The most effective e-commerce tool in China – Live-streaming

We still remember how the 2003 SARS outbreak triggered the boosting of traditional business digitalization in China, shopping online has become consumer’s daily habit ever since.
What happened in early 2020? Covid-19 outbreak restricted millions of Chinese to their homes and brought a huge impact to the offline business. People has to stay in and internet suddenly became the only way to connect to outside. During the past months, a new industry has rapidly grown up and become a phenomenon for the whole society — live-streaming.
Live-streaming has been continuously developing and becoming a new internet industry since 2016.
Users of live streaming platform
According to iiMedia research, the number of live-streaming users in 2016 was 310 million and has increased at an average YOY growth rate of 17.4% to 501 million in 2019, which covers half of China’s online users (854 million as of Jun 2019). It´s expected to reach 524 million in 2020. eTOC believes the Covid-19 outbreak will accelerate the growth even more.

Live-streaming industry started and mainly driven by entertainment and gaming segments

For entertainment live-streaming, consumers usually watch the hosts singing and dancing for fun through Kuaishou (in Chinese “快手”) & Huajiao (in Chinese “花椒”) , both of which are the major entertainment live-streaming platforms.
Huajiao
For gaming live-streaming, the audiences watch the hosts moderate the gaming competition and learn the skills from the top players. Major gaming live-streaming platforms are Huya (in Chinese “虎牙”) & Douyu (in Chinese “斗鱼”).
living streaming in gaming
Hosts from both live-streaming segments make money through interactions between the host and the audiences. For example, audiences send out the virtual gifts and hosts redeem the virtual gifts into cash afterwards.
E-commerce live-streaming has become a strong force and attracted massive social attention since 2018 as the No.1 e-commerce live-streaming host Weiya made an amazing sales record. She sold 100 million RMB products during her 5 hours live-streaming in Taobao Live platform (Alibaba group owned e-commerce live-streaming platform).

What is e-commerce live-streaming?

E-commerce live-streaming builds a real-time interactive shopping experience. During the e-commerce live streaming, the host introduces products verbally, demonstrates how to use the product and the related functionalities.
For example, to sell a pan through live-streaming, hosts use the pan to cook a dish to demonstrate all the functions and the product quality. Or to sell lipsticks, the hosts will try them on with their lips to show the real effect, so consumers are able to get much more brand and product information in a vivid way. Moreover, consumers can raise questions by sending texts. These questions will be listed on the screen and every viewer can see them. Hosts will response verbally to the questions in real-time.
e-commerce live streaming

Once consumers have been convinced by the host, they can easily click the product image which contains the Taobao product link for purchasing, the payment and order delivery process automatically triggered, the same as buying from Taobao/Tmall platform.
The live-streaming shopping experience has become more and more popular because it’s entertaining, vivid and interactive.

live-streaming shopping experience

Taobao Live is the equivalence of e-commerce live-streaming in China

As of 2019, there are 400 million consumers in Taobao Live platform, every day they can watch over 350,000 hours long live-streaming content in total. Over 200 billion RMB transactions were generated and 11.11 single´s day accounted for 10% of the transactions. 117 hosts sold over 100 million RMB value products during their live-streaming sessions annually.

What value does Taobao Live bring to the online business?

The e-commerce live-streaming brings new vitality to the industry. Taobao Live has already become one of the most innovative online marketing communication and sales promotion tool in China.
Traditional online shopping consumers make decisions based on the product claims and pictures, but live-streaming goes way beyond these. The interactive shopping experience fits perfectly to the Chinese consumers´ online behaviors and social preferences. Based on Taobao Live statistics, over 65% of users who watched live-streaming more than 30 minutes eventually visited the online store.
Live-streaming is playing a more and more important role in brands´ marketing and sales strategy. The Adidas case published by Alizila (Alibaba Group News) shows a good example how the brand owners leverage the live-streaming in Taobao Live to promote the new product launch and offset the offline business:
“adidas hosted an exclusive online debut of its limited-edition Superstar sneaker during its Super Brand Day last week. Its “See Now, Buy Now” stream, which lets consumers make real-time purchases of featured items from their mobile phones, drew 2.23 million viewers and generated more than RMB200 million in sales in 10 hours. The format has become so popular among brands that product debuts on the platform are now scheduled up to the end of April, said Taobao Live.”
Adidas taobao live streaming

Taobao Live is not only changing consumer’s shopping behavior but also empowering the whole society to make a transition

