When one thinks of livestreaming, several thoughts come to mind: livestreamed concerts, video game playthroughs, esports, and professional sports. But what about live commerce? Live commerce combines live video streaming with the ability for customers to interact with sellers in real-time and purchase goods with a mere tap on the screen, providing a transformative experience in the e-commerce space.

The upward trend of live commerce is spurred on by how it continuously creates value, which it achieves in several ways:

• Powerful and dynamic interactions; notably more immersive compared to the traditional buying and selling experience.
• Live interactions with consumers results in real-time feedback that shapes marketing strategies and product development.
• Inclusivity; from influencers to farmers, livestream hosts only need a mobile phone and stable internet connection to operate.
• Improves brand appeal and differentiation through active engagement with customers, consequently strengthening retention.
• Geographical freedom; hosts can stream from their homes, company warehouses, and even in rural areas.
• Accelerates conversion by expediting the customer journey. Hosts employ urgency tactics and gamification to invoke immediate responses from customers.

Where did it all begin?

Live commerce was pioneered by Taobao in the mid-2010s, and as such, fellow Chinese tech titans have emerged as formidable contenders, namely: Taobao Live, JD Live, Kuaishou, Xiaohongshu, Pinduoduo, and Douyin Live. These platforms offer a wide range of products, from cosmetics, fresh produce, cars, and furniture. Brands also host livestreams on their self-run online stores, anchored by staff or smaller influencers.

Live commerce growth in China

China’s live commerce growth has taken off at lightning speed since its inception. In 2020 alone, the number of live commerce viewers leapt from 123 million in March to 388 million in December¹. 617 million livestreaming users were recorded in 2021; a significant proportion of which were live commerce viewers. On 2021 Singles’ Day, users clocked an average of 33.9 minutes on the Taobao Live app, while the average time spent on JD Live in the same period was 20.8 minutes².

In a similar vein, GMV of Chinese live commerce has grown exponentially in recent years. Overall GMV quadrupled in 2021 up from 2019. It is anticipated that live commerce will rake in US$ 449 billion in GMV this year.

Key trends

1. The rise of the superhost

• Key Opinion Leaders (KOLs) offer rewards, discount battles, and games to connect with consumers and monetise the relationship with them

2. Livestreaming as teleshopping 2.0

• “See now, buy now” models in place, as well as garnering publicity and clienteles for SMEs beyond fashion, beauty, and home goods

3. AI virtual hosts

• A cost-effective alternative, allows for extended livestreaming hours. One can commission a virtual avatar built on Taobao for as little as US$ 7.73

4. Brand-run livestreams increasing in popularity

• Flagship livestreams ease customers’ concerns about purchasing counterfeit products which are otherwise sold by third parties at reduced prices

5. Shopping beyond borders

• Neighbouring countries of China, ie. Japan and South Korea, have piggybacked on the success of Chinese live commerce to reach even more customers, particularly due to travel and tourism restrictions

Challenges of live commerce

1. Sale of counterfeit goods

• Brand-run livestreams guarantee authentic products, while KOL-/reseller-run livestreams may inadvertently push fake products to customers

2. Product malfunctions

• Livestreaming only has one take, so if a product is defective during the livestream, this reflects poorly on the KOL/brand

3. Technical issues

• Inadequate bandwidth or unstable internet connectivity could severely compromise sales performance. For example, Taobao Marketplace crashed during the 2021 Singles’ Day pre-sale event, consequently affecting Qiannu, a platform for merchants to manage their online stores

4. Emulating the same experience in the West

• The Western e-commerce market remains very fragmented compared to its Chinese counterpart. Live commerce remains more of an engagement tool rather than a standalone sales/marketing channel to drive traffic and sales

Be sure to keep your eyes peeled for Part 2 of the report, which delves into the anatomy of Chinese live commerce apps, how storytelling sells, and what’s next for live commerce.

Sources

¹ Global China Daily. (2021). Livestreaming takes ‘retailtainment’ to next level. [Online] Available: http://global.chinadaily.com.cn/a/202111/15/WS6191a6bca310cdd39bc75489.html. [Accessed: 5-January-2022].

² Statista. (2022). Daily time spent in shopping apps among live-commerce and non-live commerce users during Singles’ Day sales in China as of November 2021, by app. [Online] Available: https://www.statista.com/statistics/1277772/china-daily-time-spend-of-live-commerce-and-non-live-commerce-users-on-singles-day-shopping-by-app/. [Accessed: 5-January-2022].