How Livestreaming Has Revived Chinese Retail Stores Post-Covid

In what may be a precursor to US and European retail practice, Chinese store owners are using digital streaming platforms to personally sell merchandise to consumers still nervous about entering commercial spaces.

The apps allow buyers to get product details and make purchases in mid-presentation with a single click. JL

Trefor Moss reports in the Wall Street Journal:

The coronavirus crisis (is) turning online retail into a show which has hooked millions of stay-at-home consumers. Live streaming has been a lifesaver for store owners looking to reach shoppers still wary of confined spaces. Even global brands like Gap and Louis Vuitton engage millions of homebound Chinese consumers. Most retailers stream via Alibaba’s Taobao, JD.com and WeChat. Their interactive features allow viewers to chat with hosts, call up product information and make single-click purchases mid-show.“For retailers now it’s about digital engagement, generating demand by exciting people."

Chinese shoppers have long used their phones to buy almost everything they need. The coronavirus crisis has supercharged that trend, turning online retail into a show which has hooked millions of stay-at-home consumers.

Fu Chenyuan thought she might have to close her 14-year-old Shanghai clothing shop, DF Boutique, in the spring as she watched other stores in the city’s bustling Jing’an district shut their doors. Having never sold anything online before, the 35-year-old reluctantly took up her iPhone and started modeling her inventory of niche European shoes and blouses for customers.

“We had to go online—otherwise we couldn’t have survived,” she said.

Hawking her wares live was uncomfortable for the camera-shy Ms. Fu at first, but her customers loved it: Real-time sales pitches she broadcasts through her phone now account for 70% of her total sales, she said, and revenues have bounced back to where they were before Covid-19.

Live streaming has been a lifesaver for other store owners looking to reach shoppers still wary of confined spaces. Even global brands like Gap Inc. and Louis Vuitton have joined in the scramble to engage millions of homebound Chinese consumers.

The world’s biggest retail market, with $5.8 trillion in sales last year, has yet to rebound to precrisis levels. But online sales, and live-stream sales in particular, have been a bright spot.

Live streaming has taken Chinese retail into a new phase, said Daniel Zipser, who leads McKinsey & Co.’s consumer and retail practice in China. “For retailers now it’s about digital engagement, generating demand by exciting people and creating an experience.”

Live-stream technology has already created a generation of “stream queens” and other video celebrities whose fans send them money as they perform. Retail is its latest incarnation.

Most retailers stream via the handful of megaplatforms that dominate China’s e-commerce and social media, such as Alibaba’s Taobao and Tmall sites, JD.com and WeChat. Their interactive features allow viewers to chat with hosts, call up product information and make single-click purchases mid-show.

Ms. Fu started selling directly to her socially distanced customers using video streams broadcast twice a week on WeChat, Tencent’s do-everything app. The technology offers a way of replicating the personal attention customers get in a store, she said.

After closing her physical shop one June evening, Ms. Fu opened its virtual space. She put on the first sale item, a coffee-colored Italian blouse, then positioned herself between two bright lighting panels and started speaking to more than 200 clients through an iPhone mounted on a stand. With the help of an assistant, she cycled through a fashion show’s worth of outfits and footwear, talking viewers through the features of each item and encouraging them to buy.

“Lynn, good evening,” she said, welcoming one regular client. “Today we have all kinds of shoes, a lot of them are your size—37.” Training her smartphone’s camera on a pair of blue leather heels being modeled by her assistant, Ms. Fu singled out another customer. “These are so comfortable, many sisters have bought them; Xiaoluo, you could buy one more pair!”

Some big companies, such as local cosmetics brand Forest Cabin, have trained sales staff to run regular live streams, answering customers’ virtual queries much as they would deal with in-store visitors.

Until last year, 80% of the company’s sales happened in-store. That has now flipped, and 80% of sales are online, said Chief Executive Sun Laichun. “The Covid-19 epidemic changed how we operate,” he said. Even as the epidemic raged, first-quarter sales, propelled by live streaming, actually increased 20% from a year earlier, he added.

Louis Vuitton tapped movie star Zhong Chuxi to host its first live stream on social-commerce platform Xiaohongshu in March, while Gap’s live-stream debut on Taobao in April was fronted by Viya, one of China’s best-known social-media influencers.

E-commerce was highly developed in China before the pandemic, driven by the near-universal use of mobile payments. It accounted for roughly a quarter of all retail sales last year, but jumped to a record 29% in the first quarter. In the U.S., by comparison, around 12% of retail sales were online last year.

Virtual Spree

Retail sales in China have overtaken U.S. sales, propelled by e-commerce.

$6

 trillion

China

U.S.

4

2

Online

0

2011

’12

’13

’14

’15

’16

’17

’18

’19

Sources: U.S. Census Bureau; China National Bureau of Statistics

Some analysts say China’s embrace of live-stream retail offers a glimpse of the future of shopping everywhere. Others think Chinese consumers are more open to watching shopping broadcasts on their phones than, say, their American counterparts.

It is unclear how much live streaming currently contributes to China’s overall e-commerce business. The government recently warned that some third-party live-stream hosts use bots to inflate visitor numbers and generate fake sales so that they can charge higher fees from the merchants who hire them.

Its explosive growth, however, is undeniable. Alibaba sold $720 million in goods through live streams on June 1, the opening day of the annual shopping festival known as 6.18, and the company aims to have 300,000 merchants selling daily through its Taobao Live platform by the end of this year. Alibaba typically sells around $2.2 billion a day across all its platforms.

“The habits consumers have formed won’t die away,” said Yu Feng, Taobao’s senior director of e-commerce.

DF Boutique’s profits are lower than before the pandemic because online shoppers expect discounts, Ms. Fu said. Still, live streaming provided her with a lifeline, and has likely changed her business model for good.

Haddy Li, a longstanding DF Boutique customer, started watching Ms. Fu’s streams in April to support her. “Now I also watch other live streams,” said Ms. Li, who works for a state-owned enterprise in Shanghai. “This never happened before the epidemic.”