Niels Christian Flintholm
Livestream e-commerce in China
As anyone with just a fleeting interest in the Chinese market will know, China and it´s online eco-system is both isolated and very different from the online world we know in the Western world. This uniqueness also very much apply to the role of livestreaming.
In this blog post we are going to take a look into the fascinating world of Chinese livestreaming, the power it holds over vast amounts of traffic and sales and why it can be a great way to boost a brand in China.
We will also be looking at some of the challenges facing the livestreaming market today, both regulatory and commercial as well as take a look at some of the potential dangers that brands needs to take heed of when doing livestream sales in China.
What is livestream e-commerce in China?
With eyewatering figures like projected total sales of 1.2 trillion rmb in 2022 and estimated 11,7% of total e-commerce sales in 2023 and a cohort of sellers ranging from fishermen hawking the days catch to high profile star livestreamers selling luxury watches and high fashion, it is hard to overestimate the impact of livestream e-commerce in the Chinese market.
If we look behind the staggering total numbers and dig a bit into the category distribution of the products featured on livestream platforms we see a strong dominance of apparel and fashion followed by cosmetic & beauty and food.
In a noisy market like China with a bewildering array of brands and products vying for the consumers attention, livestreaming offers a range of attractive benefits for brands trying to make a dent in the market.
To understand why livestreaming is such an attractive prospect for brands entering the Chinese market, it is necessary to first take a look at what drives the Chinese consumer to follow these livestreamers and the role they have in the market.
As the Chinese society went through decades of development at breakneck speed, quality and trust was often sacrificed by authorities and brands alike in favour of quantity and speed. This has led to a consumer market that still to this day is characterized by notably lower levels of confidence in brands than what we see in for example Europe.
This lack of trust in authorities and brands is major driver of the rise of livestreaming stars in China, whom the consumer turns to as a trusted source of shopping insight and good deals.
It is in this light that we have to see the enduring attraction of major livestreamers to brands hoping to make an impact on the Chinese market. Livestreaming is quite simply a potentially very effective way to connect directly to vast groups of Chinese consumers whom the brands otherwise would not be able to reach.
As always however there is no such thing as a free lunch and there are many pitfalls and challenges that brands need to be aware of when doing livestreaming business in China.
Read on and we will introduce you to the most important issues to be aware of!
What to be aware of
- Cost/profitability. A major headache for most brands working with livestreaming is the fact that very large discounts is almost always an integral part of the livestreaming business model and securing great prices for followers is a major USP for livestreaming hosts.
In this environment brands often risks ending up in a spiral of ever greater discounts, severely impacting not just profitability but perhaps just as seriously risks creating a very short brand cycle based on aggressive discounting.
- Bigger not necessarily better. Our own experience as well as figures from the respected Chinese business news portal CBN Data points to a tendency of ROI and overall performance not necessarily being better with the largest livestreamers as compared to lower ranked ones. CBN Data report shows that 53, 47, and 37 percent of Taobao live, Douyin, and Kuaishou’s top 100 streamers, respectively, have less than 1 million followers.
- Converting livestream traffic. A well executed livestreaming strategy can potentially create vast amount of traffic to the brands online eco-system. It is crucial to plan for this uptick in traffic by making sure that these new potential consumers and followers are being met by a thought through, authentic and seamless online brand experience. The goal here obviously being to convert as many first time livestream visitors as possible to future followers and return customers. To make this possible any brand considering using livestreaming in China would do well to first make sure that their online branding and merchandising is up to scratch.
If brands are running livestreaming campaigns without proper preparation they will easily end up just boosting traffic with the livestreamers without actually bringing the brand itself much long term benefit.
If you are interested in learning more about how your brand can leverage Chinese livestreaming just reach out and let´s see how we can help you.