China’s live-streaming is taking shopping into new frontiers

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█ When Kim Kardashian sold her entire KKW Perfume stock within minutes of live streaming in China, the world woke up to the industry’s potential. While the West has been slow to embrace live streaming, China has been drawing in viewers and engaging consumers through elaborate online broadcast sessions during which attractive young people and influencers offer reviews and educate buyers on products.

Live-streaming sessions have become highly popular in China, changing the face of the domestic retail scene. In a country where television programmes are almost entirely pro-government and present only family-friendly scenes, people pursue candour and realness; hence, it shouldn’t come as a surprise that consumers crave honest reviews and entertainment.

Live hosts who dance, sing and offer advice on various topics provide entertainment while retailers increase visits to their websites, connecting with a new generation of buyers. The digital nature of the Chinese consumer demands a high degree of online interaction, and traditional retail has been slow to adapt.

Young buyers need to experience the product before committing to a transaction, and modern technologies allow for real-time customer-brand interactions. A study by Deloitte shows that the live streaming market in China totalled $4.4 billion (around RMB 30.87 billion) in 2018, with the number of live-stream viewers reaching 456 million.

Alibaba is the quintessential example of a retail giant that takes full advantage of the opportunities offered by live streaming. According to Alizila, Alibaba’s Taobao Marketplace racked up more than RMB 100 billion (around $15.1 billion) in gross merchandise volume (GMV) through live streaming videos in 2018. Furthermore, Taobao Live hit record-high sales of RMB 20 billion (around $2.85 billion) during the 2019 Singles Day shopping extravaganza, accounting for roughly 7.5 per cent of the group’s overall RMB 268.4 billion (around $40.8 billion) in sales. Taobao hosts more than 4,000 live streamers, who generate 150,000 hours of content daily. Potential buyers watching these live streams can select from more than 600,000 products every day.

Despite a slower awakening to the potential of live-streaming marketing, the West is finally embracing the new reality. Sophisticated Gen Z and millennial consumers with their fingers on the pulse of social media trends have adopted TikTok, Instagram and Facebook live-stream features, leveraging the power of these social media sites to get their message out and display their interests.

Shopping on live-streaming apps and platforms is also beginning to gain traction. “Amazon Live” is the American retail giant’s second attempt at an interactive video feature, after a failed attempt at a daily live-shopping programme called “Style Code Live”. Wayfair also used the feature during the 36-hour “Wayday” sales event, while Target, BMW and Benefit have live streamed via Periscope, using the feature to offer in-depth product information.

Luxury retailers, too, are beginning to embrace the live-stream option in the West, not just in China. Digitally inclined brands such as Gucci and Burberry have live streamed their fashion shows for years, and now are paving the way for the industry’s reinvention. 

For decades, the luxury world was famous for its strict formality and tightly controlled interactions with the masses. It took a long time for even gradual change to come; today, there are still luxury brands that refuse to consider consumers’ preferences. A traditional marketing campaign, revised and approved by various departments, differs from going live, which brings its own particular set of challenges. However, if done right, the advantages outweigh any potential harm. 

The digital transformation has indulged the modern consumer, who now requires an immersive experience with every interaction with the brand. Buyers crave relevant and memorable experiences at every touchpoint, which ultimately becomes more important than the benefits of functional performance. Consequently, smart retailers build their brand around consumer experiences by focusing on identifying and satisfying the buyer’s needs.

“Customers will not tolerate companies that have amnesia when it comes to remembering them and their preferences for recognition,” says Gene Alvarez, managing vice president at Gartner. “This makes it imperative for companies to recognise their customers and to serve them pertinent content that demonstrates the proper recognition and treatment.”

Some brands have engaged the pre-teen and teenage audience through immersive live-streaming sessions, in which influencers encourage a new, virtual form of dialogue as they sell products. The beauty industry, in particular, has access to a sweet spot for partnerships between live-streaming platforms and influencers.

According to Coresight Research, Li Jiaqi — known as “The Lipstick King” — and Viya, Taobao’s top live-streaming host, bring in millions of viewers with their product reviews. Coresight Research highlights that during Single’s Day 2019, Viya engaged with 43.15 million potential buyers, while Li Jiaqi followed with 36.8 million viewers.

