With millions of Chinese confined to their homes since late January, the Covid-19 outbreak has given an unexpected boost to China’s livestreaming industry, already the largest in the world. As the country is experiencing a strong move from offline to online activities, livestreaming, like grocery deliveries and online healthcare, is one of the few bright spots in the country’s digital economy.
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Bottom line: Livestreaming was interesting to marketers before the epidemic. Now it’s an obsession: merchants and brands trying to reach customers have very few other options, and many are hoping the emerging medium will save their sales during the crisis. While the whole industry faces a challenge in turning windfall users to recurring users, livestream e-commerce have a better chance in retaining them compared to entertainment livestreaming.
What’s new: Livestreaming was already hot. Data (in Chinese) from iiMedia Research shows that the number of users for China’s online live streaming industry has increased 10.6% year on year to 504 million in 2019, more than half of China’s total 854 million (in Chinese) netizens. It is estimated that the figure will reach 526 million in 2020. The virus is expected to accelerate the trend.
Meanwhile, merchants and marketers are looking for new ways to reach consumers who aren’t leaving their homes. The medium appears to have found its moment.
How big is the Covid-19 spike? It’s hard to say. Stuck-at-home audiences are looking for novel means of entertainment, and it makes sense that they’d turned to livestreams. Companies like Alibaba, Pinduoduo, and Kuaishou are boasting of large audience numbers for certain livestream sessions here and there, but so far no one has published overall user numbers for the period.
Livestreaming businesses come in two very different flavors, each with its own idea of success:
The attention merchants: Entertainment and gaming live streaming contents are generally making money off interactions between host and audience and virtual gifts—meaning that eyeballs are an end in themselves.
Entertainment: Entertainment is the granddaddy of livestreaming, but still a force to be reckoned with. One of the first successes was “e-stages,” where the hosts sing or dance. But unconventional livestreams sprung up over the past month: “Cloud clubbing,” live streaming sessions launched by music labels and clubs on video platforms like Douyin, Kuaishou and Bilibili, went viral over February. Recognizing the appeal, the platforms further rolled out livestream concerts and music festivals where the artists perform from their homes. The trend also brought change to the TV program production, where live audiences are replaced by online hosts and audiences in what are essentially video conferences for fun.
Gaming: China’s video game streaming rise continued as major platforms like Douyu saw spikes in daily active users and user engagement time, according to local media (in Chinese) reports.
The advertisers: E-commerce livestreaming is about pushing product, often through online stores linked directly to the stream. For this field, purchasing conversion rates are what matter.
Agricultural products: Major e-commerce sites like Alibaba and Pinduoduo are boosting their efforts to facilitate online sales of fresh produce with livestreaming is an important part of their plan. Farmers, mostly living in remote areas, can use video to engage consumers face-to-face and introduce their products. Platforms claim that this model allows them a better margin for goods by cutting out the middleman.
Catering: Restaurants, which are on the front line in dealing with commercial impacts of the virus, are leveraging livestreaming to boost delivery orders. A total of 31 well-known catering companies, including Xibei and hot pot chain Xiaolongkan reached out to sign up for livestreaming on Alibaba’s livestreaming unit Taobao Live, on Feb. 10. Restaurants streams have gained momentum quickly. Consumers also tend to watch livestreaming late at night during the virus period, data from e-commerce market research agency Coresight shows. A livestreaming session of hotpot chain Xiaolongkan on Feb. 17 midnight sold tens of thousands of single-use self-heating hot pot pats within 10 minutes, boosting single day sales 1,200% compared with one month before.
Bookstores: Over 200 bookstore chains joined Taobao Live over the past month. The total number of bookstores giving livestream sessions on Taobao Live has grown more than five-fold, the company says.
The non-traditional, big-ticket sales: With showrooms closed, some surprising industries turned to livestreaming: real estate, cars, and even travel. While consumers are not likely to buy a house or an SUV sight unseen, salespeople are hoping they can maintain brand relationships and perhaps identify leads who will complete purchases after the epidemic is over. Early figures show they have eyeballs—but the question is how many will convert to sales in these uncharted waters.
