Chinese livestreamers can rake in billions of dollars in hours. How long will it last?
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On October 27, 2019, Lingu’s annual Double 11 online shopping festival will be held at Lingu’s e-commerce park in Linyi.
Xu Chuanbao | Visual China Group | Getty Images
BEIJING — Even as China’s newly rich internet celebrities keep smashing livestreaming sales records, businesses are finding other strategies that might work better for their brands.
Many analysts believe that livestreaming is here for the long-term, but that relying only on one system of views and personalities online will not suffice.
The real-time online selling phenomenon — also called “live commerce” or “livestreaming e-commerce” — took off in China after the onset of the coronavirus pandemic last year, and is growing in other countries.
Livestreamers are finding it more difficult to sell consumer volume this year than last. Xin Youzhi, a top livestreamerVideo app has 95.6 millions followers Kuaishou. This is a problem for the industry as it has grown to approximately 2 trillion Yuan ($312.5 Billion) market. Its growth was due more to sales volume than product quality.
Xin runs the Xinxuan Group with 1,400 employees. They screen products, create new products, and train livestreamers. Xin stated that he hopes to have the company employ 1,000 product designers one day.
Even before the pandemic in China, livestreaming has long been an enviable trend. Austin Li, 29, is one of many internet stars who have dominated this market. His lipstick sales helped him rise to prominence. set a record last monthIn a single livestreaming session of 12.5 hours, we sold the equivalent to $1.8 billion AlibabaThe run-up for Singles Day on November 11.
According to Hongrendianji, Viya was a fellow livestreamer who achieved a transaction volume of approximately $1.3 billion within 14.5 hours. This occurred during the same promotional event. According to the company, makeup and skin care were the most sought-after products.
Livestreaming is a way for businesses to create their own teams
Many companies have decided to teach their staff how to livestream sessions, despite the huge sales potential that is possible from working with internet celebrities.
Not all livestreamers are the same. Sometimes, it can be dangerous. [the company]”It is about chasing a profit because the top players often don’t have brand loyalty, and sometimes they have bargaining power,” Jialu Shan, an economist and scholar in Asian markets at the International Institute for Management Development, said..
Livestreaming sales sessions can also be done by in-house employees. Influencers typically charge a commission. Businesses will end up getting back 20%-30% of their transaction volume, according to Dave Xie from Oliver Wyman.
Especially for Singles Day this year, online influencers made it a point to promote prices that were at least the same as last year. Pedro Yip (Xie’s fellow in retail and consumer goods at Oliver Wyman), said.
However, this means that businesses will make a lower profit. Yip stated that some brands who worked with Li or Viya ended up having to negotiate the final price of products.
Livestreaming offers limited returns
It also has initial figures for livestreaming sales less clear how much of a return on investment brands are getting.
Xiaofeng Wang is a Principal Analyst at Forrester. He said that the number of viewers and transaction volumes are not sufficient to judge the success of a livestreaming session. However, data about viewership could be “diluted.”
Wang explained that “many brands found it not to be profitable just for the session.” There are many tactics that they must learn. We don’t really have any guid.[e]Book livestreaming commerce now, brands have to find out [from]Previous sessions are a good starting point. If they keep those metrics in their mind they will be able to quickly learn, test and adapt.
It is growing rapidly. For e-commerce giants like Alibaba, earnings releases show Taobao live gross merchandise volume, or GMV — an industry metric that measures the total value of goods sold over a certain time period — reached 500 billion yuan in the 12 months ended in March 31.
CNBC calculated from figures released by Alibaba shows that this means that quarterly average rose more than 40% within a span of less than two year. Taobao’s live GMV averaged 87.5 millions yuan in the quarter ended September 2020.
Public records show that Taobao’s China retail market GMV was 7.49 billion Yuan, but only 6.7% for Taobao’s Taobao Live GMV.
Businesses have other options thanks to the emergence of new e-commerce platforms, and Beijing’s clampdown against monopolistic behaviour among internet technology companies.
Oliver Wyman’s Xie stated that many businesses now have livestreaming platforms. These include Alibaba, ByteDance and Douyin’s wildly successful video app Douyin. Xie explained that a client in cosmetics who’s a leader on Douyin makes 10% from livestreaming, a significant increase from the 1% it made three years back.
Outside of Taobao, the top three livestreamers by sales in October were all on Kuaishou — and from Xinxuan, according to Hongrendianji.
The livestreaming market could double in size, although it will need more businesses and major improvements, Xin stated in Mandarin. This was translated by CNBC. It will be interesting to see if this market grows beyond 5 trillion yuan and 10 trillion yuan. [industry] standardization.”
Xin believes that it will become more important for livestreamers in the future to demonstrate where their products are coming from and how they’re made. That knowledge and connection with the manufacturing supply chain will help livestreamers become more professional and develop more targeted brands — all of which Xin expects will be critical in helping his company stay competitive.
His hope was that, when pandemic travel restrictions are lifted, he could travel to Europe with his team to search for brands that would do well in China and share his livestreaming experiences with the local markets.
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