Livestreaming e-commerce: a path to the future or just a fad? 

New Oriental has become China's latest livestreaming sensation in June, and its stocks in HK and the US have surged as much as 421% and 76% since this June. 

Livestreaming e-commerce in China boomed even before the start of the COVID-19 pandemic. It helped millions of Chinese enterprises survive the pandemic as China’s Covid lockdown policy presented challenges to the overall economy. The scale of live streaming anchors has grown at an unprecedented rate, from ordinary people to KOLs, from celebrities to CEOs, and even government officials. According to iiMedia’s report, the number of online live broadcasting users in China has reached 638 million as of June 2021, an 47.2% increase since the same period in 2020, accounting for 63.1% of total netizens. The photographs below show different groups of live stream anchors: ordinary people, CEOs and enterprises (New Oriental), and government officials (from 5 different countries).

How does it work?
The nature of livestreaming is to introduce and advertise a company’s products to the public. Livestreaming in China originated from e-commerce platforms in 2015 as mobile livestreaming rapidly grew. Taobao (BABA) introduced and integrated livestreaming into its e-commerce platform in early 2016. Its explosion came in 2019, as multiple KOLs, such as Li Jiaqi and Viya, joined the industry. The graph below shows the market size of livestream e-commerce in China from Statista.

Livestream e-commerce consists of 4 parts: products, consumers, livestream anchors and platforms, e-commerce platforms or tools. Livestream anchors introduce and advertise products on their platforms, while consumers purchase products and the orders are sent to the e-commerce platform for delivery. 

The 3 major Chinese livestream platforms include Taobao, Douyin, and Kuaishou, with other e-commerce platforms also integrating the livestream function into their systems. Currently, livestream e-commerce covers all product categories. The conversion of livestream e-commerce into sales return relies on 2 main factors: 

1, The scale of total viewers in a livestream room. The more viewers watching and more traffic on a specific anchor, the larger sales generated. Celebrities such as pop stars or KOLs generally have a larger existing viewer base, hence attracting more viewers into a livestream room. China’s top livestreaming influencer Li Jiaqi has over 64 million followers in his livestream channel on Taobao, and his sales record reached $1.7 billion during last year’s shopping festival. 

2, The professionalism of the livestream anchors. If the live anchors are capable of presenting more professional views on a product, the broadcast will be considered more credible by consumers. This is the reason why New Oriental has been successful in their own livestream business. The company applies its teaching and marketing background to pitching groceries. The livestreams are filled with philosophical lectures, musical performances, English lessons, with brief promotions of the actual product scattered in between.  

What’s next? 
New Oriental’s livestream business started last November but didn’t take off until early June. Over two weeks in June, Oriental Select’s followers on Douyin jumped from 1 million to 18.5 million, and the channel booked more than $76.7 million in product sales, according to Chinese social-media data tracker New Rank. This came after China’s top livestream influencer Li Jiaqi disappeared from the public view. As former top livestream influencers such as Li Jiaqi, Viya, and Xueli leave the stage, livestream e-commerce is becoming more common among the public and general enterprises. Viewers and consumers are not just looking for online sales or discounts, but rather for distinguished experiences and parasocial connections.  

However, some skeptics wonder whether Oriental Select’s selling point—a livestream channel that spreads knowledge and feelings—can continue to attract attention and traffic.

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