4 Reasons why China’s Live Commerce is thriving, and What Can Overseas Businesses Learn From It 

Live Commerce in China is going as strong as ever in 2022. In 2022, live commerce serves as an important leverage to empower retreating retail sales in the post-pandemic period, generating a 146% revenue increase of live commerce to RMB 181.4 billion. In contrast, the Livestream market is only worth USD 17 billion in market value, which only accounts for about 67% sales number China made in a single shopping festival. 

It is more stunning to learn that across the shopping festival, more than 100 channels across Taobao, Douyin, and Kuaishou achieved 100 million live stream views; and Taobao Live alone owned 62 channels reaching RMB 100 million GMV. Whereas Twitch, as one of the biggest platforms of overseas live streaming with a promising 30 million average daily visitors, fails to reach half of the viewing numbers of live channels.

Such impressive performance perpetuated the retail myth from 2016 when Alibaba introduced Taobao Live into its platform and opened a new page for China’s e-commerce growth. Its spontaneous, interactive, tech-empowered characteristics enable bi-direction interactions combining instant purchasing with entertainment. 

With huge economic potential, live commerce stimulates the Chinese market and should be examined as a future growth point. For overseas companies, learning the four reasons underlying China’s live commerce development reveal a promising success story that can apply to individual business strategies. Here are the four reasons for China’s live commerce development from customer experience for companies that can learn how to initiate live commerce campaigns and generate sales with better customer experience.  

REASON 1: A mature live commerce industrial chain assists companies launch initiatives

HOW DID CHINA GET THERE: 

Chinese live commerce success is powered by a mature industrial chain based on technological advancement. Paving into Web 3.0, businesses scale up to an innovative data-driven structure,  and the recent 14th Five-Year Plan of Development again highlights the encouraging environment. With a 9.7% annual increase, the digital economy in China soared to RMB 39.2 trillion by 2020, with which live commerce expanded with segmented services. 

Different from the overseas market, China’s live commerce has a large product and service pool, from which companies can choose to promote sales with great momentum. In the upper layer, the live infrastructure upgrade, as suppliers of Cloud service and CDN (Content Distribution Networks) enables intelligent data storage and basic commerce functions. In the middle layer, more live products emerge, tailoring to different contexts supported by SaaS (Software as a service) applications.

In the lower layer, professional companies can design specific business campaigns to ensure details of live commerce activities. Such agile chain collaboration enables SaaS products to extend from standardised versions to more flexible PaaS and aPaaS (application Platform as a Service) products, enabling companies to grow individual live commerce with suitable tool kits. 

Recreated by Chozan 2022

Overview of live Commerce Industrial Chain (Source)

Weizan is a WeChat-focused PaaS service company within such a mature system. Assisted with dividual cloud services, it helps companies to set up live channels and manage relevant functions, covering traffic attraction, customer profiling, private traffic nurturing, live interaction improvement, etc. With its large data pool, XinXiang chip technology, and AI-empowered data analysis, companies can avail smart CRM, OA, and CDP tagging segmented customer profiles with specific tracking criteria.

Different layers of product and service providers synthesise to complement a live ecosystem worthy of an RMB 29 billion market with a 43.1% annual increase, with which China’s live commerce is underlined with a solid basis. 

WeiZan’s chip technology enables companies to manage live streaming with efficiency (Source)

WHAT CAN YOU LEARN FROM IT:

Empower your live commerce with the mature Chinese live industrial chain. companies should discover that the local live service providers are experts in providing tailored SaaS products and relevant services. These services can assist in channel set-up, generating traffic, applying certain technology in online purchases, reviewing live performance, etc. To further stimulate profit growth, enterprises may launch collaborations with specific service providers based on the company’s core business and which live platform they may enter.

REASON 2: Streamers leverage live commerce ecosystem

HOW DID CHINA GET THERE:

Streamers are vital leverages for Chinese live business. Adopting the “one-to-many” selling mode, streamers affect how brands interact with customers and how to turn traffic into GMV. Compared to the overseas market, China is equipped with a comprehensive KOL cultivation culture supported by professional MCNs. E-commerce players in the late-comer sectors like Thailand have to cultivate local streamers via official collaboration, so as to rejuvenate live commerce; China’s market, however, is leaping towards an advanced period.

Lazada and Shopee collaborated with Thailand’s Ministry of Commerce to cultivate local streamers (Source)

Top streamers like Autin Li, also referred to as ‘lipstick king’ for selling record-breaking 15000 lipsticks within 5 mins, created 460 million views with a stunning RMB 21.5 billion GMV in one show for 2022 double 11. To promote personal brand influence, Austin Li explored hosting the  TV show All Girls’ Offers 2, extending scenarios of live streaming to reach people under specific products and build intimate relationships. Such a campaign initiative attracted views of over 1.94 billion on Weibo and directly contributed to Austin’s live streaming GMV of RMB 10.65 billion of the presell session of 2022 Double 11. 

All Girls’ Offer 2 attracted huge traffic and generate GMV for live commerce (Source)

Other streamers with different personal brands and charisma provide unique content marketing to enrich the live commerce ecosystem. Streamers avail personal brands to infuse live streaming with more innovations: Recent trending streamer DaZui Mei on the T97 coffee channel, utilises microphone shouting, also known as hanmai, to introduce coffee products in rap-like songs and achieved over 10 million views per day; Dong Yuhui, another exemplar in DongFang ZhenXuan company, sells products via discursive chatting and won over 30 million fans in Douyin platform. 

