In 2017, with € 200 on him, 25-year-old Li Jiaqi decided to go to Shanghai for better opportunities.
He always liked makeup. After graduating from art school in Nanchang, Li became a beauty artist at a L’Oreal counter. He knew how to sell, and was soon contacted by a MCN company, an incubator for influencers. The company presented him the new selling platform for BAs - livestream. Li was convinced.
In the two following years, Li was remembered by a couple of things:
Tried 380 different lipsticks in one live show
Did 5-hour live show with no pause every day
Iconic catchphrase “Oh my god! Buy it! Buy it!!!”
Beat Jack Ma on livestream sales on Taobao (where Jack is the CEO)
Finally, Li went viral in 2019. The weird scene of a young man selling makeup soon caught people’s attention. He could sell 15,000 lips in 15 minutes, and earn € 2.5 million of commission per live show. Every night more than 5 million people joined his live room, irresistible from his tempting pitch.
Starting from him, online retail in China went into a new era - Livestream e-commerce. In 2019, Alibaba held its yearly shopping carnival known as "Double 11" in China. In just one hour, sales through livestream surpassed the total sales of last year. After 24 hours, livestream sales reached a crazy amount of € 2.5 billion.
So what is livestream e-commerce?
Remember the teleshopping shows in the 90s where people sell stuff through TV? The hosts sell everything from washing machine to pillows. But the buying experience was rather painful. You then need to call a certain number, go through all the waiting, try to get the right item, and it's usually full of scams.
Livestream e-commerce give life to the extinct teleshopping shows. It moves the retail experience online, then integrates the buying process with e-commerce platforms. You can ask questions at any time, interact with the host and other people in the same room. The platform lists all the products that the host is selling. Just click on the link and... there you go, nothing else to do than clicking “buy”.
What made livestream e-commerce even bigger, is the integration of social media. It’s like the “promotion” feature on instagram. But instagrammers get famous, then sell; while the live hosts get famous because they sell.
Early in 2013, Weibo (Chinese version of Twitter) signed a strategic alliance with Alibaba. The idea is to incubate influencers and transform the way of online marketing. Normal advertising is usually one directional with only a few seconds of commercials. Social media enables the marketing campaign to last weeks or months. This gives brands great flexibility to adjust advertising strategies according to market feedback.
So imagine this: First, you can do live videos on Twitter. The live videos then contain the link that directs you seamlessly to the Amazon page of each product. That might not sound crazy yet, but the “trending” feature is a powerful tool for marketing.
For example, a recent hot topic in China is Gaokao - the life-deciding college entry exam. The yogurt brand Yili caught this “hot trend”. After designing new packaging for Gaokao students, the brand launched a marketing campaign on Weibo. They invited a popular boy idol group to be their spokesperson, and created hashtag #Yousuan yogurt cheers for you#. The trend soon hit 180 million views on Weibo.
But Weibo doesn’t stop here. It has created a whole ecosystem of features for e-commerce.
“Hot item” tab
On the “trending” page, one tab is “hot items”. This tab gathers and ranks items such as makeup, electronics and food. On the hashtag page, you can click on the left button to “like” the item and put it in your wishlist. The right button allows you to share user experience with score and comments.
Launch screen ad
After launching the app, Weibo has a five-second full screen advertisement with link to the product page.
Brand’s store page
Brands can have a store page on weibo. The view looks like e-commerce platforms with all products listed out. The detailed product page then directs you to the Taobao website.
Ranking statistics
For each hashtag “trend”, you can check all statistics: ranking, number of views, number of discussion, number of original contents, etc.
So here are the reasons why livestream e-commerce is so engaging. In short, it is:
A close-to-reality retail experience with human interaction
A semi social behaviour with the integration of social network
A stimulating platform for compulsive consumption
…And white noises for young people to get through loneliness
But why this happened in China?
Video is the way to communicate
In China, almost everyone connects to the internet through smartphones. Chinese people might not know how to use a computer, but they master their phones. This encourages the spread of videos - a more effective form of communication. Anyone can produce and be the next influencer.
The exploration of video content gives birth to livestream and short videos. Short videos hook you through powerful algorithms capturing human's short attention span. Livestream hook you by real-time interaction - a rare but authentic human-to-human experience in our cyber age.
Today, everything can be on live. Selling fish, jewelry, art, house renovation…. CEOs go to the livestream room to promote their brand. Even mayors are helping peasants selling agrifood on live.
Whole population shaped by online experience
China grew with the rise of internet. The adoption of digitalization is astonishing, especially for the older generation. My 60-year-old aunt posts her daily life on social media. My mom attends lessons through DouYin (TikTok), and organises dinners in her online groups.
Take online payment as an example. For Chinese, there was no need to "transform" from bank card payment. Most still pay by cash when online payment arrived. It was a perfect greenfield.
Same with online shopping. Taobao allows you to "buy anything you want", and soon emerged as the biggest marketplace in the world. Today 20% of the retail transaction amount is done online.
This is when livestream appeared. The e-commerce market needs better online retail experience than pictures and words. Don’t know the right size? Different models try it on through live. Unclear about some details like material? Ask the host. Curious about the difference between two lipsticks? The host is there for you.
China’s scale
For any social app, network effect reaches its full potential in China. Across this massive land, 1.4 billion people speak the same language and live the same culture. Everyone wants to be the first to step on an uncharted territory. As “a single spark can start a prairie fire”, the first takes all.
Competition is not new to Chinese. As iteration gets cheap, tech companies explore new features in every direction. We also start to see the integration of social media in e-commerce in the west. China didn’t do anything distinctively innovative - It’s just more ahead.
What’s in it next?
Livestream hosts are celebrities today. Actors and singers go to their live shows to speak for their brands. It quickly evolved to become the new form of talk shows. Viya, another top live host, just held her fifth music show with 30 singers and idol groups. Her hashtag #5.21 Viya festival# hit almost 1.3 billion views on Weibo.
Everything eventually evolves into entertainment, e-commerce as well. Social media is the fuel behind this transition. It also makes consumption the new personal identity in Chinese society.
But how long will it last? What’s in it next? As the industry starts to consolidate, there certainly won’t be a next Li. But more Li will show up somewhere else in the next greenfield. Many are to be unveiled in this best of times, with everything before us.