China is transforming digitally at an unmatched pace. The COVID-19 epidemic has further pushed the Chinese market towards digitalization and more and more e-commerce platforms are developing functions that can improve the consumer experience.
In particular, during the February lockdown in China, the live-streaming industry literally exploded.
With this article, we want to analyze how this phenomenon is affecting business models and consumer behavior.
With over 400 million viewers, live streaming in China has become the most popular video format. If we combine this factor with the constant growth of the Chinese middle class, it is clear what the business opportunity is in what is today the largest retail market in the world.
Since the beginning of the coronavirus epidemic, several brands have been forced to invest in the world of Chinese social commerce to keep their sales ongoing and live streaming has represented a large portion of these investments.
There are more than 200 live streaming platforms focused on different markets. According to iiMedia in 2019, live commerce sales in China reached $ 61 billion, a figure that is estimated to double in 2020.
What is live streaming?
Live-streaming is a “real-time connection”, which offers the public the possibility of interacting with the video hosts during shooting. In this way, potential customers are able to quickly get answers to their questions and thus have a more complete opinion on the products.
The success of live streaming lies precisely in the high personalization and involvement of the consumer in the shopping experience.
Chinese customers will not tolerate companies suffering from amnesia when it comes to remembering their preferences, this makes it essential for companies to recognize their customers and offer them personalized content that demonstrates appropriate recognition and treatment.
Live streaming in China is extremely sophisticated and the platforms are well integrated with each other to ensure a pleasant shopping experience, from viewing the video to connecting to e-commerce up to online payments.
We have developed 3 formulas to remember regarding the use of live streaming in China.
Formula number 1:
Live streaming + KOL = Success
Chinese users tend to base their buying choices on word of mouth and on the advice that is given by influencers. In particular, the culture of Internet celebrities exploded in China thanks to live streaming. The combination of KOL (Key Opinion Leader) or KOC (Key Opinion Consumer) in Chinese live streaming is very effective, in fact, reviews and product recommendations in live videos hosted by KOL or KOC increase the exposure and recognition of the brand and to the same time the popularity of the speaker.
Online fame is converted into cash at an impressive rate. An example comes from KOL Viya, an influencer with 5 million followers on Weibo, 12 million followers on Taobao, and 550K followers on Xiaohongshu. Viya hit its record high with RMB 353 million (about $ 49.7 million) in one-day sales.
Another rather widespread – and controversial – technique of streamers to earn money online is to receive “gifts” from the public. In practice, the public of the web can send money in the form of animated emoticons to the streamer if they appreciate his performance. In this way, a Shanghai D-J managed to earn almost RMB 8 million for a live music performance.
Formula number 2:
Live streaming + E-commerce = Live Commerce
Live streaming channels are often incorporated into e-commerce platforms, allowing stores to sell through live streaming. Famous Chinese e-commerce platforms such as Taobao and JD.com were the first to connect their shopping interface to live streaming so that viewers could purchase items while watching videos. This type of sale has grown on a large scale, to the point of deserving its own definition: Live Commerce.
This practice is very similar to teleshopping, with the difference that live commerce allows not only to reach a wider audience but also to create events more similar to the show to entertain users. One of the best examples is the annual show organized for Tmall’s clothing collection, which in 2019 kept 87.8 million people glued to the screens.
Formula number 3:
Live streaming + localization = necessity
As David Ogilvy said, “If you are trying to get people to do something or buy something, I think you should use their language, the language they use every day, the language in which they think”
Localization of content is the key to conquering hearts and minds.
For this, it is necessary to use Chinese influencers and that mainly comes from first-level cities such as Shanghai, Beijing and Hong Kong.
In essence, using a Chinese voice for your brand is the key to gaining market share and making your brand speak Chinese too.
What are the main live commerce platforms?
In addition to being one of the pioneers of live commerce, Taobao is also the undisputed leader in the Chinese market. In February, at the height of the coronavirus blockade in China, the number of traders on the Taobao live stream platform increased by 719%.
WeChat expanded its live stream capabilities with the launch of its live stream mini-program called Kandian in early March. Intended to increase Taobao-style live shopping, the Mini Program allows both KOLs and live stream merchants to insert a direct link to their WeChat Shops and mini-programs. According to a Reuter Communications report, nearly 1,000 fashion, beauty and lifestyle brands streamed live on WeChat Mini Programs for International Women’s Day on March 8, increasing WeChat’s social commerce traffic by 83%.
Xiaohongshu, which is a kind of merger between Instagram and Pinterest and is known for shopping-related posts and product reviews, has doubled its live stream activities since the beginning of the coronavirus epidemic.
Douyin (the Chinese version of TikTok) is increasingly popular in China. According to Daxue Consulting, during the peak of the COVID-19 epidemic in China in February, users spent an average of 120 minutes watching live stream on Douyin and 89 minutes watching other forms of content on the app every day. For comparison, the average TikTok user spent about 45 minutes a day on the app in 2019. During the Chinese New Year holiday period and during the lockdown, the overall use of Douyin increased by 102% thanks to the entertainment content streamed
The social commerce and video platform Bilibili has almost doubled its live streaming performance since the explosion of the virus.
There is no doubt that the expansion phenomenon of live streaming in China is destined to last over time and perhaps evolve into even more engaging experiences such as VR. There is even the question of whether this phenomenon will also affect the rest of the world and to what extent. We just have to wait for it.