Lessons in live commerce: Getting started as a foreign brand in China

Live commerce, the act of buying products online during a dedicated livestream, is known to be a major shopping channel in China, with Insider Intelligence forecasting that selling via live commerce will account for a “remarkable 19.2%” of retail ecommerce sales in China this year.

Brands who want to crack the China market would do well to crack live commerce. But with dozens of platforms, hundreds of influencers, and a distinctive retail market, how can brands entering Chinese live commerce make their debut a successful one?

At Ecommerce Expo, Jack Porteous, Client Services Director at cross-border ecommerce company Samarkand Global, spoke about the company’s work helping clients to gain a foothold in China and how to approach live commerce for the best results. Jessie Han, China Account Manager at British luxury skincare brand Temple Spa, a Samarkand client, also shared the brand’s live commerce case study and the lessons the team learned from launching ecommerce livestreaming in China.

“One of the most exciting things that’s going on in global ecommerce”

Live commerce was already big in China before the Covid-19 pandemic (we wrote about it a few times ourselves, such as this live commerce explainer from January 2020 when budget retailer Pinduoduo entered the market), but it received a further shot in the arm during lockdowns as a source of both entertainment and purchases for consumers stuck at home.

Ecommerce giant Alibaba is unsurprisingly a major force in live commerce, but the field has been growing steadily more competitive in recent years thanks to entrants like Douyin (the Chinese equivalent of TikTok), the aforementioned Pinduoduo, Kuaishou, Xiaohongshu (Little Red Book, or RED) and WeChat (a new entrant to the space).

All of this growth and competition means that livestreaming is “one of the most exciting things that’s going on in global ecommerce at the moment”, in the words of Porteous. Chinese live commerce is fast-paced and highly interactive, often involving time-limited special offers as well as a high level of back-and-forth between the streamer and the shoppers watching, who will quiz them about the product being showcased.

Temple Spa’s Jessie Han added that livestreaming has “really, really changed the consumers’ shopping journey” at Temple Spa. “Before, they [would] probably do a lot of research before they purchased a product”, but as a result of the more interactive format of livestreaming in which viewers can see a product demonstrated and ask questions in real-time, “they can expedite the shopping decision-making process”.

Meanwhile, sellers benefit from a quicker path to purchase, more visibility, and the ability to keep the customer engaged with their brand or product throughout.

However, live commerce isn’t a shortcut to unlocking magical ecommerce benefits in China – it’s an undertaking that needs to be approached and planned in the right way. Here are the tips that Porteous and Han shared based on their experience:

Get the timing right for your brand

Between selecting the right livestreaming partner and preparing them; determining how best to present the brand; and ensuring that the right stock is on hand in the right quantities, live commerce is a complex, multi-step undertaking.

For this reason, Porteous doesn’t recommend it for first-time entrants to China, even though it might seem like a good way to make a splash as a new brand, because it requires familiarity with the Chinese market and some level of existing following.

“You’ve got to be in the right place … if you’ve only been in China for three months and no-one’s heard of you – sorry, it’s probably not going to happen,” said Porteous. “Even if you pay [a huge livestreamer like] Austin Li to promote your products.

“You’ve got to pick a point when it’s the right time for you and make sure that you’re ready for it.”

Han noted that, “There’s a lot of risk working with livestreamers, even though they can bring huge revenue to your brand – so my top advice is to have some very stable sales channels to … make sure you have a stable revenue source.

“Livestreaming is a really good add-on to something you’ve already built.”

When choosing who livestreams your products, authenticity is key

It’s important to find a livestreamer who can act as an authentic voice for your brand and products, said Porteous, rather than simply choosing the influencer with the largest following.

“Choosing a really famous comedian in China to push your natural range of skincare may not be the best fit – you might find that’s not what his followers are interested in purchasing,” he joked. He also advised that major streamers can command a very high commission – so make sure that it’s money well invested.

Temple Spa has cultivated a long-term partnership with Miya, the top overseas livestreamer on Douyin, giving her exclusivity on some of their SKUs and issuing invitations to the brand’s headquarters, where she can learn more about Temple Spa products, thus lending additional depth and legitimacy to her livestreaming. Jessie Han explained,

“She has visited our headquarters … to interview our Head of Product on the formulation of the product and give her audience insight – but also to help her understand our product better so she can really introduce it during the livestreaming. She also has made content with our founders and our CEO, which proves her credibility with our brand, to show customers that the product she sells is authentic.”

A joint livestream with Temple Spa founder Mark Warom went over particularly well with the Douyin audience, with viewers enjoying the additional insight into the brand and its origin story. “They really, really liked that authenticity of having the founder there – it made them feel like they’re interacting with this international brand, it’s a legitimate company, they’re very popular in the UK … It was a really good experience for Miya and for Temple Spa,” said Porteous.

In collaborations with big names, don’t expect to call the shots

Temple Spa have also worked with some of the biggest names in livestreaming, such as ‘Lipstick King’ Austin Li (Li Jiaqi) and Dong Jie, the top streamer on Xiaohongshu and one of the first celebrities to launch on the platform. While major livestreamers undeniably bring huge exposure to the brand, Han reflected on some of the challenges involved:

“First of all, the top livestreamers are really hard to control. They have the decision power; you can’t really control what products they sell, and it’s hard to argue price with them, so it’s important to set a pricing strategy in advance to make sure your price is protected.

“They are extremely strict when streaming the product because they want to maintain credibility to their target audience, so there’s a very strict process before they decide they can actually livestream your product – a lot of extra paperwork, a lot of extra time so that you can make your product live.”

[Top influencers] are extremely strict when streaming the product because they want to maintain credibility to their target audience…

 

– Jack Porteous, Samarkand Global

Han also highlighted the difficulties with stock – sales from livestreamers can be very unpredictable, which introduces a level of risk on cash and stock. She advised preparing some buffer stock in case there is extra opportunity, as if a brand can’t provide stock for livestreamers at the right moment, they will move on.

Porteous summarised: “The opportunity is huge; you just have to decide what your level of risk appetite is – to stock up and prepare for the best-case scenario, or to work with these bigger livestreamers.

“For someone like Austin Li, you’ve got to have about £200,000 at retail of stock available on one SKU before he’ll consider working with you, so you’ve got to be confident you’re going to sell through all that.”

Find a partner with live commerce experience

Naturally, Porteous also advises looking for a partner organisation to work with who has experience with the hurdles of selling and streaming in China.

This is particularly key when it comes to finding trustworthy streamers, and also keeping abreast of how rapidly the ecommerce market in China changes: “[People] aren’t necessarily shopping on the same ecommerce platforms as they were five years ago. … I like to start [presentations] by saying, ‘It’s time to rethink Chinese commerce’, because it’s basically always time to rethink Chinese commerce – it changes so fast,” said Porteous.

In an interview with Ecommerce Expo ahead of this year’s event, he remarked, “China moves at a different speed than the West, and you can’t apply the same business thinking to China. For example, making a five-year plan won’t be as effective because the market is not predictable in the same way.

“[U]nderstanding whether there’s a market in China for your product is really important. It’s not somewhere that is crying out for any international product just for the sake of it. The whole world is selling to China right now.”