Livestreaming E-commerce in China: Exploring the Future of Online Shopping

Livestreaming e-commerce in China has become a sensation, with platforms like Taobao Live and Douyin Live attracting millions of viewers.

In 2020, Taobao Live alone generated over $7.2 billion in sales, a significant increase from the previous year.

This rise in popularity can be attributed to the fact that Chinese consumers are increasingly looking for immersive and interactive shopping experiences.

Chinese consumers are also drawn to the social aspect of livestreaming, with many preferring to shop from influencers and celebrities they admire.

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Livestreaming e-commerce in China is a rapidly growing market, and understanding the platforms and networks involved is crucial to grasping its dynamics. The main Chinese platforms for live commerce are Taobao Live, Kuaishou, and Douyin.

Taobao Live is the live streaming platform of Alibaba's B2C platform Taobao, one of the earliest adopters of live e-commerce in China. Kuaishou is a mobile app for short videos, particularly popular among the lower tier cities and rural areas. Douyin is the short-video platform owned by ByteDance and famous outside of China as TikTok.

These platforms are fueled by multi-channel networks (MCNs), companies who incubate live streamers, or KOLs, and connect them with brands and end-users. Among the most famous MCNs in China are Xinxuan Group, Rhunn, MeiONE, and Qianxun Group.

Here are some of the key MCNs in China:

Chinese platforms have been at the forefront of live commerce in China. Taobao Live is one of the earliest adopters of live e-commerce in China, and it's the live streaming platform of Alibaba's B2C platform Taobao.

Taobao Live and its flagship app Diantao lead in popularity among Chinese live commerce users, with a usage rate of 74%. Douyin, on the other hand, follows in the second place, with a usage rate of 51%.

Here are the top live commerce platforms in China, ranked by their usage rates:

However, when it comes to the share in total GMV, Kuaishou and Douyin have already passed Taobao and Diantao. By 2022, Douyin made up nearly half (47%) of the total GMV of leading live commerce Chinese platforms.

In China, multi-channel networks (MCNs) play a crucial role in the growth of the live streaming industry. They incubate live streamers, known as KOLs, and connect them with brands and end-users.

MCNs act as a communication bridge between merchants and live streamers, selecting suitable live streamers based on product information. They also negotiate details on behalf of the live streamer, such as deposits, commissions, and products to be sold.

Most MCNs have one leading KOL in the founding team or as the main source of revenue. They tend to work with one platform.

Some of the most famous MCNs in China include Xinxuan Group, Rhunn, MeiONE, and Qianxun Group.

Here's a list of the main MCNs in China, along with their key information:

Stream Influencers are the lifeblood of Chinese live streaming, with many becoming celebrities in their own right. They host 4-hour shows every night, showcasing 48 products and often featuring guest celebrities and entertaining performances.

These influencers have immense power, with the ability to sell out products in seconds and rake in millions of dollars every night. It's not easy for brands to get their products onto these shows, with only about 1 in 8 pitches being accepted.

The MCNs (Multi-Channel Networks) play a crucial role in connecting brands with these influencers. Main MCNs in China include Xinxuan Group, Rhunn, MeiONE, and Qianxun Group, each with a leading KOL (Key Opinion Leader) and a focus on specific platforms.

Here are some of the most famous MCNs in China, along with their headquarters and main platforms:

These MCNs not only connect brands with influencers but also train live streamers and act as a communication bridge between merchants and live streamers.

Exploring 3D livestreaming is a promising development, especially with the increasing demand for high-quality video connections.

Potential buyers are almost always watching on their mobile phones, which can be a challenge for sellers trying to livestream from the field where they are growing the produce.

Mobile service operators China Unicom and China Mobile have started to sell data packages geared toward livestreamers in parts of the country, giving them priority service on the network.

This means livestreamers get a faster and more stable connection, similar to how an express lane on a highway allows buses to avoid traffic.

Looking ahead, 5.5G will theoretically increase download speeds by 10 times compared to 5G, and upload speeds by two to three times, making 3D livestreaming a more feasible option.

AI's development is also letting businesses quickly turn 2D images into 3D ones, which could make 3D livestreaming a reality as early as two years from now.

