“Live Commerce: the Next Big Thing in Europe” is an online event looking into the latest trends in live commerce in China and its recent developments in Europe. In view of the webinar – scheduled for 27 October – Claudia Vernotti, Director of ChinaEU, spoke with Ashley Dudarenok, Founder of China-focused social media agency Alarice and China trends watching and training company ChoZan, about the appeal of live commerce as a unique sales channel, the key differences between China and Europe in the role played by livestreaming hosts, and the opportunities for European brands looking to tap into the Chinese live commerce market.
Claudia: Live Commerce as a sector is growing rapidly and is expected to account for roughly 24.3 percent of total online sales in China by 2023. What is it about this format of online shopping that appeals so much to Chinese consumers, in particular Gen Z?
Ashley: For Chinese consumers, there are three major reasons for watching e-commerce live streaming, namely buying cost-effective products, watching intuitive and clear product presentations, and finding a way to relax. It provides consumers with an immersive experience with visibility, interactivity, authenticity, and entertainment.
As for Gen Z, the social attribute plays a key role in their lives, and live commerce is exactly tapping into their values and needs. For traditional commerce, consumers search for massive information by themselves, while live commerce is more socially guided by interacting with live streamers and viewers, catering to Gen Z’s interest in shopping while chatting, playing, and sharing.
Claudia: Some European brands have not been very successful in trying to enter the Chinese digital retail market. What is the best strategy for aspiring European brands who want more market penetration in China?
Ashley: In order to achieve a higher market penetration rate in China, first European brands need to create awareness among Chinese consumers. In order to sell to Chinese consumers, having a presence on e-commerce platforms is not enough. They will also need to leverage the social platforms to create awareness and expand their influence and work with celebrities, KOLs and KOCs to produce short posts and launch live streaming for product recommendation, especially during the post-covid era when everyone is turning to the online world for product recommendation and purchase.
In order to achieve a higher market penetration, it is essential for them to have a better understanding of the China market and Chinese consumers. They can consider working with tech giants such as Alibaba and Tencent that have accumulated massive consumer data to gain insights for the market and consumers in China. Such data will provide information as to market trends and consumer demands and will serve as directions for product research and development, so that brands can manufacture products that cater more to the China market. Particularly, today’s China market is very segmented with many different consumer groups showing unique consumption behaviours and preferences. With these insights, brands can also develop more subdivided product categories to cover as many consumer groups as possible.
Claudia: KOLs (Key Opinion Leaders) in China are trained from the ground up, becoming sales market specialists and learning how to engage and entertain hundreds of thousands of followers during live shows. Some even become internet celebrities. What are the key differences between KOLs in China and influencers (hosts) in Europe? What should brands in Europe learn from China in terms of KOL training and professionalism?
Ashley: The differences between KOLs in China and Europe lie in several aspects. First, most KOLs in China make money by promoting and selling products so they earn a fixed fee based on their follower base and sales power plus commissions from brands. And their value is reflected in the amount of sales they can achieve. Meanwhile, however, their counterparts in Europe specialise more in branding and position themselves as content creators instead of sales people.
What’s more, KOLs in China may be able to promote and sell products across different categories ranging from electronic products to daily necessities and cosmetics, while overseas influencers generally concentrate on one or two industries that they specialise in instead of trying to cover as many industries as possible, which results in a higher loyalty level of their followers and a higher conversion rate overall.
Also, when it comes to live streaming, e-commerce live streaming may still not be that popular in the West, as many KOLs still only do free talks and talent shows instead of really selling products in their live streaming.
In terms of KOL training, brands in Europe should focus on the training of sales techniques and how to retain the audience. In other words, KOLs should be trained on how to attract their audience to watch an e-commerce live streaming and the very beginning, how to engage them during the live streaming and how to promote products effectively so that the audience will eventually place orders. Also, they should be trained on how to answer questions from consumers about the brand and products and other on-site operations.
Claudia: What is your message to European companies thinking of using Live Commerce as a way to grow their business? Should they consider it, and what can they learn from China?
Ashley: China’s live commerce industry is becoming more and more mainstream by the day. As it is now a key marketing tool for brands to drive awareness and boost sales, there is no doubt that it is necessary for European companies to consider integrating it into business plans.
Here to address three recommendations for European companies. First is to establish a DTC business model by e-commerce live streaming. For brands, it is an awesome opportunity to reach consumers directly, getting first-hand consumer insights and building deep brand-consumer relationships. Second, from the product’s perspective, buying genuine goods at a fair price is consumers’ top reason to watch live commerce. As such, product is always the king to win the market. Lastly, cultivating in-house talents is also of great significance. Live commerce business involves cooperations between several teams like content development team, promotion team, and performance analysis team. As a fast-growing industry, its core of competitiveness is the ability to preserve talents.