As isolated Chinese consumers spend more time online, livestreaming, influencers and private social media groups help brands stay engaged and competitive.

Franklin Chu, managing director, Azoya USA

Franklin Chu, managing director, Azoya International

In China, things are all but back to normal as restaurants, bars, and retail stores start to reopen. But for some time, many Chinese retail players saw sales hit rock bottom and had to resort to measures such as livestreaming and private social media groups to keep their businesses alive. We take a look at some of their proven, innovative tactics and how U.S. retail players can apply them now to stay alive. 

Livestreaming and ecommerce

Livestreaming ecommerce in China is a phenomenon that began in 2014/15 and started to take off in 2018, with Taobao Live selling 100 billion RMB (~US$15 billion) of merchandise that year.

In China, most brands livestream on Taobao, Alibaba’s eBay-like C2C ecommerce platform where anyone from mom and pop shops to venture-backed retail start-ups and gray-market daigou sellers can sell to Chinese customers. Daigou is an emerging form of cross-border exporting in which an individual or group of exporters outside China purchases goods for customers in China.

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Brands can either choose to host a livestreaming session on their own channels or elect to work with an influencer. During the session, the host presents the brand and tries on different products one by one, telling the audience how it looks and feels. “Lipstick King” influencer Austin Li reportedly tried on 300 different types of lipstick in a single day of livestreaming.

During the session, the host also tends to host a raffle or virtual game to keep customers entertained. Public chat is enabled during the session, so viewers can directly ask questions about the look and feel of each product and interact with the host. At any point during the session, viewers can purchase products by clicking on a small link and paying with Alipay, Alibaba’s mobile and online payments platform.

Which brands are livestreaming to stay alive through the coronavirus crisis?

In March, Swedish furniture retailer IKEA held a livestreaming session to promote the launch of its new Tmall store. IKEA’s Tmall launch was the first of the kind, as the retailer has spurned partnerships with ecommerce platforms in the past. Tmall and Taobao are part of the same Alibaba ecosystem; Tmall items can be found in Taobao searches and Taobao Live livestreams can link to Tmall stores.

Furniture is a difficult category to sell through ecommerce channels, given the complexities around shipping heavy cargo and the fact that most people want to try out the products in person. But the coronavirus crisis has forced the global furniture and home décor retailer to shut all 30 of its offline retail stores in China, robbing it of its primary source of revenues and leaving it with no choice but to double down on its ecommerce initiatives.

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IKEA isn’t the only one to turn to livestreaming. Another local cosmetics brand, Forest Cabin, trained 1,600 of its store employees to host livestreaming sessions after being forced to shut down half of its 337 stores in China. The founder and CEO of the company himself hosted a two-hour livestreaming session on Valentine’s Day, selling nearly 400,000 bottles of camellia moisturizing oil. Now ecommerce accounts for 90% of the brand’s sales, compared to 25% before the coronavirus crisis.

Now other verticals are turning to livestreaming to keep businesses afloat. People are livestreaming concerts, real estate agents are using livestreaming to show off apartments, and even auto repair shops are livestreaming on Taobao Live, to the degree of 300 livestreaming sessions a day.

Private WeChat groups

Chinese retail players are also turning to private social media groups to keep their top customers engaged through the coronavirus crisis.

This is a phenomenon called private traffic and this method of marketing enables brands to more closely engage customers in a private setting. The main channel, in this case, is WeChat, China’s eponymous messaging app. In China, most customers are averse to communicating via e-mail and prefer more immediate forms of communication.

Since offline retail all but closed down entirely in China, some retail players trained their store employees to set up private WeChat groups, online promotions and discounts to keep consumption going. Each WeChat group can hold up to 500 people, and the group moderator typically is an employee that forwards promotions, product advice, and even interactive mini-games to keep customers engaged.

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One of China’s largest sportswear retailers, Anta Sports, mobilized 30,000 of its employees and partner distributors with sales commissions and customized QR codes on WeChat to better track commissions. In China, most people complete online transactions with QR codes embedded within WeChat Pay; these mobile wallets are linked to debit cards and bank accounts.

The one brand that has taken private traffic marketing to the next level is Perfect Diary, which has skyrocketed to become China’s number one brand on Tmall after launching in 2016. Perfect Diary has created its own virtual influencers to moderate its WeChat fan groups. Abby was the first influencer, and now Minmin and Susu have groups of their own, even holding livestreaming sessions that average 60-70k viewers each.

The role of these virtual influencers is to dispense beauty advice on how to apply makeup. This is important for multi-step color cosmetics that consumers can use to create different kinds of looks. Each of these virtual influencers has different personas that reflect differences in skin type and the different beauty problems they may face. This variety helps Perfect Diary increase its reach by appealing to different kinds of customers who may be looking to resolve various issues.

Key takeaways

  1. The coronavirus crisis hit China roughly 2 months before it hit the rest of the world and most retail stores remained closed after the end of Chinese New Year in January. Since then, they’ve had to turn to new ways to keep their businesses alive as offline retail traffic dropped to near-zero levels.
  2. Brands in China are turning to livestreaming to help keep sales afloat as their offline stores remain shut. IKEA launched a livestreaming session to commemorate its launch on Tmall, and real estate agents, car repair shops, and even concert promoters are using livestreaming to take advantage of all the extra time that people are spending online.
  3. Sellers use private WeChat traffic groups to engage better with customers stuck at home during the coronavirus crisis. Retailers such as Anta Sports are incentivizing store employees with commissions to help organize these groups, and market sales and products to them.

Azoya International assists retailers and brands as they expand into China via ecommerce.

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