DaZui Mei and Dong Huiyu expand streamers’ influences with unique personal styles (Source)

For e-commerce platforms like Taobao 632 live channels have contributed over RMB 10 million GMV, and the GMV for new streamers achieved a 345% increase in the recent shopping campaign. For content platforms like Douyin, the commerce sector confirmed how streamers redefine sales, as daily average sales rose by 156%. It can be estimated that, with more KOLs, KOCs, and celebrities involved in this sector, the “one-to-many” selling mode amplifies how people transform live commerce. The overall streamers’ community and related MCN organisations provide valuable human resources to run the live commerce and pluralize live strategies with more innovations.

WHAT CAN YOU LEARN FROM IT:

With the growing importance of live commerce, people should be placed with a high focus on the company calendar. After the tax evasion scandal of the former Livestream queen Viya, the government has launched detailed regulations on the growing sector. Also, nurturing brand-owned live hosts is helpful for managing private traffic across platforms.

Estee Lauder, L’Oreal, and Proya exceeded 10.65, 7.39, and 6.19 million views respectively in the past double 11 event, demonstrating the potential new growth points for brand promotion. This highlights that companies should acquire detailed customer profiles and choose the right persons to delegate brands, ensuring smooth bi-directional interaction. 

REASON 3: Diversified product categories drive growing purchase incentives

HOW DID CHINA GET THERE:

The redefined product category extends from specific commodities to general groups and may include emotional support, brand image, unique services, etc. Major live e-commerce platforms with a retail focus like Taobao and JD.com have spurred growth, and more content-centred players like Kuaishou, Douyin, and Bilibili are grabbing the market share.

Live commerce covers more products and wins traffic for higher profits. According to iResearch, companies of live commerce cover multiple sectors, from medical beauty, and professional training, to home appliances, with 27.5%, 17.7%, and 7.8% market shares respectively. This trend confirms that besides the upgraded retail, the diversified market underlies the growth of live commerce.

NIO, the leading Chinese automobile company, is holding occasional live car-touring sessions to show customers their product details and tech advancement, which encourage customers with interest to book an offline trial experience.

China Galaxy Securities, likewise, opens regular live activities explaining stock market strategies and related knowledge. What sells via live streaming is not peculiar entities, but soft and vivid brand images of expertise, trustworthiness, and good service quality. These hidden company assets can be utilised for long-term development exceeding their counterparts.

NIO Automobile and China Galaxy Securities holding live activities for brand construction (Source 1 & 2)

WHAT CAN YOU LEARN FROM IT:

Investigate how live streaming can help the company connect to customers with more intimacy and flexibility. As more players enter into live commerce, companies should be aware that the commerce core can be realised not only from the selling perspective. Other than trending entertainment, commerce, and gaming sectors, training-related content occupies 41% market share, exhibiting the traditional PRODUCT is redefined from physical entity to comprehensive group; in addition, catering to diversified needs, live streaming is further segmented for brand activities, public campaign, product reviewing… Overseas companies may leverage live streaming as a vital channel to convey brand stories, soft-selling products in an interesting way, and pleasing customers with individualised preferences. 

Different contexts can live streaming assist companies with efficiency (Source)

REASON 4: Customer experience enriched via live streaming

HOW DID CHINA GET THERE:

The extended contexts of PLACE enrich customer experience. The contexts for live commerce extend from typical channel rooms to factories, TV activities, reality shows, etc., to promote brand selling via various methods. With Metaverse being introduced, comprehensive tool kits including AR, VR, MR, and digital humans are upgrading more immersive customer experience as the new growth point.

Companies like Belle, Anta, and Estee Lauder have recently launched NFTs in breaking the physical restraints; and digital humans Liu Yexi, Ayayi, and Luo Tianyi advance how audiences interact with brands. In cooperation with its licensing platform Alifish, Alibaba’s research institute DAMO Academy launched an XR-powered marketplace on Tmall and Taobao, allowing people to purchase items in their customizable avatars. The latest innovation Ming Palace on the Cloud shows an immersive experience of trespassing time and space limits, which propels market growth with great momentum. 

XR applied in users’ immersive experience in the Ming Palace on the Cloud Activity (Source)

WHAT CAN YOU LEARN FROM IT:

Consider at which point a product reaches its life cycle across different platforms. Platforms with different focus gains affect how businesses adapt to contexts toward targeted groups. According to NetEase, the top platforms preferred for live purchases are Taobao, Douyin, and Pinduoduo, with 73%, 51%, and 25% shares respectively. Companies should be aware of the competitive edges across platforms and divide budgets for tailored live-streaming plans. In addition, companies may embrace metaverse trends to break the physical place silos.

New applications like 3D, 5G, VR, and AI empower overall customer experience. They have already proven success, as Lancome, Hua Xizi, and Philips utilise smart AI assistants, immersive backgrounds, and digital streamers to differentiate from other competitors and assist in GMV conversion. 

Until 2022, the live streaming application covers multiple contexts, 66.7% of which entail the commerce industry. By now, the revenue profits of live commerce soared from RMB 300 million to an estimated RMB 7.8 billion by 2024, demonstrating significant potential. More companies are seizing the market and new players crossing industrial boundaries are adding new incentives to the growing industry. The new sales page from China opens an ever-refreshing business model, and companies need to internalise how live commerce transforms the traditional business world and utilise the growth point for further development. 

Periodical live channels ensure a stable connection between brands and customers, yet sticking to almost the same live context can be boring. 

To conclude

Live commerce has developed into a vital component for successful consumer products enterprises across most of Asia, including China, where it is now the norm. Overseas brands and companies are seeing an increase in the prevalence of this way of selling. 

There have been a few pioneers who have had an impact and reach that has never been seen before. Others who are interested in following in their footsteps will need to move swiftly to come up with their own strategies in order to make the most of this innovative new channel.

ChoZan can help your brand learn from the country of live commerce, China. If you need help from a consultancy relating to learning from China, or even custom corporate training, feel free to contact us. We’re here to help.

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