Business

Chinese streamers can make billions of dollars per watch. How long it will be going on?

Online streamers are gearing up for the annual Double 11 Online Shopping Festival to be held on October 27, 2021 at Lingu E-Commerce Industry Park in Linyi, Shandong Province, China.

Xu Chuanbao | Visual China Group | Getty Images

BEIJING. While newly emerging internet celebrities in China continue to break live sales records, businesses are finding other strategies that might work better for their brands.

Many analysts say live broadcasts will continue, but relying on a system of internet personalities and opinions will no longer be enough.

The online real-time selling phenomenon, also called “live commerce” or “live streaming e-commerce”, originated in China after the outbreak of the coronavirus pandemic last year and continues to grow in other countries.

The difference from last year is that live streaming isn’t easy to get sales, said Xin Yuzhi, a leading streamer with 95.6 million subscribers on the Kuaishou video app. This is a challenge for the industry going forward, as the market size has grown to about 2 trillion yuan ($ 312.5 billion), he said, as it relies more on sales than product quality.

Xin now also runs his own company, Xinxuan Group, which employs 1,400 people who are involved in product verification, product development, and training for professional streamers. Xin said he hopes the company will one day have 1,000 of its own product designers.

Even before the pandemic, internet celebrities such as 29-year-old Austin Lee dominated the trends in live broadcast sales in China, even before the pandemic. He became famous by selling lipstick, and set a record last month selling $ 1.8 billion in a single 12.5-hour live stream on Taobao from Alibaba in anticipation of shopping on Singles Day on November 11.

According to industry research firm Hongrendianji, his livestream companion Wiya recorded an estimated $ 1.3 billion in transactions in about 14.5 hours during the same promotional event. According to the company, among the most popular products were skin care and cosmetics.

Companies create their own streaming teams

Despite the huge volume of sales that working with such internet personalities can bring, many companies choose to train their employees to broadcast live instead.

“Collaborating with top streamers isn’t the only way, and sometimes it can be a ‘bad’ way, especially if [the company] strives for profit as the leading players are not brand loyal and often have market power, ”said Jialu Shang, economist and scholar on Asia and Emerging Markets at the International Institute for Management Development.

Using in-house staff to conduct live sales sessions also helps businesses save money, as influencers charge commissions and ultimately return 20% to 30% of transaction volume, according to Oliver Wyman’s Dave Si.

In particular, for Singles Day this year, internet influencers have focused on pushing prices that are at least as low as last year, said colleague Se Pedro Yip, head of retail and consumer products practice at Oliver Wyman.

But that means less profit for the business, and some of the brands that worked with Li and Wii ended up in lengthy negotiations over the final selling price of the products, Yip said.

Limited Livestreaming Profit

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“The market for live streaming could double or more, but it will require more companies and major changes,” Xin said in Mandarin, translated by CNBC. “Whether this market can turn into 5 trillion yuan or 10 trillion yuan will only be seen after [industry] standardization.”

Looking ahead, Xin said that it is increasingly important for streamers to show customers where products come from or how they are manufactured. This knowledge and connection to the manufacturing supply chain will help streamers become more professional and develop more targeted brands – all of which Xin expects will be critical to keeping his company competitive.

He said he hopes that once travel restrictions are lifted, he and his team can travel to Europe to find brands that could do well in China, as well as share their live streaming experience with the local market.


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