Real estate: Taobao Live has attracted over 5,000 estate agents from over 500 brokers, across nearly 100 cities in China. During Feb. 12-17, some 2 million users watched real estate livestream events on Taobao Live. Beijing, Jiangsu, and Shandong were the top three areas for the sell side, as counted by the number of livestream hosts.
Cars: Over 1,500 automobile sales services shops have livestreamed through Taobao Live as of Wednesday, hosting an average of 300 livestream events everyday. China Passenger Car Association expects the country’s passenger car sales to drop 80% year on year in February. In response to the gloomy market, over 80% of the car brands opened livestream sessions in an attempt to offset the drop from offline sales.
Travel: Travel-oriented platforms have been among the worst-hit during the outbreak and spread of the current novel coronavirus. Top travel platforms like Fliggy, Ctrip and Mafengwo opened livestreaming services to allow online sight-seeing for users. Travel industry is gradually recovering as the epidemic shows signs of leveling up.
Already on the rise: Livestream e-commerce has been on the rise since 2016, year one for China’s livestreaming market. Alibaba’s Taobao, the pioneer, generated more than RMB 100 billion (about $14 billion) in gross merchandise volume through livestreaming sessions in 2018, an increase of nearly 400% year on year. Taobao Live, the live-streaming unit of e-commerce giant Alibaba, recorded sales of RMB 20 billion during the Singles Day shopping event held on Nov. 11, accounting for around 7.5% of the group’s overall RMB 268.4 billion in sales.
E-commerce platforms including Xiaohongshu and Pinduoduo, and short video apps such as Douyin and Kuaishou are all jumping on the bandwagon.
Carpe Covid: Online platforms are selling livestreaming to merchants as a means to fend off growth slowdown by the virus. On Feb. 10, Alibaba announced that it will waive normal requirements for offline store operators across the country to join Taobao Live , and made operational tools free of charge.
In February, the platforms says, growth in new streamers was eight times higher than the previous month. Orders surged by an average of 20% each week, the company—meaning that they about doubled over the month—while by value February sales were double those of the same period last year, suggesting that consumers are making a lot more, but smaller, purchases.
Some brands that never tried out the new marketing channel are experiencing beginner’s luck, enjoying sales even higher than before the epidemic.
- Shanghai-based skin care brand Lin Qingxuan saw performance fall by 90% as 157 were forced to close, creating a crisis in which the company feared bankruptcy within two months. After starting livestreaming sessions on Taobao Live, its performance rebounded, an increase of 45% over the same period last year within 15 days.
- Huang Honglin, a farmer in Jiangxi province, sold over 25,000 kilograms of fruit after starting livestreaming sessions on Pinduoduo.
Will it last? What happens to livestreaming as life goes back to normal, and people leave their houses? Some experts believe the trend will sustain:
The epidemic will reinforce the use of livestreaming as an effective selling channel. We will see more merchants across various sectors/industries use livestreaming to sell and reach consumers. Consumers will just rely more on livestreaming to buy things and form a habit of doing so. When the epidemic ends, buying through livestreaming will offer different alternatives for consumers to shop.—Coresight analyst Eliam Huang.
But it will also have to overcome growing regulatory challenges. Livestream e-commerce may face lesser pressure compared with entertainment livestreamers, but challenges remain.
- Public scrutiny over livestream e-commerce has increased recently. The National Radio and Television Administration issued a notice in November warning audio-visual e-commerce live-streams and marketing campaigns about false advertising, vulgar content, and misleading exaggerations.
- The government intervention was a response to public outcry over dishonest sales pitches prompted by Lipstick King Li Jiaqi. Li had an “emperor’s new clothes” moment before an audience of 400,000 while pitching a nonstick frying pan—to which an egg quite conspicuously stuck as he was promising that “It won’t stick, it can’t stick.”
- Live streamed e-commerce is expanding from the promotion of regular products like garments and cosmetics to more sophisticated products like automobiles. Livestreaming hosts in these new categories are expected to have professional knowledge of the products they introduce, and often don’t.