While brick-and-mortar stores are hit by the outbreak of COVID-19, e-commerce in China is embracing a new growth point. Among all the marketing and engagement methods used to drive sales on e-commerce platforms, live streaming was the most popular and effective method employed during the crisis.
According to a report released by Taobao List, the number of merchants who started live streaming for the first time on Taobao Live increased by 719% month-on-month in February [1].
Consumers also like this shopping method. According to data from Changtai Securities, the average number of viewers per live stream on Taobao Live increased by 43.13% during Spring Festival, which translated to a sharp rise in turnover for participating retailers [2]. In February, the number of total orders received by Taobao Live merchants rose an average of 20% per week, and turnover doubled compared to the same period in 2019 [1].
Reasons behind the boom
During China’s peak COVID-19 outbreak, many brick-and-mortar stores experienced a huge drop off in turnover, and as expected, this impact was particularly pronounced in large malls and shopping centers. During this time, enterprises were forced to turn to online channels.
During mandatory isolation and quarantine, people turned to live streams as a form of entertainment, a way to engage with their peers, and also a way to shop. On Feb 5, when Austin Li, the top live streamer in China, restarted his live stream after a temporary halt, some consumers said his voice was a comfort to them, and also a welcome respite from the monotony and boredom of long-term self-isolation.
Platforms also play an essential role as they launched new policies to stimulate the development of live streaming. In Feb, Taobao Live started two policies: Zero thresholds and zero fees for all types of offline businesses to enter Taobao Live. The platform also launched open access for individuals. Taobao Live isn't the only popular platform for live streaming. Other live streams also participated in the intense competition in Feb:
WeChat Mini Program started to test a live stream function, inviting WeStores to start live streaming to sell their products.
Little Red Book opened access to its live stream function for some brands’ official accounts to test this function.
Douyin (Chinese version of Tiktok) also launched “Escort Plan” to provide free certification, training, traffic support services for companies to start live streams.
Kuaishou also lowered the threshold for companies to enter their platform.
Jingxi, the live stream platform of JD, launched 16 support policies for its clients, involving financing support, logistic support, traffic support, etc.
Forest Cabin (林清轩): Livestreaming its way out of a hole
Forest Cabin is a Chinese skincare brand founded in 2003, which has focused most of its efforts on developing offline stores. It has more than 300 direct-sales stores around China, and sales in these stores account for 75% of total turnover. During the outbreak of COVID-19, the brand faced significant challenges. By the end of January, almost half of its stores were closed, and turnover decreased by 90%. The company was expected to go bankrupt in two months [3].
An open letter from the founder
However, the brand saw a sharp increase in sales over the course of the following two weeks. At the beginning of February, Forest Cabin started live streaming on Taobao Live. On Feb 2, its live stream channel only had two viewers. Four days later, the number of viewers increased to 5000. On Feb 14 (Valentine’s Day), the founder, Lin Qingxuan, hosted his first live stream. This live stream lasted for 2 hours, had more than 60,000 audiences. During the live stream, the company sold 400,000 yuan in products, which equals to the total monthly turnover of 4 of its bricks and mortar stores combined[3].
The founder told Beijing Commercial Daily: “After starting the live stream, Forest Cabin is now adding 3,000 followers a day. [4] The increased traffic has also translated to a dramatic increase in turnover. From Feb 1 to Feb 15, turnover increased by 45% [3]. On Mar 8, Women's Day, online sales increased 513% year on year [5].
The success of live streaming has prompted the brand to invest further time and capital into the method. The company's plan is to hire and incubate staff that has the ability to live stream. The company will also integrate live streaming locations into their bricks and mortar stores.
The rendering of Forest Cabin’s new store
The Limitations of Livestreaming
Live streaming is only suitable for certain types of products and brands and, more generally, only for lower value purchases. Car companies and real estate companies have attempted to use live streaming to drive sales and engagement but have been unable to find an effective live stream formula that converts to sales.
Livestreaming requires specialist training and the use of specialist equipment and software. A high production value and engaging live streaming personalities are required to keep viewers engaged.
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