In China's bustling retail ecosystem, a personalised gamification strategy is key to winning over the younger consumer base. The system encourages buyers to engage with brands and take part in various activities. Live-streaming hosts employ a range of rewards, discount battles and play-along games to connect with consumers and influence their shopping behaviour.

However, these gameplay elements are not just for fun. By continually using them, influencers and brands are monetising the relationship with the prospective consumer. While Western luxury buyers don’t expect an interaction with a cute digital mascot when buying luxe cosmetics or accessories, this element is close to a requirement in China, with platforms like Tencent and Alibaba enabling viewers to play with lovable hippos, cats and penguins.

Hao Wu’s documentary, The People’s Republic of Desire, shows how live streamers Big Li and Shen Man earn cash rewards by entertaining their fans on the Chinese platform YY. Each live-streaming platform has its own virtual gifts (yachts, fireworks, Porsche cars) and its very own superstar host. Popular hosts can make tens of thousands of dollars from virtual gifts, but even less famous hosts can earn their "pocket money" by live streaming their hobbies or daily activities. According to CNBC, part-time teenage host Ding Gaoxing made about RMB 10,000 ($1,450) a month in 2016 from virtual gifts from his fans. This doesn’t even come close to Viya’s earning potential, who capitalised on her sales skills to make more than $4.2 million in 2017. On average, the top 10 hosts on Taobao made roughly $2 million per person.

Alibaba-owned e-company Lazada is redefining the concept of “Shoppertainment” through its “See Now, Buy Now” fashion show in Southeast Asia. Lazada brought gamification to the forefront by implementing gaming features that empower users to play in-app games such as Shop-and-Match, as well as secure discount vouchers to buy products available on the Lazada platform.

Luxury brands also use live streaming through gamification to boost revenues and sales. For instance, in 2018, when popular influencer Tao Liang (also known as Mr Bags) released a capsule collection in collaboration with Tod's, he reached sales of RMB 3.24 million in six minutes (around $461,800). Liang maintained the high demand through the “limited edition” feature while engaging his audience through the “see now, buy now” concept.

In the US, it’s mostly middle-aged women that tune in to watch the ultimate shopping channel, QVC. By contrast, Chinese teens and young adults enjoy a similar, but enhanced version of QVC, featuring a vivacious host who tries out products while responding in real-time to consumer inquiries in the chat function.

Digital teleshopping is far from a groundbreaking discovery, but in the Instagram age, modern technologies have made the interaction more engaging, fun and glitzy. By introducing a new class of media solutions, live streamers have opened a new revenue stream that connects brands to the end consumers.

One application of these modern technologies and innovative marketing techniques can be seen in the annual Tmall Collection show’s incorporation of the “See Now, Buy Now” feature, which rewrites the rules of engagement and encourages real-time sales. According to Alizila, the show has attracted a striking 87.8 million views, driving brand engagement and sales while building buzz around the event.

Domestic and international SMEs have also found an opportunity in this new form of video shopping. According to data from Alibaba, during the Malaysia Week in September 2019, eight Taobao KOLs fostered product sales worth RMB 1 million in just three seconds (around $142,500). Other highlights include sales of 80,000 bottles of bird's nest in five minutes and 3,000 packs of “teh tarik”, a type of milk tea, sold in three seconds. 

Likewise, top-tier Taobao influencer Viya engaged with rural farmers and boosted sales in the less-developed areas of the country, while rural live-streaming host Chen Jiubei helped farmers in her hometown sell 2 million kilograms of unsellable oranges in 13 days. Alizila highlights that in 2018, Taobao Live hosted more than 150,000 agriculture-related live streams, which drew over 400 million viewers.

This process of democratisation has opened live streaming to a wide range of consumers who rely on personal recommendations instead of virtual reviews. This change highlights new potential for the retail industry. China’s live-streaming platforms' willingness to develop, improve and adapt to ever-changing consumer behaviours has proven successful. In this new frontier of the digital retail shopping universe, China’s digital ecosystem is forging ahead.