How Taobao Livestreaming Transformed The Chinese eCommerce Industry

When accessibility is restricted, creativity comes in handy. As the digital world is now directly interconnected with the real, the retail industry took strides to be creative when access to goods was restricted. So, when Alibaba launched Taobao Live in 2016, it pioneered a new approach that would change the online customer experience of businesses. In the six years since Live commerce has become a global phenomenon. And has established itself as an effective product marketing and customer engagement strategy for eCommerce brands. Taobao Live streaming was a conversation that was being carried out in each part of the world; where people expected the industry to shut down and make ends meet, it grew like never before. The world truly realized the importance of live commerce during the pandemic when in-store shopping had come to a standstill. For businesses to stay afloat, live commerce became a necessity.

According to the McKinsey State of Fashion 2022 report, the global fashion industry wasn’t expected to reach its pre-pandemic levels until 2022. However, the Chinese fashion industry was estimated to have reached its pre-pandemic levels and surpassed it in 2021 itself.

As Livestreaming continues to grow and has started penetrating the west, it's crucial to know what works and what doesn't. So, it is imperative to look from where it all began.

What is Taobao Livestreaming?

Taobao Livestreaming is an integrated Livestreaming platform exclusively on the Taobao App currently operating in China. It is a platform for customers and brands to collaborate. Consumers can shop through a livestream conducted by a key opinion leader (KOL). These leaders are considered industry experts and disseminate information, application and the product's or service’s long-term scope.[mid_cta_with_button]As someone they trust, KOL gives viewers a rich experience of how the product functions, what are its plus points and how to best use it. Say you wish to buy some skincare product, then the Taobao way will be to go on the Livestreaming section. Then pick a KOL in the skincare category, go through some products, resolving your doubts in real-time, look at the seller reviews and once satisfied, purchase the product.Also, Taobao live shopping has various features such as live chat, real-time order tracking and a seller rating system that contributes to an enriching shopping experience.

How did Taobao Live Start?

What was once the usual shopping platform for buyers and sellers to meet, engage and advertise was transformed by the Taobao app through Taobao Live Sessions. For the app, a significant source of revenue remained advertising. But, all of that changed in 2015 when Alibaba Livestreaming organised its 11.11 Shopping Gala. In the beginning, there were only 27 merchants participating in the 11.11 Global Shopping Festival. In 2020, 290,000+ brands participated and Taobao Live featuring 700+ leading KOLs, influencers, celebrities and brand reps in livestream sessions. Moreover, to offer a social shopping experience, Taobao Live commerce rolled out an incredible feature for users to share their “shopping cart” items with friends and family.They tweaked the platform to celebrate their one big night in a way where customers could interact in real-time, win prizes and make live purchases. But the event’s mega-success gave not just the app developers but also brands a peek into the future of retail. The event provided a platform that sold products while entertaining its users. This would eventually increase the overall engagement rate for the app.

Take a look at the impact of the 11.11 Gala Event 2020:

The 2020 11.11 Global Shopping Festival generated RMB498.2 billion (US$74.1 billion) in GMV during the 11-day campaign from November 1-11, an increase of 26% compared to the same timeframe in 2019. #Double11 https://t.co/cqIcJB79VU pic.twitter.com/nPLDP0oSig

— Alibaba Group (@AlibabaGroup) November 12, 2020

Why is Taobao so Successful?

Well, its varied features highly contributed to its success, a big plus would be its use of expertise in each category. KOLs providing key information has enriched the customer’s viewing experience, and interacting with the audience on various queries has also helped. Their power to influence people and drive a more significant sum of turnarounds is one of the leading factors in Taoboa’s success. Once a brand caught the eyes of the buyer, they changed lanes. Soon the sales teams of manufacturers and retailers were trained to become streamers, which helped cut down the influencer costs and increased profits. Therefore a considerable part of their success came from building upon what's already built. They better themselves on each mile, leading them to be ahead of the curve.

According to the McKinsey State of Fashion 2022 report, the global fashion industry wasn’t expected to reach its pre-pandemic levels until 2022. However, the Chinese fashion industry was estimated to have reached its pre-pandemic levels and surpassed it in 2021 itself.

A major reason for this growth was China’s early adoption of live commerce. Let’s take a look at the numbers indicating the growth of Chinese live commerce and the role Taobao Live commerce played in it:[caption id="attachment_16207" align="aligncenter" width="682"]

Source: Mckinsey and Capillary Technologies[/caption]

Categories of Leading Sectors in Livestreaming

The simple truth is that nearly all brands can harness the power of Livestreaming to enhance their brand. However, the apparel industry is a leading category bagging the most number of streams at 35.6%. The live visual representation helps fashion brands showcase their products while continuously growing. Beauty and skincare come in at 7.6% and fresh food at a close 7.4% as consumer electronics, home furnishing and automobiles become the new favourites. [caption id="attachment_16208" align="aligncenter" width="720"]

Source: Mckinsey[/caption]

What Factors Enabled this eCommerce Revolution by Taobao Live?

The emergence of Taobao Live as a global force is linked to a few factors that are common to China, a country that is a heavily-monitored and walled garden for users online. This led to the growth of super apps like WeChat or Taobao Live. Today, Alibaba’s Taobao Live is the largest social commerce platform in the world and the sixth most visited website on the planet.The Covid-19 pandemic saw exponential growth in live commerce. The market value for the same more than doubled in between 2019 and 2020, from $67 billion to $171 billion. Since then, it has maintained this positive growth year-on-year.Let's take a look at how Taobao’s community-based, content-driven and technology-enabled approach adapted to some of the common global consumer trends. Thus, making a connection between the emergence of Taobao and the growth of live commerce.

