Retail companies have embraced the power of video to build brand trust and 2019 was the year when livestreaming in ecommerce started to take off.
Now that the big Chinese retailers JD.com and Kaola (a unit of Alibaba) are jumping into the mix, where is the industry headed? Will customers become overwhelmed? We look at the past, present, and future of livestreaming and how it could transform the way global consumers shop online in 2020.
How ecommerce livestreaming started
Livestreaming in ecommerce first emerged in 2014 when Chinese fashion ecommerce platform Mogujie began to experiment with it, with Alibaba’s Taobao, the world’s biggest ecommerce website, following suit soon after that.
Both Mogujie and Taobao sold low- to mid-range apparel to young female shoppers, with many of them between the ages of 18 and 23. But given the limited purchasing power of these target consumers, the average value of each transaction was low, so boosting conversion rates became a priority.
With livestreaming, hosts tried on different types of clothes and users could interact with them through live chat windows. Viewers could ask about how the fabric looked and felt in real-life scenarios, and even ask hosts to try on items with different sets of accessories.
In this sense, livestreaming played three essential roles: 1. To provide entertainment, 2. To help customers better understand their products, and 3. To activate sales.
Customers viewing products in real time had a higher propensity to make a purchase. After all, most customers are looking for instant gratification. The development of smartphones and mobile payment options like WeChat Pay and Alipay made this happen.
In 2018 and 2019, livestreaming began to take off. Faced with increasing competition and ever-higher traffic acquisition costs, merchants became increasingly open to the thought of using livestreaming. In 2018, livestreaming ecommerce generated over 100 billion RMB ($14 billion) in transactions on Taobao, Alibaba’s premier C2C ecommerce marketplace in China.
For Singles Day 2019, livestreaming generated 20 billion RMB ($2.9 billion), and livestream stars such as Viya Huang and Austin Li reached celebrity status as millions of fans watched their livestreaming sessions. Over 100,000 brands and sellers leveraged livestreaming to promote their products, including American and foreign brands like M.A.C., Levi’s, Ralph Lauren, Sisley, and Burberry.
Kim Kardashian partnered with livestreamer Viya to sell 15,000 bottles of her new KKW Beauty perfume; it sold out 15,000 bottles in within minutes. The session drew over 13 million viewers.
Livestreaming has become such a hit that competitors JD.com, Kaola, and Xiaohongshu have all announced plans to build out their own livestreaming ecosystems, with JD.com planning to invest hundreds of millions of RMB, which equates to tens of millions of U.S. dollars.
As everyone jumps into the fray, there are two questions to ask in 2020: 1. Will livestreaming ecommerce become a mainstream method of shopping among ordinary consumers? And 2. Will consumers get overwhelmed and turned off by the increasing frequency of livestream sessions out there?
The future: Going global
Another interesting scenario to consider is livestreaming ecommerce on the global stage.
Livestreaming has emerged in places like Japan, South Korea, and the US, but is more focused on livestreaming eSports competitions. Livestreaming games makes sense because it generates multiple revenue streams. Platforms such as Twitch make money off of ads, subscriptions, and taking a cut of in-app transactions – users buy and use virtual currency to give “shout-outs” to livestreamers.
But now things are beginning to change, partly because of Alibaba’s dedication to taking livestreaming global. Aliexpress launched a livestreaming feature in Russia in 2017, and Alibaba-owned Lazada has been using livestream sessions in the Philippines, Thailand, and Malaysia.
In Korea, companies like LF Corp and TVON are launching live chat features for sellers to communicate with customers. In Japan, the flea market app Mercari and Rakuten have also added video-streaming features.
Amazon sellers can host livestream sessions on their store pages or product pages and have the option of paying to boost traffic to them. Amazon also hosts its own livestreaming sessions to highlight new trends. Despite this clear momentum, livestreaming ecommerce is still in its early stages.
The US and other countries must build up an ecosystem of livestream hosts willing to stake their reputation on ecommerce. In China, there are livestreaming incubator factories that are willing to train hosts and provide them with the necessary equipment. Many of these hosts livestream for 12+ hours a day, sometimes for six days a week at sub-optimal wages in the hopes of becoming famous.
Those that do become well-known have to ensure that their viewers get the best customer experience or risk losing their fan base. Hosts also must come up with scripts and are concerned about product quality control issues. The margin for error in livestreaming ecommerce is much higher because goods have to be physically transported from one place to another, incurring logistics costs, import duties, and occasionally lost packages.
- Livestreaming began in 2014/2015 when Taobao and Mogujie started to use it to entertain young female shoppers and sell low- to mid-end apparel.
- Now livestreaming has taken off in China as traffic acquisition costs skyrocket and merchants look for new ways to reach users. All of China’s ecommerce platforms are launching livestream functions to keep up with Alibaba.
- Livestreaming ecommerce is going global. Korea and Japan were some of the first countries to do it, and Alibaba has brought the practice to Russia and Southeast Asia. Now Amazon and Wayfair are using livestream sessions to draw in their customers too.
Azoya assists retailers and brands as they expand into China via ecommerce.Favorite