In Part 1 of the live commerce report, we touched on the basics of live commerce, key trends, and challenges for this emerging, relatively young field. Here in Part 2, we’ll explore the features of Chinese live commerce apps that make them stand out and how Key Opinion Leaders form crucial touchpoints in building rapport and gaining customers’ trust. This report concludes with an outline of what we can anticipate in the near future in the live commerce space.

The anatomy of a livestream

Basic web browser-based live commerce sites consist of the following main components:

• The video stream
• The list of products being promoted, with the product currently being displayed highlighted
• A chatbox for viewers to submit questions/comments and interact with the livestream host
• A reaction button that can be used to convey sentiments to the host.

Seems pretty straightforward, right? However, compared to Chinese live commerce apps, these are but bare bones. Let’s have a look at how Chinese apps go above and beyond to maximise appeal and outreach to customers.

First and foremost, Chinese live commerce apps are optimised for smartphone use, in comparison to Western live commerce platforms that generally still cater to desktop/laptop users. This in itself boosts user outreach, as anyone with WiFi or mobile internet could tune into a livestream while on the move. Secondly, Chinese live commerce apps provide a picture-in-picture view of the livestream on the current hosts’s page (refer to Figure 1¹). Viewers can also watch recorded demonstrations of previously shown products; if the products are on the featured products list without any demo, they can submit a request to the livestream host to show that product.

If you thought that was all, you’d be wrong. Chinese live commerce apps provide coupon centres in which viewers are prompted to review available coupons before making a purchase (Figure 2¹). Some coupons are available to viewers immediately upon joining the livestream while others require more engagement, such as watching the session for a specific period of time, following the host on the shopping platform, or sharing the link to the livestream with 3 friends.

Gamified loyalty levels are also leveraged to encourage viewers to participate in the livestream (Figure 3¹). Each viewer has a loyalty level that reflects their past participation in a specific host’s livestreams, which can be increased by watching, commenting, and making purchases. Hosts further cement customers’ loyalty by rewarding higher-level customers with exclusive coupons.

Spotlight on Taobao Live

Alibaba launched Taobao Live in 2016 as a platform for viewers to watch, be entertained, learn about new trends, and purchase goods. This platform has become so hugely successful that the total sales of the top 2 Key Opinion Leaders (KOLs) reached more than US$ 1.4 billion in the 2 days of pre-sale before 2020’s Singles’ Day event. Livestreams on Taobao Live run for an average of 6 hours and showcase approximately 70 different products, no easy feat at all. However, top KOLs who have mastered the art of displaying products at lightning speed can display 1 product every 5 minutes. This can attract up to 266,000 viewers per stream, resulting in approximately 75,000 orders being placed.

The most popular categories of purchased goods in live commerce are shown below in Figure 4.

Storytelling sells: KOLs

Live commerce has been a game changer for retail businesses. Mass adoption of technology by KOLs has transformed the way customers interact with sellers, creating an environment where both parties can engage with each other without physically being in the same room. Unlike the traditional e-commerce setting in which tailored ads pushing products onto customers can become bothersome, live commerce empowers the consumer to participate in the shopping experience by choice.

KOLs have transitioned from blogging about products/deals to adopt livestreaming as part of their repertoire with the rise of Taobao Live. By interacting with consumers in real-time, KOLs can incentivise spending by offering vouchers/coupons and building rapport with viewers. In turn, customers can ask questions, leave comments, and emojis to convey sentiments to the host (and by extension, provide real-time insights that are useful for brands).

From one end of the spectrum to the other, KOLs come from a variety of backgrounds. As an example, Austin Li (also known as the Lipstick King) is an affluent, vibrant personality and one of the top KOLs around. He broke records by selling US$ 1.8 billion worth of goods during an impressive 12.5-hour long livestream on 2021 Singles’ Day². 250 million viewers tuned into his livestream, a clear testament to the extent of his influence on customers. He is widely regarded as a trustworthy, reliable source of information due to his blunt and straightforward nature, even going so far as to criticise products by higher-end brands. He earns between US$ 10-20 billion per month and his net worth is estimated to reach US$ 15 billion in 2023 by livestreaming alone.

The counterpart to Austin Li comes in the form of tech-savvy farmers in rural China. Over 110,000 farmers have turned to livestreaming to reach urban customers. In fact, as of September 2021, Taobao Live hosted over 2.3 million livestreams, resulting in over US$ 786 million worth of agricultural sales. Rural farmers who struggled with produce wastage due to supply chain disruptions from the pandemic are now bouncing back in full force. Nearly 2000 rural participants now generate a monthly income of approximately US$ 1,400, eight times the rural average. It is evident that live commerce is a powerful tool for the agricultural sector. Taobao now offers free training workshops for farmers while JD.com has launched rural livestreaming initiatives on their platform³.

What’s next for live commerce?

While live commerce is still in its early years, we have identified several pointers to look out for in the near future.

1. Leveraging micro- and nano-influencers

• Influencers with a few thousand dedicated followers can foster a more intimate and trusted connection with audiences at a lower cost for brands. Engagement rates for nano-influencers on Instagram can hit 10x those of mega- and macro-influencers.

2. Innovative formats

• AR and VR are powerful tools to enhance the shopping experience. AI hosts are emerging as a new force in the industry.

3. Growth in Asia and beyond

• Countries such as Singapore, Malaysia, India, and Thailand have stepped up by integrating livestreaming into their major retail platforms. Whether other countries in the region such as Vietnam and the Philippines will hop on the bandwagon remains to be seen, but live commerce is slowly but surely attempting to penetrate the market in the West. YouTube, Facebook Live, and Amazon Live have started testing the waters in the US, achieving moderate success so far.

Closing notes

In summary, live commerce is proving to be powerful disruptor in an otherwise traditional retail space. Although the usual suspects associated with shopping account for the top selling categories in live commerce (eg., fashion and apparel, groceries, and electronics), live commerce has found a way to branch out to other sectors such as the agricultural industry. The inclusive nature of live commerce means that virtually anyone can be a KOL themselves. The future of live commerce is a promising one. Businesses and brands alike would do well to harness the power and potential of live commerce to propel them ahead, and in doing so, forge meaningful, long-term connections with their customers.

Sources

¹Nielsen Norman Group. (2021). Livestream ecommerce: what we can learn from China. [Online] Available: https://www.nngroup.com/articles/livestream-ecommerce-china/. [Accessed: 5-January-2022].

²Bloomberg. (2021). China’s ‘lipstick brother’ livestreamer sells record $2 billion of goods in one day. [Online] Available: https://www.bloomberg.com/news/articles/2021-10-21/china-s-lipstick-brother-livestream-has-record-2-billion-day https://www.bloomberg.com/news/articles/2021-10-21/china-s-lipstick-brother-livestream-has-record-2-billion-day. [Accessed: 5-January-2022].

³MIT Technology Review. (2020). Live-streaming helped China’s farmers survive the pandemic. It’s here to stay. [Online] Available: https://www.technologyreview.com/2020/05/06/1001186/china-rural-live-streaming-during-cornavirus-pandemic/. [Accessed: 5-January-2022].