There is no market in the world where commerce and entertainment are integrated like in China. Because of the constant media pressure that Chinese consumers suffer every day, marketers use different strategies to attract their attention, from video games to TV series, to live streaming.
The latter has been booming in the last couple of years, China is the largest livestreaming market in the world, which, according to a Deloitte report, reached 3.9 billion Euros in 2018 with an annual growth of 32%. The same report estimated that the number of livestream viewers last year in China amounted to 456 million
The typical livestreaming format involves a celebrity showing a product and answering the questions of the audience that is watching. It takes place in real time and usually on a smartphone, which is used for 95% of e-commerce activities in China. They are similar to the direct broadcasts that Western influencers perform on Instagram answering to the questions of their fans, but in the West the actions that took place during a direct are definitely limited compared to those in China
Sometimes celebrities modify products based on the suggestions of the public, they do what they are asked to do, interact with them as if they were actually in the same room.
This type of marketing works: Alibaba’s Taobao market generated over 100 billion RMB (13.5 billion Euros) in volume of gross goods (GMV) through live streaming sessions in 2018, with an increase of almost 400% year by year.
This phenomenon began its rise between 2015 and 2016, and by the end of 2016 there were over 200 apps offering live streaming services. The phenomenon was so explosive that many people left their jobs to become “live streamer”. 2018 saw the beginning of another trend, that of short videos in China (through apps like tiktok) but live streaming is still strong.
Live streams and e-commerce, the perfect couple
When it comes to livestreaming marketing, the most effective campaigns feature a combination of livestreaming and e-commerce. According to a trend report in China’s live streaming industry in 2017, 41.25% of respondents in China watched live e-commerce streaming at least once. Of these, 60% browsed the products recommended by live streaming hosts, while 20% bought the recommended products after watching the program.
During the last Singles Day or 11.11, e-commerce giant Alibaba broadcast a “Look now, buy now” show, where consumers could buy the latest items over 80 brands including Adidas, Burberry and Gap, on the Tmall platform. Alibaba has reached a record total of 15.7 billion euros, 32% more than last year. Singles Day also marked the launch of “Entertainmerce”, a combination of entertainment and e-commerce.
According to Alibaba statements, the conversion rate of live shopping is 10-20% on Tmall and 30% on Taobao. Alipay and WeChat Pay, with 450 and 600 million active users, make it very easy to pay while watching videos on mobile devices
The Internet giant Tencent Holdings, to which WeChat also belongs, invested over € 1 billion in 2018 in the livestreaming market of China.
Livestreaming is mainly used by key opinion leaders (KOL) to engage their audience in China. Fans can ask questions about products, send comments to hosts and send virtual gifts as a sign of appreciation while watching the live stream. There are no Western platforms capable of creating such experiences.
Taobao’s live streaming service already has over 10,000 celebrities who review beauty, sports, food and baby products, making shopping a true entertainment experience for new generations. Alibaba has invested 41 million Euros in Ruhan, a celebrity incubator that teaches future stars to write blogs, pose for photos and interact with fans, in line with the growing trend that sees micro-influencers as more influential than celebrities themselves.
Taobao hosts over 4000 streaming hosts, which generate 150,000 hours of content every day. As live streams take place within China’s e-commerce platforms, fans can buy the items they see immediately in the same app. On Taobao, customers are able to buy over 600,000 streaming products every day.
Fashion and beauty remain the most important categories of livestreaming, but in fact, any product category can find its space in the livestreaming. In particular, the livestreaming of fresh products is gaining popularity, as the origin of the products is a crucial topic for Chinese consumers. Livestream guests often demonstrate how farmers collect vegetables or fish the products that are sold online. Viewers can ask questions and place orders while they watch the live broadcast.
Livestream not only for online sales
Although it is particularly suited for online sales, the livestream can also be used to create an interaction between online and offline. For example, the New York startup startups Shopshops is bringing Chinese consumers to discover their boutiques in the main fashion capitals around the world by livestreaming on Taobao. International brands have the opportunity to use the livestream to push Chinese consumers traveling abroad to visit their stores or have an experience with them, denoting a certain capacity also for the development of tourism.
Why is live stream is so effective?
First of all, there is a functional advantage for live streaming. It allows the experts to show the product used, and to demonstrate the results, the experience is interactive and engaging.
There is also a feeling of authenticity that comes from the livestream. Chinese TV is entirely state-owned, with somehow predictable plots and themes. Due to continuous scandals, there is a general skepticism towards brand promotion and word of mouth is still the most effective method of promoting a product. The reviews and reactions of other consumers therefore weigh heavily on the purchasing decisions of Chinese buyers and the livestreaming allows them to watch these reactions in real time and interact.
What is absent in the livestream is the explicit slogan when buying the product. As consumers grow in terms of refinement and taste, they prefer to participate in a chat where everyone is free to express their opinion or experience.
Consumers often feel a sense of control, they have the power to judge and say their opinion, as well as change the course of the live broadcast. The consumer is a kind of judge during a reality show.
More importantly, live streaming allows brands to be introduced to consumers through a richer experience. The demonstrations allow a dialogue that can cover more complex topics.
In this same perspective, live streaming can generate word of mouth. By managing to explain a product, the brand’s value proposition is passed on to the consumer. Live streaming is particularly useful for niche and new brands on the market, ensuring that the product is used, accepted and disseminated.