A Primer on E-Commerce Livestreaming in China
Overview of China’s E-commerce Livestreaming Industry
In 2020, China’s e-commerce livestreaming market was estimated at 1.2 trillion RMB – an increase of almost 3x over 2019. The industry is projected to grow with a CAGR of 58% in the next years. The penetration rate of e-commerce livestreaming in online retail was 10.6% in 2020 and is expected to further rise, primarily driven by new users as well as an increase in order frequency and average basket size.
Main drivers behind the rapid growth of the e-commerce livestreaming are:
- Vivid information and real-time interactive answers are more accessible to consumers (similar to tele-shopping in the West in the past), shaping the consumption habit of combining watching livestreams and online shopping
- Merchants turn to online streaming to directly reach consumers generating sales and enhancing consumer engagement, especially during COVID-19
- Various e-commerce platforms launched preferential policies regarding host support and merchant settlement
Continuously expansion of product categories on e-commerce livestreaming
Different categories and brands should adopt differentiated livestreaming strategies based on own characteristics to drive business growth.
- Consumers have great cognitive differences in the characteristics and price of goods with low standardization and low unit price. Product introduction can be clearly transmitted to potential consumers through livestreaming to improve the efficiency of transaction.
- For commodities with very low standardization, such as jewelry, the transmission of product information and knowledge can be emphasized in the livestreaming to shorten the decision-making process of consumers.
- The characteristics and price of highly standardized goods are more transparent, and the price difference of similar goods is mainly reflected in the branding. Multiple forms of price reduction are more effective during livestreaming.
Ecosystems of different e-commerce livestreaming platforms
Traditional e-commerce platforms represented by Taobao. Relying on complete supply chain and large quantity of goods provided, platforms possess large consumption-oriented users with a rather high conversion rate through livestreaming. Brands on traditional e-commerce platforms focus on setting up their own broadcast in their online shop, since it is cheaper than usage of Key Opinion Leaders (KOLs).
Content-generating social commerce platforms represented by Douyin. With high online traffic, social commerce now makes it possible to earn money via livestreaming. The conversion rate of social commerce is lower than that of e-commerce platforms due to the audience focusing more on content. Livestreaming is mainly hosted by online celebrities or KOLs, generating ~70% of total transactions.
Shopping-guide e-commerce platforms represented by Mogu. Build shopping scene in the form of live broadcast with strong interaction with audience. As the pioneer of e-commerce livestreaming, Mogu builds diversified groups around exclusive “hosts”, strongly focusing on the fashion category.
Brands aiming to participate in e-commerce livestreaming need to consider:
- Brands need to take own brand positioning, popularity, and product category into consideration and conduct a comprehensive operation analysis.
- Moreover, the demand type of livestreaming has a direct impact on the selection of livestreaming methods and platform, e.g., brand promotion and new product launch.
- As for livestreaming methods, hosted by internet celebrity or self-team are two major ways which differentiated in terms of operation and expenses.
- Considering different target groups of different platforms, platform synergies are important to reach as many consumers as possible.
For more information about Chinese consumers, also read our briefings on the direct-to-consumer trend, or on China's growing "silver generation".