The first time that I ever livestreamed was in 2017, when I was accompanying a Chinese rap star, Jackson Wang, to LA to attend the American Music Awards. We planted some products throughout the session so that our celebrity could interact with them but that was it; nothing like the hardcore selling shows that are now dominating the mobile screens of Taobao. Back then, livestreaming had not developed into the live selling phenomenon it is today. In 2017, it was mostly a show, used as entertainment, for brand building. The year 2019 was the year during which livestreaming took off to become a common way for stores to sell products online in China.
What is livestreaming?
Livestreaming is a concept of selling or sharing products with customers who are joining remotely to watch, chat, and buy.
A livestreaming room looks like this:
1. The number of viewers is up top. Take note however, that this number is the total number of viewers who have watched and not the current number of people in the room right now. This was a psychological mechanism that the product team placed here since viewers will only want to stay in rooms that have very large numbers, instead of being in a room that has only one other viewer. So even if you see a very large number here, there might actually be just one other viewer in the room with you. You will never know.
2. The main host will tend to sit on the left side, since from a viewer’s perspective, our eyeballs will usually glance from the left to the right when reading across a screen. The main hosts’ body will also be directly above the links to the products to guide the viewer to more easily click through the links.
3. Comments will fly in throughout the course of the livestream session, typed up and sent in real time, usually with questions about the product or usage of the product
4. Items to buy are placed in a general pool or large shopping cart. After the host has talked about a product, they will place them into the general pool for viewers to buy. Viewers can then flip through the total number of products and at any time click into products that have already been talked about.
5. To maintain engagement, the host may instigate a lottery draw to draw for a certain item for free, gamifying the experience
6. The right placement is usually for a guest appearance, either by the host’s “helper” or a celebrity which will increase the traffic level of the livestream room
7. Viewers can click on driving up the number of “hearts” or “likes” which will also algorithmically raise the engagement reading of the room to rank the room higher in the main livestream tab
L: How livestreaming is driving e-commerce sales in Chinaivestreaming in retail
People have asked time and time again why livestreaming has been such a point of growth for China this year if the format is so similar to TV Shopping like QVC that we have in the west. (And that was developed in 1986!) There are some clear differences that make livestreaming the ultimate way to sell things:
1. Live: Livestreams are very intimate, where a live person is talking directly into the camera in a just-in-time fashion for the consumer. Usually, this is someone charismatic, funny or interesting to watch paired with a product, which elevates the liveliness of a product. In ecommerce, product display has evolved from a still photo, to reviews, to a recorded video. It is only natural that a live video provides a more immersive experience for the consumer.
2. Interactive: At any time, a consumer can write a question or post a comment which is displayed in real-time to all watchers and the host. The host can then choose to address the comment live and answer the question in front of all viewers. This is a new element of connection that appears between a viewer and the host as both parties interact with the product more deeply.
3. Curation: Popular livestreamers will constantly have hundreds of thousands merchants approach them to sell their products, so their teams will have tested many products in the same category to know truly which product is superior. Thus, in a livestream session, the products are curated towards quality. The livestreamer is the one responsible for customer service after-purchase so if he/she chose a bad product with quality issues, he/she would apologetically be the one to deal with that consequence.
4. Price: What will push a consumer to buy something in a livestream session versus any other time of day? A flash sale will guarantee that the price is lowered for a small period of time so that the consumer feels a greater need to buy the product immediately. Prices for certain products are cheapest in their livestream room, when that product is on promotion. This makes livestreamers extremely powerful as price-sensitive consumers will gradually all flock to her livestream room, which burgeons her number of followers even more.
In the last Double 11 campaign, three livestreamers appeared above all others in terms of the amount of products they were able to produce：Viya, Austin Li and Cherie. Their sales combined to a total of 1 billion dollars in sales during Double 11, which is more than many large brands on the platform.
The cost of having one of these KOLs mention a product for the brand (price as of Mar 2021) is around 40,000 RMB with a 10 per cent commission.
Eg. A product that is priced at 100 RMB and sold for 10,000 in quantity, the brand will have to pay 140,000 RMB for a two minute mention of their product during a livestream session:
40,000 + (100 x 10000 x 0.1) = 140,000 RMB (~14,285 USD)
A KOL would usually be featuring around 80 products a night, so by multiplying those two numbers together, these KOLs are roughly earning US$1 million a night for talking for four straight hours, the average length of a livestream show. Because hundreds of thousands of merchants send their products to these KOLs, it is quite competitive to obtain a deal. Sometimes, the brands might choose to sell at a loss or earn no profit just to have exposure on the product. Local and global products have launched new products directly in these livestream rooms where each view can be recorded. Brands have discovered this has a much better return on investment than spending large amounts of money on billboards in high-traffic areas without a digital footprint of who has passed by the sign or follow-up as to if the person had bought the product or not.