Livestream:economic bubbles or the path to rich?

By Zhong Mengxia

In China， live-streaming was not born overnight. Several years ago， live-streaming about games， sports， and food was familiar to many netizens， and watching it has been one of the Internet habits for them. In 2016， Taobao， a Chinese online shopping website， owned by Alibaba， as a pioneer， first grabbed livestream to help its shops to increase their sales. Since then， the live-streaming on e-commerce platforms had been growing smoothly， still with much room for its potentials to be improved until 2019 which witnessed its rapid surge as the new platforms and applications such as Douyin， which is called Tik Tok overseas， Kuaishou and Xiaohongshu， have made great efforts to develop e-commerce live broadcast.

To our naive surprise， the live-streaming business turned out to press ahead with an impressive growth extensively in real estate， automobile， and home appliances as well as other daily commodities， in spite of the COVID-19 impact out of staying-at-home quarantining and traffic lockdowns. Live-streaming is widely applied to almost all fields and is boosting consumption and transformation in certain industries in China， as consumers tend to switch to online-purchasing amid the COVID-19 pandemic. According to the Ministry of Commerce， more than 10 million sessions of live-streaming were held in China in the first half of the year， with about 400，000 live-streamers participating， and introducing over 20 million commodities. Live-streaming sales seem like the hottest way to get rich right now， but is that really true？

How does the industry boom

The coronavirus outbreak has restricted peoples travel， friends meetings and many other outdoor activities on the administrative curb-and-curtail notices， making it possible for the enterprises and brands owners to make use of the situation in the live-streaming methods to sell their products to the home stayers， even though it comes into peoples sight as a relatively new form of entertainment， so to speak. Reports show that FMCG （fast-moving consumer goods） brands and products in live-streaming are found easier to unzip consumers wallets， especially in cosmetics， clothing， food and household things， the top 4 items in the sales list with the cosmetics accounting for over a half of the total sales of all the goods， ranking in the first place.

In terms of the business mode of live broadcast， C2M（customer to manufacturer） mode made enterprises earn money without worries. C2M needs consumers to buy first and then factories produce according to the orders， and there is no inventory backlog.

According to Iimedia， by March 2020， there were 560 million live-streaming users in China， of which 270 million were e-commerce users， and about half （48.2%） of livestreaming users had purchased products there. During the pandemic， the number of live broadcast users has soared. Surveys show that nearly 30 percent of users watch livestreaming on e-commerce platforms almost every day. Livestream has gradually become an important part of online shopping for Chinese consumers.

How is the domestic industrial chain

E-commerce live-streaming has formed a complete business chain including brands or enterprises to livestreamers and MCN institutions， to platforms and applications， finally to consumers. Brands choose MCN institutions and live-streamers to help them promote their products， and MCN institutions and live-streamers make marketing plans and sell products to consumers as much as possible. Finally， a large number of consumers buy goods which en-hance the reputation of the brand and product in turn.

It must be noted that live-streamers like Li Jiaqi， Wei Ya and internet influencers push the industry to another level. In May and June， 2020， a lot of famous Chinese hosts， celebrities， actors and well-known entrepreneurs such as Baidu CEO， Li Yanhong， Gree Group CEO， Dong Mingzhu， rushed into live-streaming， and its content not just includes the share and sell of the goods， but also brings more joys and attention to users and consumers.

The industry met the bottleneck period for development now

Since May， as enterprises are resuming work and production and people are back to their workplace in succession， obviously， live-streaming is not as popular as the first several months of 2020 any more. According to the report jointly released by Pangqiu Data and other organizations， the overall sales of live-streaming in July 2020 （8 billion yuan） fell by 40% compared with 13.5 billion yuan in the previous month.

Also， celebrities effect doesnt work any more. At first， people may be surprised by the appearance of their favourite singers and actors to impulse purchase. A few months later， however， people just buy things because they need them and shopping on live-streaming apps is cheaper， and they do not pay for goods they do not use. Except for Li Jiaqi and Wei Ya taking advantage of the low price， most of the other live-streamers have experienced a sharp decline in sale performance. There is still a market for live streaming， but it is not as crazy as it used to be.

Several sub-standard phenomena happened. When the bubbles burst， some industrial chaos unmask. As one of the hottest industries in 2020， the sales volume of livestreaming in China will reach 961 billion yuan in 2020， accounting for 8.7% of Chinas online retail volume. However， with the development of live-streaming， many nonstandard phenomena appear as follows.

●Poor quality of products. Some live-streamers exaggerate the material， quality， effect， cost performance and other aspects of the product. In addition， a part of goods received by consumers are inconsistent with the products purchased online.

●Risky transaction. Some live-streamers are not responsible for their recommendations and cannot share the real and useful feelings of the products for the audience. In addition， some steer consumers away from live-streaming platforms to private transactions， making consumerstransactions risky.

●After-sales service unsatisfying. Many consumers complain that the shopping experience is of low satisfaction and after-sales handling process is complex.

●Fake sales data overwhelmed. Fake sales of products induces consumers， so as to mislead consumers to buy， such phenomena emerge one after another.

The live-streaming e-commerce industry， which only focuses on traffic， exposure and hot topics， will surely be reformed， while the industry， which is consumer-oriented， focuses on product quality， improves user shopping experience and satisfaction， and meets consumer demand， will attract more consumers to watch and buy in the future. Therefore， live-streaming platforms should continuously accumulate management and operation experience and gradually form their own standards， systems and norms， so as to improve consumers shopping experience. At the same time， relevant government departments and institutions should also strengthen the awareness of consumer rights protection， guide the healthy and orderly development of the e-commerce industry， crack down on all kinds of illegal behaviors， standardize the live broadcast content of live-streamers， and strengthen the supervision of MCN companies. The rise of shopping in live-streaming apps in China is one of the landmark events of the new consumption era， while the cool down of this industry is also a wake-up call to remind enterprises to think about what consumers really need and how to make use of the tool to build brand image rather than be crazy about making money.