Live-streaming in eCommerce, Video Commerce, complete information
An interesting trend in eCommerce has emerged from the east and is spreading across the globe. Live-streaming commerce. It being considered as a potent strategy for eCommerce in current times.
This article, is based on my readings on the subject; it provides all information to get familiar with the topic.
The Beginning
Live-streaming in eCommerce has become hugely popular in China and is fast getting attention in the rest of the world markets. The story originated from China itself which started experimenting with it in 2016, pioneered by Alibaba, China’s biggest tech giant. It has now become an integral part of Chinese eCommerce and a major growth driver. Let us look at some of the numbers:
- During Singles Day 2019 live-streaming contributed 3 billion USD or over 7% of Alibaba’s sales
- Overall China’s live-streaming eCommerce industry reached 63 billion USD or 9% of all eCommerce sales in 2019, a 72% year over growth
- 2020 revenue projections hover around 129 billion USD
What is live-streaming commerce?
Live-streaming is simply broadcasting a live video over the internet. It has been primarily for entertainment purposes, Twitch in the US being the best example for it with over 5.8 million active streamers a month. However marrying live-streaming with eCommerce is a novel idea making online shopping more vivid and a social experience. It is particularly good for conversion rates and has proven marketing effects.
- According to Alibaba, the conversion rate on Taobao Live (Alibaba’s main live-streaming platform) was 32 percent — 320,000 items added to cart per one million views in 2019
- Overall Taobao live’s gross merchandise volume grew by 150% per year for three years in a row
Quote from Guowei Zhang, JD.com’s head of live-streaming to Marketing Interactive — “Live-streaming essentially creates a real-life shopping experience scenario that draws consumers even closer to a product. Through real-time interaction with key opinion leaders, consumers will be able to try, feel and inevitably trust the products”
Live-streaming in eCommerce is used with multiple acronyms like social commerce, video commerce or live commerce.
The format involves a trusted influencer also referred to as KOL (key opinion leader) who is a celebrity or company hired talent, explaining a product to users over live video, trying out the product herself, responding to live questions and yes above all providing an entertaining and affinitive environment. The users can continue to shop the product once it is opened during the stream, checkout and make payments, all this while watching the live-stream. Brands or sellers themselves can also host a live-stream to reach-out to their customers directly. This is different from tele-shopping over TV which does not have the interactive and social aspect of a live-stream, also viewers do not get eCommerce like purchase experience.
Influencers or KOL
Listen to some stories about KOLs and their amazing numbers. KOLs have been hugely popular in China, having achieved celebrity statuses like movie stars, with millions of fans. They have their own studios and teams who help put together a successful live-stream. During sale days they spend many hours conducting streams and selling multiple products in a day. Using their connection with the audience they act as catalysts to eCommerce sales.
- Viya, China’s most famous KOL, made sales of over 3 billion yuan (430 million USD) on singles day alone
- One of Viya’s live-stream hit audiences of more than 37 million which is more than “Game of thrones” finale (19.3 million) or “Sunday night football” (20.5 million) or Oscars 2020 (23.6 million)
- Viya even sold rocket launch services for 5.6 million USD in a single evening
- Kim Kadarshian, american media personality, sold 15000 units of her KKW perfume within minutes of her live stream with Viya
- Li Jiaqi, another famous influencer of China, popularly called the “Lipstick King” famously sold 15000 lipsticks in 15 minutes
- Li Jiaqi now sells things ranging from skin care to chilly sauce; he once introduced 39 products in a span of 5 hours on Taobao live sale with 30 million viewers tuning in
- US based QVC live’s lifestyle influencer Jill Martin earned 60 million USD in revenue from Today’s show in 2018
- Geng Shuai, Chinese influencer sold 1623 cars on a 2.5 hours stream. Yes cars!
Quote from Tiger Ai, chief executive of multimedia company Hifan, to South China Morning Post “Fans like their idols to share their own insights, all of which are conducive to ‘raising’ the temperatures of an online shop to create a welcoming atmosphere that entices followers to spend their money. In other words, it’s the ‘ambassador-like’ service of KOLs that pushes the sales. It is like injecting life into the products to make shopping an authentic, personal and exciting experience”.
Influencer economy
This is part of a larger global influencer marketing economy which is expected to grow to 22 billion USD by 2024 at a Compound Annual Growth Rate (CAGR) of 32.4%. Brands are increasingly identifying the power of influencers to sell products and get better rate of conversion from viewers to buyers than traditional marketing — 30% Vs 3%
- Gross merchandising volume (GMV) of live-streaming increased 6 fold, users 10 fold and number of broadcast increased increased 5 fold in 2019 as compared to 2018, as per Guowei Zhang, head of JD live
- Alibaba wants to build a global influencer ecosystem starting with 100000 influencers and growing to 1 million in 3 years
- Alibaba also announced plans to incubate 200000 farmers to enable them to sell their produce via live-stream
- Taobao live plans to host live-streaming sessions from 300000 merchants daily in 2020
- Nasdaq listed and Alibaba backed company Ruhnn is a big influencer incubator and has over 150 signed KOLs and over 206 million fans across Chinese social media
- Hifan is another big incubator like Ruhnn creating next generation live-streaming celebrities
Global scenario
Looking at the global scenario we can say that China has been successful in combining entertainment and eCommerce. The numbers speak for themselves. It is running full throttle now on all of China’s major eCommerce platforms from Alibaba’s Taobao and Tmall to JD to VIP to Pinduoduo which has also launched it’s live-streaming platform Duoduo.
