The discovery of live commerce as a digital sales modality had a major boost during the pandemic period. Selling products live through various digital platforms such as YouTube and Instagram has become popular with different audiences in both B2C and B2B channels.
The live commerce market is expected to move more than US$500 billion worldwide in 2022. In the Chinese market alone, the format moved US$131 billion in 2021 and already represents 37% of all social commerce sales, according to data from consulting firm eMarketer. To give you an idea of what these numbers represent, Brazil’s entire e-commerce market in 2021 is estimated to be USD 42 billion.
The strong point of growth of this modality is solving one of the main problems of online retail, something that is different in the physical store: the humanization of sales.
With a conversion rate almost eight times higher than traditional websites, live shopping has brought, in addition to humanization, the expansion of consumer shopping experiences through interactivity and product selection.
Companies have also loved this format because it is a powerful relationship and training tool for their field teams, direct sales, franchises and many other corporate audiences that are accessed remotely.
One of the benefits of live commerce is that in the middle of a sale, people can interact live and make a purchase by talking to whoever is there doing the presentation. This interaction takes place through chat questions that are answered live.
VTEX, a giant in the e-commerce sector in Brazil, has an interesting case with the chocolate brand Dengo: people can communicate with the seller directly from the store, through its platform, and buy what they want by integrating with WhatsApp, resulting in convenience to complete the sale.
What can China teach us about live trade?
China, not the West, is shaping the future of e-commerce. Its market is much bigger and more creative, with tech companies combining e-commerce, social media, events and concerts to become online shopping centers for 850 million digital consumers. China’s e-commerce exceeded US$1 trillion in 2020.
China’s live commerce has seen explosive growth since 2019, promoting and selling products through influencers’ streams on their own social media channels, most commonly found in China’s online shopping malls.
Alibaba’s Taobao Live has the most live broadcasts with around 80% of the audience. Other big Chinese tech and e-commerce players, such as Baidu and JD.com, have also jumped on the bandwagon. Douyin, China’s version of TikTok, and its competitor Kuaishou, in partnership with JD.com, have live streams and in-app purchases, as well as leading fashion platform MOGU. The presented products are mainly cosmetics, fashion and food.
Live streaming is an alternative for brands to gain awareness and move excess inventory.
A very interesting movement that happened with the pandemic was the live streaming of small businesses from artisans to independent farmers in the interior of China, who started selling their products directly to other cities to reach a new market and new prospects.
China’s top live stream influencers have become mega celebrities. They have their own shows and appear every night for four hours straight from about 8pm to midnight, selling highly selected products, often at deep discounts. Approximately 12 products are featured every hour, 48 per night, and items can sell out in seconds. In addition to choosing which products your followers want to feature, the show’s hosts negotiate with manufacturers to get the lowest possible prices and estimate how much to buy.
The right balance between supply and demand is essential to keep the audience excited and the action going. The hosts, called KOC – Key consumer opinion, show and review products, explain features, occasionally answer phone questions, and sometimes sing and chat with celebrity guests. Exciting music is heard with gongs and drums beating as coupons and product promotion links are revealed. Influencers encourage viewers with phrases like “just shop”, “grab now”. They are known as KOL – A key opinion leader and live-streaming e-commerce has made them big, well-paid celebrities. They are paid differently than in the US, where influencers are usually paid a fixed fee for each post. In China, KOLs typically receive an introduction fee plus a hefty commission on products sold.
One of the most popular streamers is Li Jiaqi, known in English as Austin Li, and he is also called the “Lipstick King”. He is a former physical salesperson for L’Oreal who is now worth around $5 million. Jiaqi is famous for showing lipstick marks on his own lips. He has 6.5 million followers on his live stream on Taobao Live and a nightly audience of 2 million viewers. He has also become a TikTok celebrity with over 30 million viewers. The more fans he has, the more bargaining power he has with brands to get the lowest price.
Outside of rich countries, China’s approach is already gaining traction. Many leading e-commerce companies in Southeast Asia (Grab and Sea), India (Jio) and Latin America (Mercado Libre) are influenced by China’s strategy of offering a “super-app” with financial services. Multinational companies like Unilever, L’Oréal and Adidas generate more revenue in Asia than in America, and their bosses turn to them, not to California or Paris, to see what’s new in digital marketing, branding and logistics.
Chinese features are already appearing in Western malls, partly as a result of the pandemic. Silos break down as companies diversify. Facebook is now promoting shopping services on its social networks and is getting involved in “social commerce”, including live streaming and the use of WhatsApp for messaging between retailers and customers. In December, Walmart hosted its first live purchase inside TikTok, the Chinese-owned video app it hopes to buy a stake in. This transition to a more Chinese-style global industry promises to be great news for consumers on digital channels.
Natalino Franciscato is a project manager at Gouvêa Consulting.