1. Gen-Z and Millennial audience

Gen-Z and millennial audiences form a majority of both shoppers in this space. In fact, 70% of Gen-Z consumers buy products directly from social media. They are more accustomed to consuming content in the format of videos on their phones. Additionally, they’re always looking for a unique experience and are open to shopping through the livestream shopping or the app online.

2. Social Media Penetration

Social media is now becoming a necessity, and as its user base increases, our audience increases as well. The number of social media users in China alone is expected to reach 1.1 billion users by 2023.

3. Popularity of eCommerce

We have seen a substantial gain in the eCommerce sector in the last two years. In 2019, China had over 35% of the overall retail sales from eCommerce, the highest of any country in the world. Their eCommerce sales are almost 3x more elevated than the US, which is in second place. This growing popularity is partly due to the widespread adoption of live commerce. It is a clear sign that integrating live commerce in a full-funnel strategy will draw more users to your website.To provide further insight, here is a case study about how Firework implementation on Foo Tokyo’s brand website boosted their 5X customer engagement. As a lifestyle brand that offers luxury loungewear and skincare products under the concept of "Foo time for people who work hard”, Firework built a stronger relationship between the brand and its customers by improving the time spent on the website and showcasing various product information in the video function.

4. Evolving Customer Behaviour

Most customers are well-versed in engaging with live shopping and shoppable videos. This change in customer behavior and preferences has led to a growth in customers choosing to engage more with shoppable videos. Their preferences and behaviour have led to positive growth in the sector.

What does Taobao Live get so Right About Live Commerce?

Livestreaming is becoming popular day by day, and while there are a lot of guides, do’s and don'ts one has to follow, it is imperative to understand what Taobao livestreaming got right. Here are some critical learning that one could adapt to attain similar results,

1. Feature Multiple Formats:

A major reason live commerce works is that it's a conversation and not a sales pitch. Customers spend time looking at the content. This says that entertainment works as a glue for the viewers' eye, and making content that can be deemed monotonous can turn out to be a grave mistake. Therefore, featuring content in multiple formats such as tutorials, interviews, behind the scene videos, and short feature films could work wonders. The vertical video format is one such form to watch video on a mobile phone while on the go, which is how our target group prefers it. Click here, to check out our guide to creating a vertical visual experience.[caption id="attachment_16209" align="aligncenter" width="666"]

Source: Marketing to China[/caption]

2. Choose Influencers, not Just Celebrities

Taobao used KOLs to reach its audience instead of celebrities or influencers. This ensured it did not limit its reach to any particular audience. These could be salespeople from physical stores, popular online figures, or industry experts. This helps them to reach a wide variety of people, increases their trustworthiness among them and allows them to carve a path for all categories of products and services. This enables them not just to sell beauty and apparel products but also high-value products like cars. In one live event featuring Geng Shuai, a kitsch village craftsman, he was able to engage 4.8 million viewers and sell 1623 cars in two and a half hours.[caption id="attachment_16210" align="aligncenter" width="667"]

Source: Marketing to China[/caption]

3. Using AI to Reach Target Audiences

From 2017 onwards, Taobao Live has been using Artificial intelligence (AI) to target users based on their content consumption pattern and monetization. It helps them study the content consumption patterns of a user and showcases content that is of their interest, allowing them to explore with the hopes of hooking them up to the app. Such data can be helpful in multiple ways, it can point a brand in the direction of where the consumer is heading, what their tastes are, what encourages them to browse for longer and help them better understand consumer needs and wants. [caption id="attachment_16211" align="aligncenter" width="649"]

Source: Forrester[/caption]

4. Adopt In-stream Engagement

Most discontinued turnarounds are a result of distractions while consumers navigate to the purchase portal. Eliminating this step altogether is how Taobao gets it right. Building an in-stream buy now button and a way to carry out instant purchasing, generate more transactions. It keeps the viewer engaged and provides ease of purchase, creating a seamless customer experience.[caption id="attachment_16212" align="aligncenter" width="630"]

Source: Marketing to China[/caption]

Growing Popularity of Livestreaming in the West

With Alibaba entering the live commerce field and demonstrating such rapid growth, other sections of the world were in awe. Building upon the same methods and tactics, we can see an increase in the number of brands making investments in Livestreaming in the West. All the more now that brands like Firework exist to make efficient Livestreams possible on brand websites. Customization of these livestreams to fit a specific target audience makes them efficient. Multiple formats with an expertized professional present for every niche make brands from any category a part of Livestreaming service.Many big names like Heinz, Aud Pop, American Girl, Fluff and more have already dipped their toes in Livestreaming. At the same time, some go head first into the narrative, organizing product launches, awareness campaigns and sales initiatives. Livestreaming is pacing quickly through the digital grounds and will soon be owning it, and brands need to act fast to be a part of the movement.

Wrap Up

When we say that livestream is pacing quickly, it’s because it caters to the ultimate goal of brands – driving sales. This method of promotion and Livestream sales works best because it is a consumer-first method. It pinpoints each area that a consumer may be struggling with in a purchase cycle and works on improving it and all the while providing creative and innovative opportunities to brands to improve their interactions and upgrade their entertainment. With livestreaming adding new features as it goes on, it is always at the forefront as its inclusive nature allows brands and consumers to come together virtually and create an ideal experience.