In China, livestream sales flourish in time of COVID-19
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Last summer, Sam Tian took a big gamble.
He quit the ad sales job he had held for years and convinced his girlfriend, Eva Wang, to leave her teaching position too.
They moved from Beijing to the e-commerce hub of Hangzhou city.
Together, they started a livestream channel on Alibaba’s Taobao app to sell cosmetics.
Tian said he expected that within three months, they would earn more than they did at their old jobs.
“A talent agency boss told us this was a realistic goal. He said with our looks and my previous sales experience, we could earn a combined monthly income of 30,000 yuan [$4,300] so long as we stick with it and work hard,” Tian said.
Livestream sales channels look like low-budget versions of QVC or other home shopping networks but with a lot more viewer interaction.
For some brands and retailers, livestreaming sales is a way to stay afloat through the COVID-19 pandemic. Chinese research firm iMedia estimates that livestream sales will more than double this year from 2019 to hit almost 1 trillion yuan ($143 billion).
According to China’s internet authority, 265 million people watched livestream sales channels last year.
Trying to attract some of those eyeballs wasn’t easy for newcomers Tian and Wang even as more people who were stuck at home because of the pandemic tuned into livestreaming sales channels. They sold mainly beauty products provided by the talent agency they signed with. When stock ran out, the couple resorted to witty banter or serenaded viewers with an impromptu karaoke song.
However, after livestreaming at least six hours a day for 100 days straight, they still weren’t earning enough sales commission to cover their expenses.
Tian said they survived on credit cards.
“It was a real struggle, and we wondered whether we should give up on livestreaming,” he said. “My girlfriend was under a lot of pressure and I was not in a good mood. We fought a lot.”
Tian and Wang managed to stay together, but they no longer host a livestreaming show.
“To succeed in this business, more than 50% depends on luck,” Tian said.
Recently, there have been Chinese media reports questioning whether livestreaming is overhyped as a sales technique.
A sportswear firm in southern Fujian province told Chinese state broadcaster CCTV that before the company had hired a livestreaming influencer, it checked her previous sales records, which showed sales figures of over $140,000 for one brand during a show.
“However, she did not do any preparations on our product before the livestreaming session, and in the end, she sold only about 90,000 yuan [$13,000] worth,” a spokesperson for the sportswear firm told CCTV. “The next day, the influencer was bragging to others that she helped us make 1.5 million yuan [$200,000] in sales!”
“To succeed in this business, more than 50% depends on luck.”Former livestream sales host Sam Tian
Industry insiders acknowledge that influencers and talent agencies do sometimes exaggerate their sales figures but said it is not widespread.
“I think a lot of retailers claim they were fooled, but they weren’t. They just didn’t have realistic expectations or any understanding of this industry,” said Ji Shengli of Jitao, one of the larger talent agencies for e-commerce in Hangzhou.
Ji pointed out that there are high refund rates in livestream sales — up to 50% for clothing.
“Female consumers might buy the same piece in two colors and two sizes to see which one fits better. If they like it, they might keep one and return the other three. Or they might want a refund on all four items,” Ji said.
However, with the pandemic, manufacturers like Zhou Weidong are still sitting on inventory from January and now want a piece of livestream sales.
Zhou’s factory produces bed linens. He walked into the Jitao office without an appointment, carrying bedsheets and pillow samples.
“Our sales revenue has dropped by 30% to 40% since the pandemic hit, so I’m here to find other sales channels,” he said.
Zhou said his factory tried to do livestreaming sales on its own but didn’t get enough viewers.
Hosting a livestreaming sales show requires skill and hard work but also a lot of luck, according to Ji of the Jitao talent agency. He is the one who signed former livestream hosts Tian and Wang.
“What happened to [Tian and Wang] is a typical case in this industry,” Ji said, adding that only 20% of the people he trains to be livestreaming influencers last more than a year.
Former host Tian is still in the livestreaming sales industry, but he works mostly behind the scenes, as does Wang.
They are not certain that livestreaming will make them rich, but Tian said he is not giving up on his dreams.
“I hope the next time we meet, I’ll be really successful.”
As successful, he said, as Apple’s Steve Jobs.
Additional research by Charles Zhang.
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