Why live-streaming can be an effective tool for brand growth
Live-streaming e-commerce – in simple terms, the act of using live media to sell products and services – has grown rapidly in prominence since 2016 when it first hit the China eCommerce scene. Today more than 309M consumers participate in some form of live-streaming eCommerce; at peek sales events, like the recent 11/11 shopping festival, this number exceeded 700M.
There are three types of live-stream e-commerce event; for the majority of international brands, it is influencer-led live-streaming that delivers best results in terms of sales and exposure. Of the top performing live-streams based on RMB sales during the recent 11/11 shopping festival, c. 50% were led by influencers (25.9 billion RMB sales); while c. 30% were driven by brands (7 billion RMB sales). These brands were all prominent, well-established house-hold names.
Working with top influencers can put brands in front of up to 40 million consumers; the majority are attending with the specific purpose to purchase. Viya – one of China’s most notorious live-streamers – was watched by over 12 million people on a typical day in November.
“Brands seeking to participate in a live-stream do well to consider profitability”
The sales performance during live-streaming is difficult to compare with general eCommerce on the basis of scale. For instance, a relatively unknown brand of skinny jeans went from selling an average 10 units per month to 10,000 during a live stream event, generating c. 5.7 million RMB within minutes.
Live-streaming demonstrates unprecedented utility in generating sales and exposure; however, brands seeking to participate in a live-stream do well to consider profitability. The two overt fees affecting profitability are the “坑位费” (a fixed fee for participation), and a commission on sales (For Viya a fixed fee can vary from 30K – 200K RMB depending on product category, and the commission can stretch from 15 – 40% depending on brand stature). The hidden cost which brands often overlook – and one which has direct bearing on the success of the live-stream – is the amount to which the product is discounted.
For brands seeking to generate mass exposure and turnover, influencer-led live-streaming e-commerce can be an effective option. To scale and sell with resilience, however, requires brands to implement live-stream within the context of a broader sales plan that balances turnover and profitability.