How China is leading in the live-streaming e-commerce world

Live-streaming e-commerce is fast gaining currency in China, not least when tapping on short video and “we-media” platforms. Supporting the “internet celebrities” who promote endless products through this avenue are a support network backed by AI and big data. Technology specialist Yin Ruizhi looks at how this new model is changing the face of retail.
This photo taken early on October 23, 2020 shows Silvia Rivera (in background) attending a live-streaming event from a studio in Shanghai to offer products on an Aliexpress channel in Spain. By some estimates, livestream shopping is a near US$70 billion industry inside China. (Hector Retamal/AFP)
This photo taken early on October 23, 2020 shows Silvia Rivera (in background) attending a live-streaming event from a studio in Shanghai to offer products on an Aliexpress channel in Spain. By some estimates, livestream shopping is a near US$70 billion industry inside China. (Hector Retamal/AFP)

When it comes to commercial uses of the internet, it is widely acknowledged that China’s innovation is a match for the US. Product sales through live streaming is an e-commerce model that has matured in China. And why has China taken the lead in developing it? One important factor is service platforms for micro businesses.

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These online platforms are targeted not at regular users, but small- and medium-sized commercial enterprises; their users number in the tens to hundreds of thousands, and are not well recognised by the general public. Many of these online platforms’ services are automated through big data and artificial intelligence, so that micro businesses can easily complete business transactions even if they only have a few people or even just one person managing a business. This has lowered the bar significantly for entrepreneurship, as well as reduced operating and innovation costs for micro businesses. Hence, the contributions of such platforms to China’s online and commercial sectors cannot be overlooked.

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Workers sort packages for delivery at a warehouse of China Post Group in Hengyang, in central China's Hunan province on 12 November 2020, a day after the end of the Singles' Day shopping festival. (STR/AFP)

Let’s look at the popular short video and “we-media” sector, with benchmark platforms such as Mockuai and Youzan. Mockuai was established in 2015; at the time, Kuaishou — one of the top two short video apps in China — had about 100 million registered users, and short videos started to become regular entertainment fodder in China’s towns and farming villages. At this point too, hundreds of thousands of entrepreneurs appeared and filmed short videos as public entertainment — these were the first batch of short video “internet celebrities”.

However, short videos are not products that can bring in sales revenue; these video creators need to earn money somehow in order to keep creating content. So, going into e-commerce by tapping on their fan base accumulated through posting short videos and livestreams became their core profit model. The question is, how can one create a good business model that will work for these entrepreneurs with no funds, business experience, or manpower, within the shortest time?

Supporting the live-streaming e-commerce revenue stream

The first difficulty in generating sales is finding a suitable supply of goods. During the time of the traditional economy, a lot of manpower was required to go to wholesale markets to seek supplies; even in the e-commerce era, it is also difficult to get suitable products to sell from wholesale e-commerce platforms. This is where platforms like Mockuai come in to perform a critical role — matching entrepreneurs with suitable products through big data, making product selection convenient and efficient. It is worth noting that Mockuai carries over 100,000 different products for all its internet celebrities; the number of its stock keeping units (SKUs) is even more than traditional mega markets.

This has generated abundant opportunities for countless individuals living in the under-developed regions of China. Such platforms are a major boost for the economy, and also encourage social development across the country.

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An employee checks the delivery information for packages ahead of the upcoming "Double Eleven" Online Shopping Festival day at an e-commerce warehouse in Lianyungang, in eastern China's Jiangsu province on 2 November 2020. (STR/AFP)

Second, online sellers need to manage their business operations. Users simply put in their orders, but sellers have to make careful preparations in getting products ready and shipping them. The second key role played by platforms like Mockuai is that they allow entrepreneurs to focus on customers, while actual selling can be done at a click of a button. Once a user orders a product introduced by an internet celebrity team, the order information is transferred to the suppliers provided by the platform, who are fully in charge of shipping and after-sales service. These two core competencies help to lower the threshold in terms of manpower and experience for short video and livestream creators to enter the retail sector, so that they can focus on content creation. This has generated abundant opportunities for countless individuals living in the under-developed regions of China. Such platforms are a major boost for the economy, and also encourage social development across the country.

Third, the value of training. Platforms like Mockuai and Youzan are commercial platforms, but they are also educational platforms. Another key mission for them is to explore new ground, synthesise knowledge, and propagate the business model of this emerging sector. One important job for Mockuai and Youzan is to conduct training that is of value for these emerging entrepreneurs and content creators. One can say that these models have helped the latter save time and effort instead of finding their own way and encountering needless setbacks on their business paths. On a societal level, these platforms also reduce the overall costs of exploring new and exciting business models.

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