Live-streaming, which began in the entertainment industry, exploded into e-commerce in 2020 amid the pandemic. On the evening of June 14, Xinba, a top streamer on Kuaishou, made a comeback and smashed his target of 1 billion yuan, ultimately achieving 1.2 billion yuan in sales. Wei Ya sold a rocket during a live stream; her 521 Fan Festival drew over 100 million views. Luo Yonghao, a first-generation internet celebrity, signed with Douyin for 60 million yuan to start his sales journey. Liu Tao joined Taobao Live under the code name "Liu Yidao"...
-01- Brands Join the Frenzy While most FMCG brands were still grappling with full warehouses due to the pandemic, some saw the benefits of live-streaming and were the first to join the bandwagon. Compared to the rigidity of traditional graphics and text, or one-way video, live-streaming is more dynamic, showcasing products in a comprehensive, multi-dimensional way and enabling real-time interaction with consumers. Moreover, top streamers often achieve impressive sales in a single session. The popularity gathered in the live room in a short time can also greatly help brands with product promotion. Thus, in the live-streaming ecosystem, besides streamers and MCN agencies, brands are the most enthusiastic, with many even treating it as a strategic tool to overtake competitors.
-02- Emerging Problems When the wind blows, even pigs can fly. Live-streaming is at the forefront, but not everyone can reach the sky. As live-streaming sales mature, problems are surfacing.
1. The National Live-Streaming Craze: Not Enough 'Leeks' (Audience) Since the live-streaming model emerged in 2016, over 300 online live-streaming platforms appeared in China within a year. Then e-commerce platforms like Mogujie, Taobao, JD.com, NetEase Kaola, and Pinduoduo joined the fray, followed by Kuaishou, Douyin, Douyu, WeChat, and others. There are also many lesser-known platforms. According to media reports, from May 2016, a new live-streaming app launched every three hours on average. However, compared to the multitude of platforms, the number of viewers who accept, use, and watch live streams is clearly limited. Taobao, Kuaishou, and Douyin have accumulated substantial user bases through continuous development. They also strongly support top streamers, so traffic is concentrated on these three platforms, while other platforms scramble for the remaining traffic. As it stands, the 'leeks' (audience) are insufficient.
2. B2B Hype, C2C Indifference Secondly, compared to the enthusiastic entry of brands, user response to live-streaming is lukewarm. According to relevant data, cost-effectiveness is a key factor in purchase decisions when watching live streams. For most consumers, price is the main attraction. Even if they watch, if the streamer doesn't offer a discounted price, they won't place an order. In fact, many users are just spectators, not buyers, and are indifferent to streamers' sales pitches.
3. Saving Time on the Surface, Wasting It in Reality Before a live stream, the streamer's team pre-selects products based on consumer demand. On the surface, consumers save time on product selection and can get discounted prices in the live room. But a streamer's session lasts at least two hours, often four or more. Products are launched one by one according to the team's schedule, and consumers often don't know when their desired product will appear, so they wait for long periods, afraid of missing the "lowest price on the internet." Live-streaming appears to save time but actually wastes it.
4. Brands Dig Their Own Graves "Lowest price on the internet! Miss it, wait half a year!" is a common catchphrase used by streamers to attract users. Indeed, brands cooperating with top streamers offer rock-bottom prices, even lower than their own flagship stores, because top streamers' sales volumes are staggering. However, behind these promotional prices, brands are digging a deep pit for themselves. Continuous discounts have trained consumers to only buy during promotions, and some have even figured out the timing of brand promotions, waiting to take advantage. Sustained low prices have a huge impact on a brand's price system, potentially cementing a low-price perception in consumers' minds, consuming and depleting brand value. For long-term development, it's not worth it.
5. Frequent Live-Streaming Mishaps In live-streaming sales, mishaps are frequent due to streamers' lack of product expertise or brands' unethical practices. For example, a top streamer promoted a non-stick pan but, unfamiliar with its use, caused sticking, which went viral on hot search with 280 million reads. Another top streamer showcased a beautifully packaged, generously filled cookie, but consumers received simple packaging and a product that looked quite different from the live stream. The weight and size were also inconsistent with the promotion. Some streamers claimed that buying a certain high-end skincare product would come with numerous free gifts worth more than the product itself, but consumers found the actual gifts didn't match the promotion. Consumers who encounter such mishaps may have a chance to seek recourse if they bought from a top streamer with a robust after-sales team, but in many cases, consumer rights protection remains difficult.
6. Live-Streaming Feeds a Gray Industry Chain In 2015, a streamer's game live stream on a platform reportedly had over 1.3 billion viewers in the chat room, making data fraud an open secret in the industry. A brand once told media that a live room charged tens of thousands of yuan for a slot, promising sales of over 50,000 orders, but the streamer wasn't responsible for returns. After the stream, the return rate hit 30%, and due to signed contracts, the brand had to bear the losses. Some companies even actively inflate traffic and orders to secure better slot fees for streamers. Brands, to meet campaign targets and report to their companies, turn a blind eye to fake data. Currently, some shopping platform stores openly price live-streaming data: XX yuan for XX followers, XX yuan for XX live room views, and some store links have considerable sales. Live-streaming sales have nurtured a stable gray industry chain. As it develops, commercial live-streaming faces endless problems. These are just the more prominent ones, but they are already limiting the industry's growth.
-03- Return to the Essence of Business Models Fake orders, fake traffic, fake popularity—live-streaming sales have gradually lost their original flavor.
1. The Underlying Logic: KOL Expertise Influences Purchase Behavior Live-streaming is essentially referral-based e-commerce. The streamer is the KOL in their field, and live-streaming is the tool they use to reach a wide audience. Based on user needs, the streamer selects the most suitable, highest-quality, and most cost-effective products from a sea of options. This reduces users' shopping and decision time, and products are recommended to the audience through the live room. So it's fundamentally about recommendation. Users buy based on trust in the streamer.
2. The Dividend of Top Streamers Has Faded Top streamers' recommendations are limited. As brands compete for their slot resources, the dividend has gradually disappeared. With streamers' development, their bargaining power, slot fees, and commissions keep rising. Brands may achieve high sales volumes, but with the lowest prices, slot fees, and commissions, profitability becomes a real challenge.
3. The Original Intent of Brand Live-Streaming For brands, live-streaming is more like a marketing tool: clearing inventory in the short term, promoting new products, and nurturing product KOCs through streamers' private traffic. It can be a powerful marketing weapon when needed, but brands shouldn't become addicted, especially to top streamers, ending up with only sales and losing the brand value and reputation built over the long term. For live-streaming to achieve long-term development, it must return to the essence of KOL recommendations. Modern people are bombarded with complex product information daily. Buying products often requires significant time and high trial-and-error costs to find the right one, so KOL recommendations are undoubtedly a huge benefit. But KOL recommendations must be based on product quality and consumer needs, not just profit. Brands also need to recognize the real problems in live-streaming, avoid blindly chasing trends, and focus on building solid products and brand reputation. Only then can they seize opportunities when the wind blows and rise to the occasion.
(Note: The original text ends with "爆料一经采用将支付400-2000元", which is a call for submissions and not part of the article body.)