SHANGHAI, Dec 21 (Reuters) – China’s imposition of a $210 million fine for tax evasion on Viya, an internet celebrity dubbed ‘the queen of livestreaming’, highlights how quickly the industry has grown to become one of the country’s most popular sales channels in a few short years.
Top Western brands from L’Oreal (OREP.PA) to Louis Vuitton (LVMH.PA) engage livestreamers to help market products on China’s top e-commerce platforms, and analysts now describe it as essential to a brand’s strategy in the world’s second-largest economy.
WHERE DID IT ALL BEGIN?
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The first company to combine livestreaming online and shopping in China was e-commerce giant Alibaba Group’s (9988.HK) Taobao marketplace, which introduced Taobao Live in 2016.
The platform allows influencers to open their own livestreaming channels on Taobao, on which they can market a wide range of products, everything from cosmetics to clothes and snacks to cars. Viya even sold a rocket launch service for 40 million yuan ($6.3 million) last year.
Brands also hold regular livestreams, usually anchored by staff or likely lesser known influencers, on their own self-run online stores on Taobao and Tmall, another Alibaba marketplace.
HOW DOES IT WORK, AND WHY IT IS SO POPULAR?
Anchors speak to online shoppers, answering questions about size, colour and fit in real time, engaging them with a chatty, informal approach and also encouraging quick purchases with discounts available for a limited time.
One big attraction is that it all happens on a single mobile app interface – shoppers can watch, ask questions and click to purchase all on the same page during the livestream.
Some of the personalities, especially top sellers like Viya and her main rival Li Jiaqi, have also grown extremely popular as they are seen by consumers as a credible go-between after past scandals involving product quality and fake goods left many distrustful of brands’ claims.
Top influencers also develop their own popularity with shoppers, as well as that of brands. Viya’s image became that of a reliable, friendly ‘sister’, while the excitement in Li Jiaqi’s catchphrase “Oh my god, buy it!” appeals to many.
Getting a product placed on their livestreams is seen as a big vote of confidence in the quality, consumers and brands say.
Li counts 47 million followers on his Taobao livestream room and Viya, prior to the shuttering of her room, counted more than 90 million followers.
HOW BIG IS IT IN CHINA?
The pandemic was a big boost for the livestreaming industry as it confined people to their homes during lockdowns, spurring demand for online entertainment and shopping services. Beyond the big names, there are now thousands of livestreaming anchors operating in China.
Last year, research consultancy iiMedia Research said there were more than 28,000 so-called multi-channel network agencies in China, each of which tend to manage multiple online influencers.
Many e-commerce platforms, including ByteDance’s Douyin, the Chinese equivalent of TikTok, Kuaishou (1024.HK), JD.com (9618.HK) and Pinduoduo (PDD.O) now offer their users the opportunity to shop via livestream. Douyin is extremely popular and a keen rival to Taobao on this front.
The types of hosts also vary widely in China. Farmers to factory owners, government officials to the heads of top Chinese companies such as travel giant Trip.com (9961.HK) have all appeared on live streams to hawk products.
In July, consultancy McKinsey said the value of China’s live-commerce market grew at a compound annual growth rate of more than 280% between 2017 and 2020, to reach an estimated $171 billion in 2020. It anticipates Chinese sales reaching $423 billion by 2022.
IS ANY OF THIS GAINING TRACTION OVERSEAS?
International brands say that the Chinese e-commerce market and the livestreaming sales channel, is far ahead of that of other markets but some platforms are testing the model in other countries.
In November, for instance, NBCUniversal made its livestream shopping debut with a show on Instagram.
TikTok is also testing livestreamed shopping, and Snap Inc (SNAP.N) is investing in augmented reality technology to help Snapchat users virtually try on items like watches, jewelry and other apparel to cut down on returns.
The industry is expected to balloon to $50 billion from $36 billion in annual U.S. sales by 2023 according to research firm eMarketer.
($1 = 6.3714 Chinese yuan renminbi)
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Reporting by Brenda Goh and Sophie Yu; Editing by Kenneth Maxwell
Our Standards: The Thomson Reuters Trust Principles.