How does live streaming economy affect e-commerce sales in China?

How does live streaming economy affect e-commerce sales in China
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iResearch, an internet research firm in China, estimates that China’s live streaming market will reach 43 billion yuan this year, thus more than doubling from 2016. According to China Daily, nearly half of Chinese internet users have tried a live streaming app in 2016. How did the live streaming industry become so popular in China?

The rising trend of China’s wang hong

Live streaming is broadcasting video content in real-time. The streamers are usually internet celebrities or celebrities. The content can be anything from fashion, cosmetics, to the streamer’s daily life or the streamer playing video game.

Wang hong is the Chinese words for internet celebrities, which is interrelated to the live streaming industry. According to Zeng Ming, the chief strategy officer of Alibaba, the rise of wang hong phenomenon started in late 2014 and the explosive growth began in 2016.

These wang hong rise to fame through different platforms, depending on their skills and the content. Some of them are popular gaming live streamers, some are influencers on Weibo with millions of followers, some are fashion or beauty bloggers. One of the most prominent wang hong is Papi Jiang, who became a household name for her viral short videos on entertainment news, dating and family relationship, etc. Papi Jiang has now 200 millions followers on Weibo and her videos usually attract 200-500 million views. In April 2016, Papi Jiang sold the very first advertisement that would appear in her videos for 22 million yuan.

Despite the huge success in Papi Jiang’s “talk show”, the most profitable types of wang hong are the fashionistas based on Weibo and Taobao. They are now becoming a significant force in the online retailing business in China. Unlike in the United states where influencers get many brand sponsorships, wang hong in China find various ways to monetize their huge fan bases directly.

How does live streaming affect e-commerce sales?

Given that about 45 percent of China’s internet population has used a live streaming app, it’s no surprise that the China’s largest e-commerce platforms, Taobao and its competitor JD, have jumped on the live streaming craze as well – Taobao Live and JD Live.

Shop owners and brands can create their own live streaming videos, prompting audience with links that go straight to the purchasing page. These real-time testimonials and direct interaction between the wang hong and the audience create more persuasive advertisements. According to Alibaba, the conversion rate of content on Taobao Live is 32 percent – 320,000 items added to cart per one million views.

A successful example is a popular wang hong called Zhang Dayi, who first started as a fashion magazine model in 2009. In 2014, she opened her own fashion shop with a partner on Taobao. Acting as a model, a shopping guide, a stylist and customer service representative, she presents her own products through live streaming platforms and answers questions about the design, fabric, and prices of her clothes from the audience. On Singles Day 2016, her Taobao shop made it to the top 10 in the Women’s Wear category.

For wang hong, e-commerce live streaming offers a lucrative source of income. Live streaming for a brand could bring in from 2000 to 3000 yuan per hour for the wang hong. International brands have started to test out the marketing potential of live streaming in China. In May 2016, Maybelline ran a successful live streaming campaign on Meipai, featuring Chinese celebrity Angelababy and some other wang hong. While the wang hong were trying and talking about the new lipstick products, the audience could comment on the content through a live message board on Meipai. There was also a direct link embedded in the live video that directed the consumers to Maybelline’s Tmall site, where they could buy the products. Maybelline sold 10,000 lipsticks within two hours.

In many ways, e-commerce live streaming is becoming a new way of marketing in China. At a time when shopping in China is moving online, direct interaction with your potential consumers and giving them a feel of what a product is truly like can be a powerful driver of sales.

Photo credit: Social Brand Watch, Papi Jiang’s weibo, Zhang Dayi’s weibo,

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