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In March 2021, the State Administration for Market Regulation introduced new rules targeting the livestreaming e-commerce sector, giving platforms and merchants more responsibilities and addressing concerns linked to user data privacy and forced exclusivity.

These regulations are a response to the rapid growth of livestreaming e-commerce in China.

The Chinese government has been actively involved in shaping the industry's development, with six government agencies rolling out additional rules in April 2021. These rules require providers to set up a system to maintain the safety of content, verify the identity of livestream hosts, and secure users' personal information.

Industry standards for livestream commerce were introduced in August 2021 by China’s Ministry of Commerce.

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In China, the live commerce market is becoming more diverse and competitive, with new businesses and hosts joining the fray.

The rapid growth of sellers in live commerce has caught the attention of companies like Douyin, which is taking steps to regulate the market.

Douyin's crackdown includes a ban on quick launches and penalties for violators, aimed at protecting consumers from uninformed purchases.

Host incomes are shrinking as more competitors join the market, making it harder for individuals to gain a large audience and generate significant revenue.

As consumers become more frugal due to the economic recession in China, they're less likely to make impulse buys, which is a common trait of live commerce sales.

The rise of AI influencers who can do the same jobs for less money is also contributing to the decline of host incomes.

Companies are shifting from using influencers, known as KOLs in China, to in-house livestreamers, which is a clear indication that live streaming is not a hype, but a trend that's here to stay.

Here's a breakdown of the shrinking trend in live commerce:

This table shows that Gen Z is more active in live commerce than traditional eCommerce, but even within this generation, live commerce participation is declining as more competitors join the market.

In March 2021, the State Administration for Market Regulation introduced new rules targeting the development of the livestreaming e-commerce sector.

These rules gave platforms and merchants more responsibilities and addressed concerns linked to user data privacy and forced exclusivity.

Six Chinese government agencies, including the Cyberspace Administration of China, rolled out additional rules in April 2021, requiring providers to set up a system to maintain the safety of content.

They also mandated verification of the identity of livestream hosts and secured users' personal information.

In August 2021, China’s Ministry of Commerce introduced new industry standards for livestream commerce, detailing how hosts should dress or speak during live broadcasts.

These guidelines also set rules for hosts and product reviews, aiming to regulate the sector further.

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Livestreaming e-commerce is a dynamic, real-time buying experience that combines livestreaming and online shopping.

Hosts present products, interact with viewers, and answer questions, creating an engaging and interactive shopping event.

This format enhances customer trust and drives immediate purchasing decisions.

Live commerce has seen remarkable growth, particularly during the pandemic, originating in China.

It leverages the power of social interaction and instant feedback, making it a preferred shopping method for many.

Taobao leads the livestream commerce market in China, with a usage rate of 74% among Chinese live commerce users.

The online shopping market retail sales volume in China is expected to reach a significant milestone by 2024.

Douyin follows closely behind Taobao, with a usage rate of 51%.

The GMV of social e-commerce in China is projected to reach a substantial amount by 2025.

By 2022, Douyin made up nearly half (47%) of the total GMV of leading live commerce Chinese platforms.

Here's a breakdown of the usage rates of leading live commerce platforms in China:

By 2020, Taobao accounted for more than half of the sector's GMV, but Kuaishou and Douyin have since gained ground.

China has certainly paved the way for the future of shopping, even though in western markets the features of these live streams may be adapted and optimised for the western viewer.

Trends are shifting in favour of video ecommerce, and brands can't afford to miss out on this immersive and interactive way of shopping.

Smartzer has seen fantastic results amongst our brand collaborations for live shopping events so far, with an average of 55% of viewers engaging with the shoppable live streams.

CTR for these live streams ranges from 20-75%, which is a staggering figure that shows just how effective video ecommerce can be.

China's live commerce market has seen continuous expansion, but growth has slowed after the pandemic.

High smartphone penetration and an existing inclination towards social commerce have been key factors in the success of live commerce in China.

The eCommerce ecosystem in China has been conducive to the growth of live commerce.

Signs of market saturation are visible in China's live commerce market.

New technologies and features, such as TikTok Shop, can accelerate the trend of live commerce adoption in North America and Europe.

Gen Z are active social media users and buyers, making them a promising target market for live commerce.