How live streaming impact E-commerce
In March 2016, ‘Mushroom Street’ introduced live streaming as the e-commerce bandwagon, which has since changed the development pattern of e-commerce. After two years, the rapid development of e-commerce live, Taobao, Jingdong, and other large brands of e-commerce have launched a live function, opening up a live shopping guide mode.
After more than 4 years of development, more and more e-commerce platforms, live video platforms, MCN institutions, brand manufacturers are involved in the live e-commerce industry and the live e-commerce industry is in a period of rapid development.
2019 and 2020 have become the key years of the development of the live industry. In 2019, led by Li Jiaqi’s slogan ‘OMG, Buy it’, e-commerce began to develop in full swing. In 2020, with the arrival of the Covid-19, the whole of China almost closed their door and stayed in isolation, the whole population was in the mood to ‘fight the epidemic’. The live broadcast of e-commerce became a life-saver for various industries, and salespeople in shopping malls and real stores, business owners, celebrities, and government officials also came into the live-commerce environment. All kinds of industries started to enter into in the live broadcast sector.
What direct live streaming brings to the apparel industry chain?
The impact of direct e-commerce on the apparel industry is huge. Live streaming’s real-time output of information enables customers to have a more realistic feel, and presenters and users can communicate and interact through comments on topics such as product colors, sizes, fabrics and various questions that the presenters can answer. This makes up for the shortcomings of the original graphic flat two-dimensional, such as the picture does not match the product details, the actual product display is incomplete, etc.
Anchors and web-celebrities can bring their own fan traffic, which can quickly bring a lot of popularity for businesses and promote product sales. Compared to the traditional e-commerce marketing model, the live e-commerce model has fewer advertising links, shortens the marketing chain, and at the same time shortens the commodity transaction time and improves the conversion rate and order rate.
Tiger.com has published data: for their main clothing business there is a daily live broadcast (independent live) and the purchase conversion rate is between 7% to 10%, that is, if there are 100 people into the live room, 7 to 10 people will place orders. This is higher than the 5% for standard graphic pages.
What did live streaming bring to retail?
Live streaming has also disrupted prices at the retail end. Live streaming, in fact, is a distillation of the shopping mall transaction scene, users can switch between live streaming rooms to find the products they need, just like window shopping; and to create a sense of presence, so that users feel they are not alone in shopping-mall, with a group of people.
For the retail side, live e-commerce and web celebrities are disrupting the system of retail terminals. People’s shopping behavior in e-commerce platforms has changed from “people looking for goods” to “goods looking for people”. Based on the idea of live ecology, businesses can analysis the live market and find the best-selling products then talk with factories about prices. Then, for the mass market, they can gather their own fans and broadcast a series of live events.
Live e-commerce can be seen as super group-buying — anchors get enough users and orders to have enough bargaining power over manufacturers and supply chains. In the typical goods-anchor-consumer sales path of live e-commerce, anchors and their live-streaming rooms replace brand stores and even e-commerce platforms, becoming direct service providers for fans, and a new scenario for transactions can be reached.
For example, many web celebrities can go live with a 130 yuan product that costs 100 yuan at the factory. While the traditional channels need to sell to 300, 400, or even 500 yuan a product.
Similarly, limited-time coupons in the live store also create a grouping scenario, where people grab the same item at a fixed time. The biggest difference between the live supply chain and traditional e-commerce is that the sales capacity of the live broadcast is very strong, and the competition between anchors is also very fierce, so for the live supply chain, whether it is the speed of the new, or SKU width, the requirements are very high, including the requirements of the supply chain itself to have a certain and fast return capacity.
Under the impetus of live e-commerce and the online celebrity economy, the clothing supply chain, in terms of speed and flexibility, has undergone a qualitative change: the industrial chain is shortened, shopping efficiency is improved, and the distance between people and goods is closer. Traditional Reddit stores may be on the new rhythm of 1–2 times a month, while within the live broadcast it be at least 3–4 times a week. Therefore, a very large supply chain system may be needed to support an anchor.
Live e-commerce is more advanced. Taobao live, mushroom street, and others are delivering the anchor, supply chain and other industry chains including upstream and downstream resource integration.
Therefore, the ability to group goods, basic e-commerce capabilities, and live service capabilities is vital. In the industrial base, to do live is key — live brings the demand and traffic to the industrial base, even if the goods sold live are just samples.
Do e-businesses’ live events create capital chain problems?
E-business lives are also, to a certain extent, able to solve the clothing industry often encountered capital chain problem. The traditional ordering model is becoming increasingly difficult to survive and they need to rely on the refinement of operations. The most difficult thing about clothing is inventory control, if there is a large amount of inventory, this will directly lead to a break in the cash flow of the business.
Live e-commerce can solve many problems in the industrial ecological chain, such as quality control, efficiency, turnover, and venues/outlets. Live e-commerce relies on integrity to survive and locks-in quality control. In the live mode, customers do not have to spend time working out ‘how to dress it with’ — the anchor can directly contact the enterprise, reduce the intermediate link of the product to improve efficiency and save costs. This can help enterprises to solve their turnover problems. At the same time, live commerce can also change the consumption habits to drive consumption growth, can accurately predict the sales of particular styles of goods, provide a strong decision-making basis for businesses, and ultimately achieve flexible supply chain production based on on-demand distribution of precision procurement.
About this article
This article has been written by a student on the Grenoble Ecole de Management’s Advanced Masters in Digital Strategy Management. As part of a content creation assignment, students are given the task of writing articles based on their digital interests and disseminate the articles online. Articles are marked but we make minimal changes to the content. Thanks for reading! James Barisic, Programme Director, MS DSM.
