Shop till you drop: how livestream reshapes mainstream

Social media is giving e-commerce a facelift in China. With streaming capturing over 700m viewers, the consumption story is being rewritten and broadcast live. Based on our conversations with consumers, influencers, agents, merchants and platforms, we believe the pendulum could further swing in favour of content-driven sales. But keeping the growth momentum is not easy as users hesitate to spare more screen time or spending, and retailers confront the high operating costs and low customer stickiness.

The livestream phenomenon transcends age and social background. Price is the biggest draw, with the experience spiced by the charm of idols. Fashion, beauty and grocery feature high on shopping lists. Some of these products can pay commission of as much as 40% of GMV. Every Key Opinion Leader (KOL) in the UBS China 360 poll is committed to the profession. Even for the handful that do not like it, they find the money hard to resist.

Industry experts we spoke to think all platforms are facing the same bottleneck in time spent, which has come off the peak, according to UBS Evidence Lab. It’s not easy for merchants either. Live broadcast is costly and risks jeopardising other, more profitable channels. Return rates may be double that of traditional e-commerce platforms, our channel check indicates.

For an industry as lively as livestream, it has caught the watchful eyes of the regulators, which have imposed guidelines on content and conduct, and investigated KOLs for tax evasion. Platforms and retailers are shifting away from super idols to manage cost and key-person risk. But macro head-winds won’t be kind. The consumption pie isn't expanding much. The advance of the industry seems more led by a shuffling of deck chairs than the creation of new demand.

The migration from the high street to virtual is set to go on, though the modus operandi needs adjusting. As brand strategy goes, the allure of livestream is hard to beat. Global brands in beauty and sportswear are more cognisant in tapping this channel to raise their profile in China, data from streaming operators shows. The down and out – from education and fintech – have also grabbed the spotlight to stage a comeback.