The 'golden age' of live-streaming e-commerce seems to be fading. Once a magnet for consumers with its novel format and interactivity, the industry's top streamers like Li Jiaqi, Xiao Yangge, and Dong Yuhui turned their live rooms into shopping extravaganzas. However, this year, live-streaming e-commerce has lost its former luster, with no memorable new streamers emerging as in previous years. Recent incidents, such as Macau Coco姐's failed sales of cordyceps underwear and Tingquan Jianbao's recurring product issues, highlight the industry's growing lack of inspiring newcomers. Data also confirms that the growth myth of live-streaming e-commerce is bursting. According to iResearch, China's live-streaming e-commerce market reached 4.9 trillion yuan in 2023, a year-on-year growth of 35.2%, which appears dim compared to the triple-digit compound annual growth rates of the industry's early days. iResearch projects that the compound annual growth rate will further decline to 18.0% from 2024 to 2026. As a flagship of live-streaming e-commerce, Douyin's e-commerce has also hit a bottleneck, with its sales growth dropping from over 60% at the start of the year to less than 20% by September, as reported by LatePost. The 'ceiling' of live-streaming e-commerce is within reach.
Why has live-streaming e-commerce calmed down? In 2020, live-streaming e-commerce entered a golden period of rapid growth that lasted until 2022. A wave of new consumer brands quickly gained public visibility through live-streaming sales. However, by 2023, some merchants began to feel the heat, and by 2024, most were directly complaining about the difficulty. The once-glorious live-streaming e-commerce began to show its ceiling, with underlying issues gradually surfacing as economic conditions and consumer habits shifted. The inherent problems of live-streaming e-commerce have become unavoidable stumbling blocks.
Exaggerated sales pitches, stimulating impulse purchases, and eroding consumer trust Live-streaming sales gained popularity due to their intuitive, real-time display effects. Compared to traditional text-and-image e-commerce, live commentary is more entertaining and persuasive. However, this 'performance' aspect also brings issues of exaggerated claims and misinformation. To trigger consumers' emotional thinking, streamers often overstate product effects and functions to drive instant purchase decisions. For example, a consumer in Dezhou, Shandong, who grabbed a deal of five instant noodle cups for 9.9 yuan, received mini packages the size of a thumb; Macau Coco姐, when selling cordyceps underwear, claimed it was 'full of cordyceps essence' and casually invented 'six massage stones.' Such overpromotion actually consumes consumer trust. As consumers become more rational, the 'miracles' in live rooms are being scrutinized calmly.
Low-price promotions, devaluing brand equity To quickly boost sales, live-streaming often uses extremely low prices, especially when top streamers leverage their traffic to pressure brands into price cuts. While sales volumes increase, brand value is suppressed over the long term. Many brands find that after selling at low prices in live rooms, it's hard to return to normal pricing and positioning, with brand image stuck in the low-price segment. Consequently, many low-unit-price snacks and FMCG products appear in live rooms, while premium new products without discounts typically avoid live promotions.
The chronic problem of high return rates Impulse buying in live-streaming brings another thorny issue: high return rates. According to the '2020 China Live-Streaming E-commerce Industry Research Report,' the average return rate for live-streaming e-commerce is 30%-50%, far higher than the 10%-15% for traditional e-commerce. This high return rate persists and incurs additional costs. Many merchants find that while order volumes look impressive on the day of the live stream, actual profits are often significantly reduced after deducting returns. The sales boom from live streaming is merely a short-term digital spectacle; when accounting for the return cycle and costs of one-time orders, many merchants ultimately find that 'sales look good, but it's actually a loss.'
Traffic-driven, with declining ROI Live-streaming sales are essentially traffic-driven, but as traffic costs rise and consumer fatigue increases, ROI declines year over year. Entering 2024, more merchants find it nearly impossible to gain traffic without heavy promotional spending, and even with investment, expected returns are elusive. The dividends of live-streaming e-commerce are fading, low ROI has become the norm, and recovery seems unlikely. Merchants are beginning to realize that live-streaming e-commerce is not a path to 'sustainable growth' but rather an 'arms race' for traffic.
