Content emerges as new driver of Chinese e-commerce
Li Jiaqi, a 27-year-old video blogger, is known as the “Lipstick King” in China.
He rose to fame for selling over 15,000 of the essential cosmetic item in five minutes, a striking number compared with few hundreds the former L’Oréal makeup artist could achieve per day at brick-and-mortar outlets of the French cosmetics brand.
Li is among a growing number of online content creators who are contributing to and cashing in on the integration of content production and e-commerce industry in China.
Chinese consumers’ shopping preferences and brand awareness are influenced by content from digital influencers, or key opinion leaders (KOLs), who spread their views in WeChat articles, usually with the function to direct users to the shopping site, to social media livestreams, photos and videos.
“Quality contents from KOLs and web celebrities have a huge influence on my purchasing decisions,” Qu Lijie, a 27-year-old student from Changchun from northeastern China’s Jilin province told TechNode. “The more I like a certain blogger, the more I want to dress like her.”
Although the idea of using quality content as a marketing tool for the promotion of commodities is not completely new, the current trend brings the two sectors closer, opening more possibilities for both sectors.
It’s neither about e-commerce nor content alone, it’s about the combination.
Getting in on the action
“Content is the king and it always is,” Deborah Weinswig, an analyst at research institute Coresight Research told TechNode. “Chinese tech giants are betting on content to further develop their [ecommerce] businesses.”
Alibaba has been exploring the possibilities of boost its ecommerce business by leveraging the power of quality content since its early days.
One of the first attempts by the e-commerce giant to use content to drive sales dates to the early 2010s when it entered into partnerships with fashion platforms such as Mogujie and Meilishuo, a Pinterest-style social sharing sites where users can share their shopping experience along with URL link to Taobao shops.
Although partnership with these shopping guide sites turned sour as the latter began to eat into Taobao’s traffic and hurt its advertising revenues, the examples nonetheless showed the value of quality content.
Since then, Alibaba has been building its own content ecosystem that include Taobao’s built-in social commerce platform Weitao, and fashion and shopping news aggregation Taobao Toutiao.
But perhaps the most significant development that pushed traditional e-commerce startups to content creation was the emergence of Xiaohongshu, also known as Little Red Book, a fashion community and e-commerce platform which claims over 200 million users.
At the same time, the entry of hugely popular video apps like Douyin and Kuaishou, weighed in on the trend.
Bytedance’s Douyin rolled out a shopping cart feature earlier in December last year. In the same month, its rival Kuaishou upgraded its e-commerce services, giving preference to domestically produced goods and partnering with Chinese e-commerce giants in the hope of commercializing its 150 million daily active users.
To fend off competition from tech upstarts, Alibaba’s doubling down on content initiatives since late last year. After inking a partnership with Bilibili in December, Alibaba took a step further to acquire an 8% stake or 24 million shares in the Chinese online video platform in February. The Bilibili deal is seen as a move to leverage the power of KOLs and content creators to allure the attention of younger audiences who are voracious consumers of digital content.
In addition to external investment, Alibaba has upgraded its internet content activities by drastically expanding the operations of Taobao’s live streaming unit Taobao Live.
Integration between online content and e-commerce is now quite streamlined and friendly, Weinswig explained. For example, users watching Taobao Live is just two clicks away from the shopping site.
Weibo, China’s microblogging services which Alibaba has a stake in, will invest RMB 2 billion (around $291 million) in the next two years to support content-driven e-commerce, key opinion leaders, actors, and agencies.
Although late to the game, JD.com launched a new program on its WeChat mini program, enrolling influencers in an attempt to build up a KOL-driven shopping guide community.
Why now?
Chinese e-commerce giants are in need of a new driver while facing saturating markets and the plateauing of new user numbers. The year-over-year sales growth rate for Alibaba’s Singles’s Day last year dropped from 36% a year earlier to 27%.
Underlying this is changing consumer behavior. Different from two decades ago when shoppers use e-commerce platform to find cheaper prices for the products they had already decided to buy, browsing through various platforms has now become an essential part to the shopping journey as well as an “entertainment” experience.
“It’s all about shopping experience and storytelling. Content gives the products a background story that we want to be part of. I just purchased two lipsticks introduced by Li Jiaqi, even though I’ve already got more lipstick than I can use,” says Li Weilin, mom of 9-year-old from Harbin in the northeastern province of Heilongjiang.
Chinese e-commerce giants pioneered the “shoppertainment” concept to combine the purchasing and entertaining experience. Further, e-commerce is a good means for content platforms to commercialize their user base.
“The e-commerce platforms have all the data, they know 100% what’s working. It is obvious that targeted content to niche audiences that offers educational or entertainment value is what establishes trust, builds affinity, and ultimately converts to sales.” says Elijah Whaley, CMO of KOL marketing platform PARKLU.
Despite the boosting effect for e-commerce, some say that contents with promotion goals are ruining contents. At times, fake or overly exaggerated reviews have tarnished the credibility of some platforms. Xiaohongshu has removed more than 1.38 million paid posters and 1.21 million biased reviews from its platform.
E-commerce and contents are going hand in hand in China, but this is just “one example of a larger global trend,” according to Eytan Avigdor, CEO & founder of influencer marketing platform Klear.
“China’s ability to integrate payments across social networks is more sophisticated than any other market. With users able to shop directly in platforms like WeChat, influencers in China play an extremely important role in direct sales,” he added.
“Comparatively, platforms like Instagram make direct purchases very difficult for brands looking to integrate,” says Avigdor. “As China continues to lead this market I believe we’ll continue to see influencers playing an extremely important role in the Chinese e-commerce industry.”