Region/Countries: Asia, China Industry: Other Date: November 2020

Why this is important to Wisconsin businesses: Foreign brands, especially those in the consumer goods category, should be aware of this trend when entering the Chinese market.

In recent years, social media marketing and online influencer endorsement have increasingly been driving consumers’ attention, with livestreaming e-commerce in particular emerging as a new trend within this category.

According to Xiaohongshu, one of the most successful online sharing and influencing platforms in China, around three-quarters of people born after the 1990s reported that their purchasing decisions are impacted by content on online platforms. Influencers, or Key Opinion Leaders (KOL), as they are known in the marketing field, have the power to turn fans’ attention into purchases. Platforms like Xiaohongshu have fostered a close relationship between merchants and consumers through original content marketing, and they can serve as places for brands to consistently promote their product over the long term (versus one-off campaigns with influencers). Xiaohongshu has become a hub, attracting nearly 8,000 international brands to set up official accounts to engage with customers.

Livestreaming e-commerce is gaining popularity as a shopping platform. Although it started to thrive due to the pandemic, its development is primarily due to innovative online channels and an accelerated shift towards online consumption, with KOL being a crucial ingredient of the livestream shopping experience. According to Nielsen, 10 million online shoppers in China contribute to ¥10 trillion in online retail sales, accounting for 25% of total retail sales, and the compound annualized growth rate was 24% from 2017 to 2019. Livestreaming shopping, as an integral part of online shopping channels, is expected to reach a market size of ¥961 billion in 2020, which would account for 10% of all e-commerce in China. Nielsen’s report shows that for consumers, convenience and lower prices are key reasons they choose to shop via livestream. Other reasons include the ability to obtain more product details and recommendations and find the latest special offers. Livestream shopping with KOL also brings a more enjoyable, spontaneous and personalized shopping experience with a sense of interaction. Of those surveyed, 56% percent said they would prefer to purchase products via KOL or celebrity livestream houses over other channels, while 34% were indifferent. For businesses, livestreaming has the advantages of low cost, high attention, high conversion rate and effective marketing.

In the Double Eleven Shopping Gala event, livestreaming e-commerce occupied a prominent position: on the presale day of the Double Eleven, Li Jiaqi and Wei Ya, the two head hosts of Alibaba, drew a total viewing audience of over 300 million in the broadcast room, and nearly ¥8 billion worth of product was sold in eight hours. Livestreaming not only helps draw traffic but also improves marketing conversion rates better than traditional modes. Compared with the conversion rate of 6% to 8% in traditional e-commerce shops, the conversion rate can be doubled or tripled using livestreaming to promote goods, typically reaching about 20%. The conversion rate can go even higher for a well-known influencer with their own following.

In general, social media, influencers and livestreaming e-commerce are marketing strategies that coexist and intersect to help brands boost their public reputation and sales in both the short term and the long term. A brand might first promote its product on a platform like Xiaohongshu, then later promote sales through livestreaming by KOL. Some of the product categories most likely to benefit from this strategy include personal care products, snacks and beverages, clothing and footwear, and beauty products. Foreign brands can consider using these same social media, influencer and livestreaming e-commerce tactics to break the ice in the Chinese market, especially for brands in consumer goods category.