Live commerce is on a tear in China. 2019 is hailed as “the first year of an era” for the development of live commerce and 2020 saw the booming of live commerce. Live-streaming is turning itself into a standard feature for e-commerce.

Live commerce milestones

Live-streaming emerged around 2016 with more than three hundred live-streaming platforms launched. While the user base of live-streaming grew rapidly, e-commerce platforms were hitting a bottleneck to gain more traffic and forced to find some solution to integrate the element of content and community into their service. Live-streaming turned out to be the answer. 2016 saw Taobao (B2C platform of Alibaba, also the owner of Tmall), JD, Mogujie, VIP and other major e-commerce platforms launch live-streaming as a shopping guide function and Kuaishou, Douyu (Chinese version of TikTok) and other live-streaming platforms cooperate with e-commerce platforms or brands.

After four years of development, more and more e-commerce platforms, live-streaming platforms, MCN companies and brands have entered live commerce market, kickstarting a fast phase of development.

*Figure 1: Live commerce milestones

2019 – the real first year of a live commerce era

Taobao’s live commerce surged in 2019, achieving a growth rate for live-streaming-prompted-sales of over 150% for three consecutive years, making it the fastest growth model of e-commerce globally.

iResearch data shows the live commerce market has reached RMB434 billion (US$ 66 billion) by 2019 and is expected to grow further in 2020. Due to the impact of Coronavirus, “Resuming work on the cloud” and “shopping on the cloud” were met with high enthusiasm, helping to boost the mass adoption of live commerce.

*Figure 2: Live commerce market size

According to Taoba’s MD Jiang Fan: “Taobao live commerce has become a new growth point for 2019’s Singles Day, over 50% of the merchants on TMall’s Single’s Day promotion achieved sales growth via live commerce. Our data shows that during the Singles Day, the transaction value through live commerce is close to RMB20 billion (US$3 billion), more than 10 live-streaming studios made sales over RMB100 million (US$15 million).”

Live commerce penetration rate topped 29.3% 

The user base for live-streaming stands at 506 million or 62% of total internet users in March 2020, an increase of 163 million from 2018. As a comparison, the user base for live commerce topped 265 million in 2019, or 29.3% of total internet users.

During the 18 June mid-year promotion, live-streaming brought about the sales of RMB3 billion (US$460 million) on Taobao and growth of 120% for the number of live streaming merchants and 150% of live-streaming shows.

*Figure 3: Live commerce user base

*Figure 4: Live streamers by category Mar 2020

Strong demand for live-streaming hosts

The outbreak of pandemic in 2020 has created more pressure on employment. Zhaopin.com data suggests that during the first month after the Spring Festival holiday, positions available for employment and the number of people hired dropped by 31.43% and 28.12% respectively as compared with the same period of 2019. However, live-streaming saw a much stronger demand with positions available and the number of people hired grew by 83.95% and 132.55% respectively.

Live commerce is a large job creator

Judged by each category, jobs for internet/e-commerce accounts for one-third of all the live–streaming positions. Unlike live commerce hosted by live-streaming platforms or initiated by live-streamers, those on e-commerce platforms are endorsed by the platforms and transaction-oriented, they’re more authentic and interactive and provide more job opportunities. Content-creation-related live streaming for the media, publishing, film and TV and cultural promotion accounts for 28.58% of total positions.

*Figure 4: Live streaming jobs by category

Taobao live streaming leads the pack

According to The Online Investigation Report for Live Commerce Consumers’ Satisfaction Rate published by China Consumer Association in March, users and frequent users of Taobao live streaming accounts for 68.5% and 46.3% of total consumers respectively. It’s followed by Douyin and Kuaishou with users and frequent users accounting for 57.8% and 21.2%, 41.0% and 15.3% on each platform respectively.

*Figure 5: Live commerce market share

Price advantage is the trump card

The killer feature for live commerce is low price. For example, China’s super live streaming host Austin Li (Li Jiaqi) always cut the merchant’s profit to a certain level and demands no price exceeding this level for three months. For the same price, consumers would prefer the brick-and-mortar store for a better shopping experience.

*Figure 6: Reasons for shopping through live commerce

The report also shows good value for money and preference as the two key factors in the decision making for shopping. The top four reasons for shopping after seeing live streaming are good value for money – 60.1%, like the product being presented – 56.0%, discount price – 53.9% and flash sale and limited availability – 43.8%. In general, the main reasons for shopping are good value for money and discount price.

Trust has migrated from brands to KOLs

On the other hand, the live-streaming host turns out to be another major determining factor in decision-making for shopping as the business value of consumer products has migrated from brands to KOLs. To capitalize on online traffic is to capitalize on the trust. Only consumers’ trust of a certain KOL will create a craving for a particular product and the preference for a particular brand.

*Figure 7: Top 10 live commerce hosts

A standard feature for e-commerce, but unlikely a sales channel for most of the categories of products

Live commerce boomed during 2020 mainly due to the impact of the pandemic which has caused considerable difficulties for brick-and-mortar stores and fueled consumers’ curiosity, but some analysts warned its benefit to be temporal. Live commerce will eventually become a standard feature for e-commerce but for most categories of products, it’s unlike to be a sales channel.

*Source: https://www.qianzhan.com

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