Heavy reliance on streamers, with diminishing returns During the peak of live-streaming e-commerce, top streamers could deliver substantial returns, but now, truly high-ROI streamers are rare, and their fees keep climbing. Many merchants invest significant resources and funds yet struggle to achieve effective returns. A friend of mine working at a leading mobile phone brand hired a streamer on a platform for 300,000 yuan; after the session, after deducting returns, they recovered less than 150,000 yuan, resulting in an ROI of -0.5. He said, 'I'll never do influencer sales again.' Additionally, the risks of binding to top streamers are emerging. For example, Florasis, due to its long-term association with Li Jiaqi, suffered brand damage when the streamer faced negative incidents. This 'celebrity effect' in live-streaming sales becomes unstable during crises. These chronic issues have accompanied live-streaming e-commerce and now constrain its further growth.
Why should we re-emphasize shelf e-commerce? This year, more people are talking about long-termism. This isn't a sudden awakening but rather because the short-term traffic tactics that worked in previous years are no longer effective. So, why not take a longer view and pursue more enduring benefits? I believe we should value shelf e-commerce because, fundamentally, shelf e-commerce follows brand logic and long-termism, while live-streaming e-commerce follows traffic logic and short-termism.
Under the trend of rational consumption, live-streaming e-commerce faces pressure In the context of consumption downgrading, consumer shopping behavior has become more rational. People are gradually realizing that products bought impulsively in live rooms are often not cheaper, and they frequently purchase useless items on a whim. More consumers tend to buy products that truly offer value and meet actual needs, conducting searches and price comparisons before making careful decisions. In this scenario, the role of live-streaming e-commerce diminishes.
Brand logic vs. traffic logic Shelf e-commerce is essentially brand logic, while live-streaming e-commerce is traffic logic. Shelf e-commerce generates organic traffic through brand building, a long-term strategy. Once a brand is deeply rooted in consumers' minds, sales performance remains stable even with reduced advertising, similar to economies of scale where marginal costs decrease as user scale grows, creating a competitive advantage. For instance, during Double 11 each year, Uniqlo consistently ranks top in sales. Do they invest heavily? Not really; many consumers wait for that day to search and purchase Uniqlo. That's the power of brand. In contrast, traffic logic is different: once you stop advertising, sales quickly decline, lacking sustainability.
Enhancing brand power through pricing Building brand power requires gradually increasing market value, one way being through price increases to elevate brand positioning—think of Anta and Bosideng. However, live-streaming sales rely on discounts to attract consumers, which may boost sales in the short term but limits the brand's ability to enhance value through pricing. In the long run, low-price strategies cement the brand's image in the low-end market, weakening its potential to move upmarket. In contrast, shelf e-commerce is unaffected; if a brand implements a comprehensive price-increase strategy across channels, the shelf is just a follow-up channel.
Using search to capture mindshare In shelf e-commerce, search reflects demand, and behind demand lies mindshare. Capturing mindshare brings organic traffic and future growth. Through continuous brand building and optimization, brands can secure favorable positions in user searches, generating organic traffic and long-term market share. In comparison, live-streaming e-commerce focuses more on promotions and price competition, which attracts short-term attention but fails to create lasting brand memory and mindshare penetration. Therefore, shelf e-commerce is not just a sales channel but also a long-term tool for mindshare building.
Improving repurchase rates and engaging in user operations Live-streaming sales typically follow a transient, one-off transaction model, where consumers rarely repurchase after impulse buying, making it hard for brands to build user loyalty. Shelf e-commerce offers continuous user operation opportunities; by building brand trust, offering high-quality products, and providing excellent service, brands can increase repurchase rates. Maintaining such long-term user relationships not only ensures stable revenue but also fosters deeper interaction between the brand and users, creating a more solid market foundation.
Taking control of your destiny rather than leaving it to streamers The success of live-streaming e-commerce heavily depends on the personal influence of top streamers, making brands dependent on them. When a streamer faces issues, the brand suffers too. The collaboration between Florasis and Li Jiaqi is an example: when the streamer faces negative public opinion, the brand is also affected. In contrast, shelf e-commerce allows brands to attract consumers through their own product strength and brand power, avoiding over-reliance on external factors. When consumers actively search for and choose your brand on the shelf, it means the brand has taken control of its own destiny through long-term building, ensuring sustainable development.
Final Thoughts