This article was originally published on Forbes.com. To see more of my articles on Forbes, visit: https://www.forbes.com/sites/laurenhallanan
A couple of weeks ago, Amazon Live finally went live — bad pun intended. The launch came after several years of interest in live-streaming by the company. While Amazon filed a patent relating to live video shopping last year, the company has said that the experience was “not new”.
I believe that’s an understatement when we consider what Chinese companies have already accomplished in this sphere.
However, you wouldn’t know it by looking at US-based English-language outlets, who have been fascinated, even surprised, by this move.
On the other hand, while flipping through LinkedIn, I found this take from Danielle Bailey, managing vice president of the intelligence firm L2 Inc.:
“Amazon launching live streaming and brand stores … looking more and more like Tmall every day. China used to be thought of as the copy cats … expect more western tech and retail leaders to be inspired by the omnichannel retail, social commerce, and mobile commerce innovations in China. Facebook has already been using WeChat as What’s App’s road map.”
Danielle hit the nail on the head.
If you’re someone who follows retail in China, then you’ve probably been wondering for years why Amazon didn’t start live-streaming sooner.
Live-streaming has been a main focus for Alibaba and numerous other Chinese e-commerce platforms for several years now. Influencers and brands have reportedly pulled in millions of dollars in revenue through Taobao’s streaming feature. Taobao even launched a standalone app dedicated to e-commerce live-streaming recently.
Let’s take a look at how Alibaba uses live-streaming. Then, it will become clear what Amazon needs to do to get its version off the ground.
Taobao Live-streaming at a Glance
- In 2018, 84 Taobao stores reportedly reached $7.4 million in sales each through Taobao live-stream broadcasts. Out of those, 23 stores achieved $15 million or more.
- Taobao predicts that over the next three years, live-streaming on Taobao will generate over 500 billion sales transactions.
- Taobao has its own set of live-streaming influencers. Over 1,200 of these have more than one million fans on Taobao, and another 1,000 influencers have over 500,000.
- In 2018, 81 influencers generated over $15 million in sales through live-streaming.
- The five best-performing industries on Taobao Livestream in 2018 were jewelry, women’s fashion, accessories, skincare and cosmetics, and children’s fashion. Among top-selling jewelry stores, 60% of sales came from live-streaming.
- One segment that, to everyone’s surprise, is booming is agriculture. In the last three years, around 100,000 live-streamers have promoted farm products on Taobao, like fresh produce. Many have performed extremely well, prompting Alibaba to announce the creation of a special poverty alleviation program for Taobao sellers in the countryside. The plan includes incubating a thousand farmer live-streamers.
Why Does E-commerce Live-Streaming Work So Well in China?
Product Discovery
Without live-streaming features, people tend not to make impulse purchases on e-commerce sites. They’ll browse for products they know they want to buy. Furthermore, if an item description doesn’t provide enough info, they may call off the purchase altogether.
When combined with social media, however, e-commerce sites let consumers discover new products and develop trust in the quality of the products they are interested in. Both of these drive consumption. This effect is magnified when influencers are involved, who are great at creating raw, real content.
Taobao understands this very well and is changing the way products are sold on its platform.
The CEO of Taobao Jiang Fan once said, “live-streaming is not just a feature. In the future, it will be the mainstream e-commerce model.”
For many consumers in lower-tier cities in China, this prediction has already come true. A recent article in the Chinese news outlet Jiemian found that live-streaming is a key information channel for young beauty consumers in lower-tier cities.
One Taobao beauty influencer, Yang Xiao, shared that this demographic makes up a whopping 70% of her audience:
“These consumers have much less knowledge of beauty products in comparison to those in 1st and 2nd tier cities. And, they feel overwhelmed and confused by all the information on the internet and have trouble figuring out which products are suitable for them.”
Live-streaming Generated Trust
Trust is a crucial issue for e-commerce platforms to address, and Taobao believes that content and community are the best ways to generate trust.
Women in their late 20s to mid-30s make up the majority of Taobao live-stream viewers and consumers. When watching, they care a great deal about the level of knowledge the host has about the subject. The more knowledge they have, the more trust they have in the host’s product recommendations.
Yang Xiao and other live-streaming influencers are seen as experts — people they can turn to for advice. Through their live-streams, influencers build relationships with their audience. They share expertise on the products and allow customers to understand it — what it’s made of, how it’s used, etc.
Christine Mou, a fashion stylist and live-streamer for the cross-border marketplace Shopshops, explains:
“These live-streamers play a double-role as powerful influencers as well as peers of the customers. When Chinese consumers watch a live-stream on an e-commerce platform, they are simultaneously watching an influencer and a peer whom they like and trust. They can become extremely loyal and receptive to specific live-streamers, especially those they have been following for some time and feel connected to.”
Better Deals
Finally, when all else fails, nothing beats discounts!
“In order to attract a larger customer base and drive sales, brands will surprise live-stream audiences with incentives such as limited-time discounts and lucky draws,” Mou said. “The end result is that customers find it better to shop through live-streaming shows as they are almost guaranteed to buy products with better deals.”
What Should Amazon Learn From China for Live to Work?
Of course, Amazon Live just launched. But, in its present state, I don’t think it has a fighting chance.
It seems that Amazon and its sellers have yet to understand the core elements of live-streaming that drive sales:
Influencers
As mentioned, the connection with, and trust in, an individual is what drives sales through live-streaming. Therefore, Amazon should aim to establish relationships between the customers and the live-streamers, not between the customers and Amazon.
While Amazon hasn’t provided an opportunity for influencers to grow an audience on Amazon itself, sellers should still develop their own teams of in-house live-streaming influencers.
Audience Interaction
Trust and influencer status requires audience interaction.
Mou sums it up nicely:
“From what I see, live-streamers on Amazon Live tend to produce highly information-focused videos with a ‘one-way only’ conversation while, in contrast, Chinese live- streamers tend to focus on creating two-way conversations — they literally interact and talk to their audience every second. To watch Amazon Live almost feels like as if you are watching an unknown Youtuber doing a product review. Not only is there no element of social influence, but also missing are the engagement and relationship-building parts. Given these circumstances, why would a customer still tune-in and trust an unknown Amazon live-streamer instead of turning to their favorite social media influencers on other channels?”
Consistency
The most successful Taobao live-streamers all have one thing in common: they stream A LOT. On average, the top-grossing streamers go live more than 300 times a year and the average stream time per session is 8 hours.
Excluding Amazon’s official (and horribly infomercial-like) live-show, most of the current Amazon live-streams are less than 10 minutes long, at irregular days and times. In other words, a stark contrast to what you have in China.
Some argue that Western consumers are different than their Chinese counterparts and that’s why e-commerce live streaming won’t work here. I disagree.
While consumption and behavioral differences exist, of course, consumers everywhere desire to trust and rely on word-of-mouth.
Here’s why e-commerce live-streaming hasn’t taken off in the US yet: The essential elements are missing. It’s clear both Amazon and its sellers still need to learn how to use this medium properly to improve the consumer experience.
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