Offering low prices or high-value gifts is one of the rules for pitching via top streamers. Therefore, even sky-high sales figures do not guarantee a profitable promotion.
If the target audience hasn’t heard of the brand before the livestream, there’s only a low chance that they will buy the goods in three minutes, especially for luxury goods with relatively high prices.
Many celebrities are rushing into the livestreaming game, and there is no doubt that celebrities can leverage their huge fan bases to draw in more viewers. However, it is also not news that celebrity streams record poorer ROI than bottom-tier streamers on e-commerce livestreams.
E-commerce livestreaming is a shopping mode that enables viewers to purchase goods in real-time while livestreamers conduct demonstrations. COVID-19 has led to faster adoptions of e-commerce in Western countries, but it has also grown e-commerce livestreaming into a large part of China’s sector. KPMG and Ali Research even projected that the total scale of China’s e-commerce livestreaming industry would reach $307.12 billion in 2021 (1.995 trillion RMB).
But even though the numbers are promising, disappointment with e-commerce livestreaming is also rising. Some news outlets have revealed fake traffic behind the “views” and abnormally high return rates on e-commerce livestreaming orders.
In such a situation, some brands are wondering:
How should I position e-commerce livestreaming within my plan now?
Should I continue investing a large proportion of my budget in e-commerce livestreaming in 2021?
This article will help you decide, thanks to these ten livestreaming truths.
1. Making a profit in e-commerce livestreaming is never an easy thing for brands
Generally, brands need to pay the streamers with a basic service fee plus at least a 20-percent sales commission. Moreover, the service fee may be higher than $61,590 (400,000 RMB) across the entire collaboration with a top-tier streamer. Offering low prices or high-value gifts is one of the rules for pitching via top streamers. Therefore, even sky-high sales figures do not guarantee a profitable promotion.
2. An e-commerce livestreaming platform is merely a tool, not a total solution
An e-commerce platform is merely a tool that brands can use for increasing brand awareness, reinforcing the target audience, or boosting revenue. However, brands should not deem livestreaming platforms a total solution for meeting all the above objectives. The key is knowing what you are pursuing with each livestream and defining it to match your goal.
3. Pre-marketing and brand reputation are crucial for brands gaining high ROI via e-commerce livestreaming
E-commerce livestreaming is like the last-shot attempt in football. Across the customer journey of awareness, consideration, and purchase, e-commerce livestreaming could merely help on awareness and purchase but not on streamer consideration since they are likely to spend three minutes or less introducing each product. If the target audience hasn’t heard of the brand before the livestream, there’s only a low chance that they will buy the goods in three minutes, especially for luxury goods with relatively high prices. Therefore, a brand should not go for livestreaming if it hasn’t already recorded sufficient positive mentions on key social media platforms like Xiaohongshu.
4. The viewers of the livestream might not be your target audience
A recent report by Taobao Live and Taobangdan pointed out that netizens from Tier-2, Tier-3, and Tier-6 cities are the groups most fascinated with e-commerce livestream purchases. These groups may not be the target audience for all brands, especially luxury brands. Therefore, we should not only evaluate streamers’ views and follower numbers when selecting streamers; it is also meaningful for us to consider whether the demographic matches the brand.
5. Signing with a popular celebrity doesn’t guarantee purchases
Many celebrities are rushing into the game, and there is no doubt that celebrities can leverage their huge fan bases to draw in more viewers. CBNDATA also shows that top celebrity and streamer crossover streams generated higher revenues than regular streams. However, it is also not news that celebrity streaming shows record poorer ROI than bottom-tier streamers on e-commerce livestreams. For example, Wu Xiaobo, one of China’s most successful finance writers, only sold 15 cans of milk powder when he debuted his livestream in 2020. Therefore, if you are selecting a celebrity for livestreaming, and the objective is generating sales, you should review his or her past selling performances and customer demographics.
6. Not all the top-selling streamers have over 1 million followers
Don’t vote down a streamer solely based on follower numbers. Similarly, with the fact that popular celebrities don’t associate with high ROI automatically, some streamers on the top-selling list don’t necessarily have over a million followers. A CBNDATA report shows that 53, 47, and 37 percent of Taobao live, Douyin, and Kuaishou’s top 100 streamers, respectively, have less than 1 million followers.
7. Livestreaming viewers want a deep discount, and offering value-added gifts or limited-edition items may be a workable solution for luxury brands
CBNDATA’s research reveals that both brands and MCN deem “huge discount” as the most important factor for e-commerce livestreaming. Luxury brands don’t typically want to be associated with steep discounts to maintain their high-end brand image, so offering value-added gifts to emphasize the total value is one of the solutions. Additionally, launching limited-edition items could be another.
8. Taobao Live, Douyin, and Kuaishou are the top battlefields, but you need to select the right one for your products
Recent iimedia’s research projected that Taobao Live, Kuaishou, and Douyin continued to be the leaders in e-commerce livestreaming over 2020. However, not all platforms fit your brand, as the audiences on different platforms prefer different product categories or products with different prices. For example, jewelry, beauty & cosmetics, clothes & bags, and home appliances are the top categories on Taobao Live. But clothes, jewelry, beauty & cosmetics, foods, and shoes & bags are the leaders on Douyin. As Kuaishou’s users tend to be from smaller cities, low-priced household essentials, food, beauty & cosmetics, and clothes & shoes are more favorable on the platform.
9. Most brands overlook the best material to improve their brand image after livestreaming
Many brands are willing to put effort into pursuing a high ROI via e-commerce livestreaming. However, not many brands have worked on their post-streaming actions. Video and photos from the livestream, especially those with top steamers, could make good material for building an audience and improving the brand image.
10. Brands need to plan streams regularly
In KOL livestreaming rooms, many customers purchase goods because they trust the streamer rather than the products. Moreover, the top streamers may require a higher basic fee and commission ratio, which yields a decreasing ROI for KOL livestreams.
Conducting brand-run streams is a wiser idea. It allows the brands to gain “real” firsthand demographic information on the viewers. Meanwhile, brands are also able to retarget those viewers via advertising tools. Furthermore, it allows brands to capitalize on the trust that viewers build with the flagship store.
As such, the answer to our opening question is: Yes! Livestreaming has formulated new consumer behaviors and will continue to be one of the key growth engines of China e-commerce. Your brand needs to get on board, or you will quickly get squeezed out of the market.
Yet, entering this opportunity market is not an endpoint — it is just a beginning. Your brand must define its objectives for doing e-commerce livestreaming, take time to select the right channel, and match your goals to the right streamer.