China’s livestream sales: How brands reach consumers during COVID-19
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At 6 p.m. in mid-March, Yu Chanyao started her livestream show on Alibaba’s e-commerce platform Taobao, but she wasn’t quite ready.
Yu, better known by her stage name Songzi, applied lipstick, curled her hair and spoke to the production crew while staring at her cellphone.
Once she saw usernames pop up on the bottom of her screen, she greeted her viewers by name.
“Hello Brother Lan! And Bilier!” she waved to the camera.
Songzi mainly helps Taobao shops sell clothing. On that March broadcast, she was promoting spring wear from a Chinese brand called Gebang.
“Gebang is a premium fashion brand in mainland China and they only sold in stores, but because of the COVID-19 virus, they’re turning to online sales,” Songzi told her viewers from eastern China’s Hangzhou city.
China’s economic activity came to a halt in late January and forced nearly 1.4 billion people in the country to stay home for almost two months to prevent the spread of the COVID-19 virus.
Some brands, like Coach, turned to livestream sales in China. It is the go-to option for young consumers seeking new products and discounts.
According to Taobao, there were 400 million users watching its 60,000-plus livestream shopping shows in 2019. The livestream channels, hosted by brand stores or influencers, generated 200 billion yuan ($28 billion) last year.
The figure is only some 3% of its total general merchandise sales in fiscal year 2019 of 5.7 trillion yuan ($853 billion), but the company says the growth rate for livestream sales has been doubling every year for the past three.
In February, when coronavirus struck China hard, Taobao saw the number of livestream sessions on its app double – a sign to the e-commerce platform that brands are relying more on livestreaming to get customers.
Livestream sales channels are often compared to American home shopping networks like QVC, but they are more casual in format and try to remove some of the anxieties of online shopping in China.
“If you search on Taobao for a tank top, you can find ones that cost anywhere from a dollar to even a hundred dollars,” Songzi said. “My main function as a host is to find nice clothes for viewers among a lot of —how shall I put this? — trash.”
Livestream sales have changed the ways people shop, including one of Songzi’s fans, Lily Zhang.
Zhang is an accountant in Shanghai and used to buy brands like Kate Spade directly from Amazon’s U.S. site — a cheaper option for her that makes her less worried about getting a fake product.
For many years, Taobao has landed on the U.S. Trade Representative’s blacklist for selling counterfeit products.
“Since Taobao started its livestream channels, I’ve basically stopped buying from overseas because the influencers will show details of the clothing and guarantee the authenticity of the products,” Zhang said.
Even Kim Kardashian appeared on China’s top Taobao livestream channel last year to sell her latest perfume. The show was hosted by Viya, who has 17.5 million subscribers to her channel.
“This perfume sells for $51 in the U.S. Tonight, because it’s being released in mainland China for the first time, you can buy it for $10 less!” Viya told her fans.
Within minutes, 15,000 bottles of the Kardashian perfume went out the door.
Taobao estimates that Viya made over $4 million from sales commissions in 2018.
Eye-catching sales on Taobao livestream have become water-cooler talk the following day at offices in China.
Other video sites like Kuaishou and Douyin, the Chinese cousin of TikTok, have added livestream sales functions, but they’re not as popular as Taobao.
“If Taobao viewers like what they see during a broadcast, they just click and buy,” Ji Shengli of Jitao talent agency said. “The technology is seamless because Taobao is purely an e-commerce platform. Plus, everyone watching Taobao livestream went there ready to shop and not for entertainment [like on other social media sites].”
Ji’s firm trains influencers on Taobao.
“In 2018, when livestream shopping was less upscale, the audience was mainly in provincial cities. But now with talented hosts and better products, we see more viewers from the mega cities,” Ji said.
Ji’s offices are in an industrial suburb of Hangzhou.
One of the broadcast studios there consisted of a white desk, racks of clothing and shelves of purses and shoes.
It is a basic set, but it does the trick, according to Ji.
“This room [can] generate 50 million yuan ($7 million) in sales a month,” he said gesturing to the cluttered room.
|What makes livestream sales effective?|
|Deep discounts||Flash sales sometimes offering 90% off retail prices are offered for a limited time (lasting a few minutes) during livestream sales broadcasts, which push buyers to make impulse purchases. Items that sell best tend to be under 500 yuan ($70)|
|Address buyers’ questions right away||Livestream hosts become a sort of proxy for viewers with brands and online shops and can help answer questions such as: Is the wool scarf scratchy? What size should I order? How come I haven’t received my order yet?|
|Trust||E-commerce platforms like Taobao in China have been plagued with fakes and poor-quality products, and livestream hosts act as an added layer of protection to guarantee the products for consumers|
Both the agency and influencers earn commissions.
One of his protege is Songzi, who went from earning 60,000 yuan ($8,500) annually at a company doing business development to easily making 1 million yuan ($141,000) a year as a Taobao livestream sales host.
It has been a steep learning curve since she went to the Jitao agency in April 2018 with no social media following or products to sell.
“The first time I did livestreaming was really awkward. I had no viewers. So I was speaking to an empty room for five, six hours [each livestream broadcast]. It was torture,” Songzi said.
At the time, she said the Jitao agency gave her some dried red dates and a few outfits to sell.
“I kept trying on the same outfits over and over again on camera.”
Today, Songzi has more than 353,000 subscribers.
However, with the COVID-19 virus outbreak, more viewers do not mean more sales.
Retail sales in China dropped 21% in the first two months of 2020, according to government statistics, compared to the same time last year because of the COVID-19 virus prevention measures.
Online sales of physical goods went up by 3% though because people bored or scared to go out had shopped on their phones.
During this time, Songzi has expanded her range of products to comfortable clothing for the home and disinfectant products during this virus outbreak.
However, she does feel her followers are not spending as much because they’re worried about their jobs.
“Some of my subscribers don’t know when they can wear new clothes because they’re still stuck at home from the travel restrictions and can’t work. They’re worried about their finances,” Songzi said.
But not all of her fans are watching their spending, like Zhang. Her employer is fortunately still paying her a regular salary through the COVID-19 virus outbreak.
“I’ve been wearing pajamas at home for two months because we couldn’t go outside,” Zhang said.
“So now, I have an uncontrollable urge to buy, especially when I see beautiful clothes.”
In March, Zhang bought six pieces, including a blouse and a pair of pants, from Songzi.
As for Songzi, she’s barely taken a break from broadcasting for the past six weeks, broadcasting at least four hours a day.
She must keep her sales figures up, but there’s also a competitive factor that comes with social media.
“My agency has good products. If I don’t share the deals with my followers, then someone else will,” Songzi said.
“They’ll get ahead of me [and] then my followers won’t watch me anymore. That is the anxiety I always have.”
Additional reporting by Charles Zhang.
COVID-19 Economy FAQs
So what’s up with “Zoom fatigue”?
It’s a real thing. The science backs it up — there’s new research from Stanford University. So why is it that the technology can be so draining? Jeremy Bailenson with Stanford’s Virtual Human Interaction Lab puts it this way: “It’s like being in an elevator where everyone in the elevator stopped and looked right at us for the entire elevator ride at close-up.” Bailenson said turning off self-view and shrinking down the video window can make interactions feel more natural and less emotionally taxing.
How are Americans spending their money these days?
Economists are predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated. A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut. But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers. A lot of people enjoy browsing in stores, especially after months of forced online shopping. And another area expecting a post-pandemic boost: travel.
What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?
Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”
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