China's 300 Billion Dollar "Livestream Shopping" Craze: A Battlefield of Greed

In the sprawling digital marketplace of China, a new titan has emerged, reshaping the contours of e-commerce with its dazzling allure and unchecked ambition. The livestream shopping industry, or DaiHuo (带货), with its jaw-dropping valuation of 300 billion dollars in 2023, has transformed the once tranquil realm of online shopping into a fierce coliseum of competition, greed, and relentless pursuit of wealth. In 2023, Douyin, the local Chinese version TikTok, achieved approximately $274.2 billion in e-commerce sales, with a significant portion of these sales driven by live streaming and short video content, said by SEOAgencyChina. In the meanwhile, Kuaishou Technology (1024.HK), the biggest competitor of Douyin, achieved 40 Billion US Dollar GMV. And the craze has shown no signs of stop in 2024.

Here is the sales data of the top 3 livestreaming shopping broadcaster accounts for Douyin only in 2024 Jan by SanYanCha:

Account Name	Units Sold in million	Gross Merchandise Value (US Dollars)
YuHuiTongXing	15.0847	122,708,900.68
MiDaoDao	2.4338	90,242,761.91
DongXianSheng	4.1295	85,098,743.71

As screens flicker alive with the charm and charisma of thousands of livestreamers, behind the glamorous façade lies a cutthroat world where every player is driven by a single motive: to amass fortune at breakneck speed. The promise of instant riches has lured in legions, from savvy entrepreneurs to the common folk, all eager to stake their claim in this lucrative gold rush. But as stakes skyrocket, so do tensions, transforming allies into rivals and friendships into feuds. On 22 April 2023, the well-known live streamer Xinba (Simba) and his team's accounts were officially banned by Kuaishou for violations. Xinba, who has previously accused Kuaishou of tolerating fake popularity and data among emotional anchors, announced plans to report these issues to the Hong Kong Securities and Regulatory Commission in person.

Why is Livestreaming Shopping so Popular?

The popularity of livestreaming shopping, or "live commerce," in China and broader Asia is rooted in a blend of cultural, technological, and market dynamics that distinguish it from Western e-commerce practices.

• Entertainment and Interaction:

  • Live shopping in Asia, especially China, is popular because it's interactive and fun.
  • Influencers show products live, do demos, and answer questions, making shopping educational.

• Trust and Authenticity:

  • Viewers trust live stream hosts more than big brands or ads due to their genuineness.
  • This trust is important as people are cautious of false advertising.

• Social Aspect:

  • Live shopping is also a social activity where people can interact with hosts and feel part of a community.
  • It's appealing, especially to younger people who enjoy digital interaction.

• Technological Ecosystem:

  • Easy mobile payments and widespread smartphone use make live shopping convenient in China.
  • This tech-friendly environment boosts live commerce popularity.

What the Researchers Say: The Double-Edged Sword of Live-Streaming Shopping

Researchers have delved into the effects of live-streaming on consumer behavior, especially in the realm of cross-border e-commerce. Their findings highlight a significant increase in consumers' perceived value and purchase intention, particularly when promotions and discounts are involved. This enhancement in perceived value can, however, lead to impulsive buying behaviors driven by the excitement of live deals and the persuasiveness of the streamers.

Live-streaming shopping also introduces a phenomenon known as para-social interaction (PSI), where consumers feel a personal connection with the streamer, fostering a sense of trust and affinity. This relationship can further amplify impulsive purchasing tendencies, with studies indicating that practical product values trigger impulse buys more than the pursuit of pleasure or entertainment.

While live-streaming shopping enriches consumer engagement and offers a platform for deep connections, it also poses risks of impulse buying, excessive influence from streamers, and the challenge of managing consumer expectations in a live setting. Navigating these complexities is essential for maintaining a balance that enhances both value and satisfaction, ensuring the sustainable growth of live-streaming commerce without succumbing to the pitfalls of impulsiveness and skewed expectations.

Livestreaming Shopping: The Ugly

Live streaming shopping, while offering unique interactive opportunities between brands and consumers, also carries a set of challenges and negative impacts. One significant concern revolves around the authenticity and quality of products sold during these sessions. Without the ability to physically inspect products, consumers might face higher risks of receiving items that don't match the showcased quality or specifications, leading to dissatisfaction and potential brand trust issues.

Moreover, high order returns emerge as a critical issue in live streaming shopping. The pressure of real-time offers and the impulse buying environment can lead consumers to make hasty purchases, potentially increasing the likelihood of regrets and returns if the product doesn’t meet their expectations upon arrival

The unknown source of production is another area of concern. With the focus on the immediacy and the interactive selling pitch, details regarding the production standards, ethical practices, and source authenticity may be overlooked or under-discussed during the live streams.

"Who is selling?" and "Whose products are being peddled?"—questions that once seemed trivial now fuel disputes and controversies. In the shadows of this glittering industry, ethical lines blur, and the frenzy to sell at all costs fosters a breeding ground for deceit and manipulation. With each passing stream, the essence of genuine commerce fades, replaced by a ruthless scramble for viewers' wallets.

On April 9th, the State Council Information Office annoucned to introduce the "Regulations on the Implementation of the Consumer Rights Protection Law". Kuang Xu, Director of the Enforcement and Inspection Bureau of the State Administration for Market Regulation, emphasized that live commerce must clearly disclose "who is hosting the sale" and "whose products are being sold."

The Chinese government, in its attempt to reign in the chaos, steps forward with regulations aimed at protecting consumer rights. Yet, as the juggernaut of livestream shopping barrels on, one wonders if any rulebook can tether the wild ambitions that drive this phenomenon.

In this era of digital Darwinism, only the most cunning survive, leaving in their wake a trail of disillusioned consumers and shattered dreams. As the livestream shopping industry continues its meteoric rise, it forces us to question the price of progress and the ethical boundaries sacrificed on the altar of innovation.

TikTok's Global Expansion on Livestreaming Shopping

TikTok is now actively experimenting with expanding its e-commerce capabilities in the US through TikTok Shop, aiming to transform the platform into a multi-billion-dollar e-commerce business. A new feature being tested would allow all app posts to become shoppable by automatically identifying items in videos and offering links to find similar items on TikTok Shop. Previously, only approved influencers and brands could tag products. This expansion effort comes as TikTok aims to grow its TikTok Shop U.S. business tenfold in 2024, with ambitions to rival Amazon and other popular e-commerce platforms like Temu and Shein. However, TikTok's ambition has not succeeded everywhere. In Indonesia, a significant move came when the government announced a ban on e-commerce transactions on social media platforms, effective from late September 2023. This decision aimed to protect small businesses, citing concerns over predatory pricing by larger online entities. TikTok, one of the affected platforms, subsequently announced it would halt its e-commerce operations in Indonesia to comply with the new regulations. The ban was framed as a measure to ensure a "fair, healthy, and beneficial electronic commerce ecosystem," reflecting broader concerns over the dominance of algorithms and the use of personal data in business.

How to Get Prepared for the Craze

From a government and consumer perspective, preparing for TikTok Shop's launch involves ensuring strong consumer protection laws and awareness initiatives. Governments might need to update regulations to address new e-commerce models, focusing on data privacy, consumer rights, and fraud prevention. For consumers, it’s crucial to be informed about their rights, understanding how to safely navigate online shopping on social platforms, and recognizing legitimate sellers. Education campaigns on secure payment methods and awareness of potential scams could be beneficial for consumer protection in this new shopping landscape.