE’s subsequent live streaming and the multi-platforms live streaming on June 1st, and the high cost-effectiveness has become an excellent weapon for GREE’s soaring sales.
Gree Live Streaming

1.2.3 Head-KOLs participation, soaring professionalism

In the five live streaming of GREE, we can once again discover the importance of head-KOLs’ impact. In the first live streaming on Douyin, GREE did not configure professional live streaming KOL for itself and ended the whole process only with Dong Mingzhu’s one-person show.

In the following four live streaming sessions, Dong Mingzhu invited the top-ranked KOLs on each platform, and each KOL has more than 10 million fans. Especially in the multi-platform live streaming on June 1st, six head KOLs were invited to take turns for GREE’s live streaming.

On the one hand, the KOLs’ participation will bring traffics from their own channels. On the other hand, head KOLs are experienced and good at controlling the live streaming rhythm, mobilizing consumer’s shopping desire, and making the live streaming atmosphere more relaxed and pleasant.
Gree Live Streaming KOL Guests

2. How does GREE achieve digital transformation through live streaming?

2.1 Brand positioning reconstruction
GREE’s live streaming through Dong Mingzhu directly helps the brand to reconstruct its sales channel structure, making the Chinese manufacturing and Chinese patriotism related to this tough and capable iron lady. The smart use of CEO Dong Mingzhu’s personal awareness and popularity in China helped the brand to receive massive attention and discussion from social.

In addition, we can tell from the five live streaming sessions of GREE that the proportion of brand public relations is prominent. GREE has always emphasized its responsibility to dealers, to Chinese society, and to the rise of Chinese manufacturing. Besides sales performance, GREE also hopes to create a long-term brand image through live streaming, spread more value, and stand at high brand value.
BBrand Value Reconstruction

2.2  Pricing strategy negotiation

As mentioned earlier, the biggest challenge for GREE is the dispute over the interests of dealers. If the “lowest price online” damages the profits of dealers, then GREE’s channel will be severely defeated. Therefore, solving the problem of offline profits is the first step to maintain an attractive price online.

To solve this problem, GREE conducted specific strategies on live streaming selection and subsidies. In addition to the low-price product selection strategy, there is also a subsidy policy negotiated with live streaming platforms, which has led to ultra-low pricing in the live streaming room. So how did GREE save offline sales while guaranteeing online sales?

2.3 Traffic distribution & operation

Gree Live Streaming Model
GREE’s dealer system is huge, but GREE cleverly used its offline penetration strength to gain online live streaming traffic. Dealers get the traffic offline, Dong Mingzhu completes the conversion in the online live streaming room.

At the same time, GREE has also reconstructed the traceability and sharing of new retail offline traffic for dealers, turned traditional dealer shops into new-retail experience and service centers, and turned services into online products, bringing double benefits to the dealers.

In this way, the online and offline price difference conflicts have been resolved to a certain extent.

2.4  Sales channel digitalization

At the same time, GREE is also trying to create a digital sales channel to enter the new-retail field. The new-retail is to get consumers to deal online.

GREE started cooperated with its 30,000 offline stores on June 1st to boost live streaming sales. To drive traffic into online live streaming destination from online advertising and offline sales 1 on 1 invitation. Based on the tracking code of the orders, the source of the consumers can be tracked and GREE will rebate accordingly.

So that dealers save the workforce and offline activities costs, compared to the previous brand linkage promotion.

The dealers’ cost becomes minimal if it only serves as a brand’s service and product experience terminal. Although the profit of a single product decreases, the sales volume has dramatically increased, which is instead a profitable deal.

It is worth mentioning that GREE can realize the QR code traceability and know which dealer the transaction consumer came from. At the same time, GREE has created a strict offline system to devide the live streaming orders by region.

3. What does live streaming mean to enterprises?

3.1 Whether “Miss Dong’s Mini-Shop” is an ideal business model?

With “Miss Dong’s Mini-Shop”, consumers can purchase directly in WeChat, and the mini-program also played as an essential sales channel in the 618 shopping festival.

It is worth mentioning that the WeChat mini-program is an online sales channel operated by brands themselves, and it will have more autonomy over the acquisition and processing of background data than traditional e-commerce platforms. If you are interested in mini-program, welcome to follow us, we will produce an article detailing the WeChat mini-program operation in the future.

The advantage of “Miss Dong’s Mini-Shop” is that it can extend the customer acquisition radius of offline stores, which has alleviated the conflict between online and offline. To some extent, the self-built e-commerce platform allows offline dealers to share e-commerce development dividends instead of conflicting with the brands’ online centralized e-commerce center.

3.2 Traditional enterprises should embrace the new e-commerce era
From GREE’s live streaming trials, we can find that the self-built e-commerce live streaming business model has the following advantages:

a. Enterprises are more familiar with markets and products, and brands have more autonomy

b. The brands do not need to have any concerns about authenticity

c. Shorten the distance between enterprises and consumers, reduce the cost incurred by middlemen

d. A virtuous circle: brands drive products sales, products promote the brand image

In general, after solving the middlemen markup, the traditional longer-term problem will be a strategic upgrade for the new industry cycle. If it can complete the improvement of offline efficiency, it will also make the company more actively embrace the online sales channel. Through live streaming and self-built e-commerce platforms, it is a good start for online and offline integration of enterprises.

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