The social and entertainment apps of China have also embraced it and are driving towards commerce which they refer to as social commerce. Inke is one of China’s largest streaming platforms with over 200 million registered users. Live-streaming on Inke is mostly used for marketing with virtual gifts as a revenue model, for product purchases it drives users to third party sites. China’s biggest social app WeChat from Tencent has launched a WeChat mini program where brands via their live-streaming can direct users to WeChat shop or JD shop. Tencent also has Tencent live streaming platform which has recently opened registration for individuals for live-streaming. Xiaohongshu, a leading Chinese social commerce app with funding from Alibaba, is also said to be experimenting with live-streaming commerce.
All China tech soon starts to trickle in south-east asia, much of it owing to heavy Chinese investment in the region. Alibaba owned Lazada eCommerce, which is present in multiple southeast asian countries, has started integrating live-streaming. Similarly Shoppe, another major south-east asian eCommerce company, has launched live-streaming. Tokopedia Indonesia’s largest eCommerce firm launched Tokopedia play, it’s live-streaming platform. Japanese giant Rakuten launched Rakuten live for video streaming, combining it with commerce seems inevitable.
Moving to the west, Amazon launched Amazon live creator, an app which helps brands, amazon incubated or outside influencers to create live-streaming to sell a product. The streams are shown on Amazon live platform on amazon.com/live where users can browse and watch live-streams. Facebook already has Facebook live features and announced Facebook shops and also Instagram shops to drive it’s social commerce agenda. Google’s latest experiment shoploop is also a video shopping portal redirecting to third party eCommerce websites. It will be interesting to see how live-stream commerce evolves in the US market.
Coming to Indian scenario; there are early signs of the trend with early stage startups like Bulbul and SimSim offering pure live-streaming eCommerce. They seem to be using it as a strategy to reach Tier 2, Tier 3 cities but they do not have noticeable market share as of yet. The major players are Amazon and Flipkart. From its experiment and learnings from Amazon Live in the west, it seems a matter of time for Amazon India to launch the model. Flipkart has recently launched Flipkart ideas with curated content videos from creators and brands on products. It is not a live-streaming commerce experience but seems a step in the right direction.
Covid impact
Covid has immensely impacted businesses globally and the economy. With people locked down at home and movement being restricted eCommerce played a crucial role in ensuring supply especially of essential items. There has been a shift of global retail to eCommerce.
- As per a report from Adobe, in US, total online spending in May hit $82.5 billion, up 77% year-over-year
- According to US department of commerce data, in the first quarter 2020, consumers spent 146.47 billion USD, up 14.5% from $127.89 billion for the same period the prior year
However the growth drivers are skewed by specific categories, led by Grocery. Numbers coming in from China are showing the most surge in eCommerce overall.
- Alibaba’s first quarter revenue 2020 jumped over 22% year over year and its overall GMV for the year ending 31st March reached 1 trillion USD
- JDs revenue in the same quarter increased by 20.7% year over year
- Pinduoduo’s revenue for the same period jumped 22% year over year
Note: China was well under lockdown and faced the effects of Covid in first quarter of 2020
Covid seemed to have positively impacted live-streaming in China
- Taobao waived all service fees from its live platform in early February 2020 for merchants. As a result it saw a 719% jump in merchants using live
- In February, live-streaming sessions on Taobao live increased by 110% as compared to same period last year
- Total number of eCommerce live-streaming sessions crossed 4 million in first quarter of 2020 according to China’s Commerce Ministry
- Alibaba estimates live-streaming sales to be 5% of overall sales on an average in 2020
Influencers are engaging more with users during Covid with increase in engagement on the eCommerce apps. Brands are also quickly experimenting and shifting to live-streaming for their sales.
- Li Jiaqi and Chinese rapper Lil Ghost conducted an online promotional event for Barcelona based brand Isdin. More than 15 million people tuned in
- Viya’s viewership doubled during lockdown
- American actress Jessica Alba participated in Amazon live live-streaming for her brand Honest beauty
- Brands like Clarks, TUMI, PHILIPS and Havaianas conducted a two hour live-stream on JD in April. Transaction volume of Clarks increased 2178% on a monthly basis while transaction volume of TUMI increased 2368% compared with the daily average of the previous week
Conclusion
Live-streaming commerce is effectively providing a mechanism to combine live, social and entertainment in online shopping experience. It is surely going to be experimented in the US and other markets. However it is too early to predict it to be a game changer or just a trend in eCommerce. Also the eCommerce markets, the capabilities and product stack of major players is quite different in other countries than in China.
“I think this market has just begun” says Guowei Zhang, JD.com’s head of live-streaming, “E-commerce livestreaming will certainly generate greater value for commerce. Not 10% or 20%, it could be much higher. But I dare not predict as it’s developing too fast”
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References for this article:
https://www.alizila.com/how-livestreaming-is-transforming-e-commerce-in-china/
https://www.alizila.com/taobao-live-rethinks-the-future-of-stores/
https://jingdaily.com/e-commerce-in-2019-year-of-the-livestreamer/
https://econsultancy.com/why-livestreaming-major-part-singles-day-2019/
https://www.weekinchina.com/2019/04/people-with-influence/
https://www.marketsandmarkets.com/Market-Reports/influencer-marketing-platform-market-294138.html
https://www.wowza.com/blog/live-streaming-in-china
https://www.digitalcommerce360.com/2020/05/20/ecommerce-during-coronavirus-pandemic-in-charts/