During the Covid-19 outbreak, the consumers in the whole country could not leave their homes, millions of the physical stores had to shut down, business owners had to quickly find out online approaches to pick up their business loss. Live-streaming on Taobao Live made 110% YOY growth compared to the same period of last year.
For merchants across different industries, regardless of online or offline, Taobao Live offers a perfect solution to reach the enormous amount of audiences, including 824 million monthly active users of Alibaba’s e-commerce platforms. Taobao Live has already become an important tool not only to offset the offline business loss, but also to create a new way of enhancing customer relationships.
All kinds of merchants from different industries created various contents and experiences for Taobao Live consumers. From Taobao Live, consumers watched farmers promoting their fruits and vegetables from the field, travel guide conducting the tour in the Potala Palace, the profession wine connoisseur broadcasting the wine tasting lessons in the wine cellar, real-estate agents giving tours of apartments and even auto dealers showcasing the interior of luxury cars.
Travel tour through taobao live
For traditional offline brick-and-mortar business, it converts the store clerks to online influencers. Here is another success story quoted from alizila:
“Shanghai-based cosmetics brand Forest Cabin temporarily closed about half of its 337 stores across China due to the virus. Its stores that did remain open found few shoppers. In an interview on Jan. 31, founder Sun Laichun said sales had dropped 90% during the Spring Festival holiday, traditionally a peak season for shopping. If circumstances continued, he estimated a loss of up to RMB30 million ($4.26 million) a month and possible bankruptcy in under two months. But the brand embarked on a turnaround strategy with livestreaming at its center, and in just 15 days, Forest Cabin’s sales surpassed the same day last year by 45%.
The brand trained 1,600 shop attendants on how to host a livestream on Taobao Live and was soon adding some 3,000 new loyalty members a day, up from the typical average of 800 to 1,000 people. Sun, himself, joined in and hosted a two-hour session on Valentine’s Day in front of more than 60,000 viewers. By the end of the session, he had sold nearly 400,000 bottles of camellia moisturizing oil and generated close to RMB400,000 in sales.”
New merchants of Taobao Live
As a result, the number of merchants using Taobao Live for the first time increased by 719% compared to the previous month.

Why do Chinese consumers shop from the live-streaming?

Firstly, it is a good solution to the problem of what consumer sees online is not what they get. It allows consumers to have a deeper understanding of the product. The online shopping experience has evolved from graphics and texts to short videos and now to live-streaming.
Secondly, live-streaming reduces the complexity of overwhelming online choices for consumers. Over the past few years, the major platforms such as Taobao Tmall and JD have been developed into mature stage, the number of SKUs is becoming overwhelming and  confusing, especially when they are buried in numerous similar products with similar selling points, designs and functionalities. It’s getting more and more difficult for consumers to make a decision.

How to make the products sell well through live-streaming?

2 live-streaming hosts are the most discussed in China which you have to remember:
Li Jiaqi
Li Jia Qi (Austin) who started his career as a beauty consultant, is now becoming the most popular Taobao Live host and social KOL in the market. At present, Li Jiaqi has 7 million followers on his Taobao live-streaming page, and more than 2 million people watch his live-streaming session.
Li Jiaqi’s live-streaming performance is always stunning. Total 36.8 million users watched his live-streaming during 11.11 last year; 15,000 pieces of lipsticks were sold in 5 minutes; 90,000 boxes of masks were sold in 288 seconds, and the turnover amounted over 1 billion RMB in 5.5 hours. These all refreshed people’s understanding of how powerful the e-commerce live-streaming was.
No. 1 KOL in China
Another host is Weiya who has been called the No.1 Taobao Live host with 18 million followers on her Taobao live-streaming site. She created 2.7 billion live-streaming sales record in 2018, with an annual income of up to 30 million RMB. She kept the highest sales record from a single live-streaming session, 267 million RMB products were sold in just 2 hours. Furthermore, she made 3 billion RMB sales from her live-streaming during 11.11 in 2019.
Consumers have changed their product discovering and shopping behavior from “searching products” to “entering the live-streaming room to get recommendations from the host”, which means that they have handed over the “scouting products” which is the core part of the shopping process to the live-streaming hosts.
Accordingly, the live-streaming hosts’ capability of whether they deliver the memorable selling points of the products in a very limited time, and express it to their audience in natural, clear and infectious language, and quickly respond to consumers various inquires in parallel become their core competences.
Furthermore, the professional e-commerce live-streaming hosts know their fans very well after a long time of interaction with them. Therefore, they can select the “fit-to-fans” products to cooperate and make sure the stable sales performance.
Generally speaking, the brand that cooperates with the e-commerce live-streaming hosts will pay 20% -30% of the sales generated from live-streaming period as a commission. The larger the traffic of the host, the higher the commission rate. For the top hosts, the commission rate can be up to 50%.
Choosing the right products, offering an exclusive promotion price, cooperating with the host who is specialized in your category, as well as a comprehensive after-sale service are the key factors of a successful live-streaming promotion. E-commerce live-streaming tool doesn’t change the core of the e-commerce business, but how to learn and adapt quickly to capture the trend in China will make a difference.

E-commerce live-streaming will become a global phenomenon

5G era is approaching, whenever and wherever possible to watch the live-streaming will become a norm. The traditional entertainment live-streaming player like Kuaishou and short video giant platform Tiktok (in Chinese “抖音”) are both aiming to tackle the e-commerce live-streaming segment given the booming opportunity. This online shopping trend and upcoming competition will keep boosting the growth of e-commerce live-streaming.
Overall, e-commerce live-streaming has shortened the distance between “consumers” and “brands and products” by enhancing the efficiency and engagement of information dissemination. At present, overseas live-streaming feature and e-commerce platforms such as Youtube, Instagram and Amazon are actively following up the function of e-commerce live-streaming. E-commerce live-streaming has been recognized by the world as a new direction for combining social content and online shopping.
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