- Companies from Jo Malone London to Chinese education company New Oriental have turned to live streaming sales as a way to stay connected with consumers in China and get them to spend.
- The use of live streaming virtual hosts was a trend that stood out during this year’s Singles Day, said Xiaofeng Wang, principal analyst at Forrester.
- Businesses are also combining ChatGPT-style AI with live streaming.
HAIAN, CHINA – NOVEMBER 7, 2023 – A crab farmer sells crabs via live webcast in Xinhai Village in Haian City, Jiangsu Province, China, November 7, 2023. (Photo by Costfoto/NurPhoto via Getty Images)
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BEIJING — Live-streaming markets are taking off in China, leading to the development of new technology products such as virtual human streams and mobile data bundles.
It’s an effort to generate revenue — and innovation — in one of the few bright spots for an economy that has largely slowed growth.
Live-streaming e-commerce saw sales rise 19% during the last Singles Day shopping festival in November, while sales through traditional e-commerce fell 1%, according to McKinsey analysis.
Since the start of the Covid-19 pandemic in early 2020, retailers in China have rushed to hire or deploy in-house live streaming hosts to sell products. People like online influencer Austin Li have become overnight celebrities and millionaires using live streaming trading.
“Live streaming, particularly live streaming commerce, is something that no country in the world has anything at the scale that China has,” said Daniel Zipser, senior partner and leader of McKinsey’s consumer and retail practice in Asia.
Now companies are testing live-stream hosts that are digitally created humans — either avatars representing a real human host or virtual human beings created from scratch.
This use of live streaming virtual hosts was a trend that stood out during this year’s Singles Day, said Xiaofeng Wang, principal analyst at Forrester.
“The quality has improved a lot this year, the virtual hosts look more real, at least the ones I’ve seen from Tencent, JD,” he said.
Wang added that using virtual livestreamers is a way for retailers to differentiate themselves from others, as well as reduce the cost of hiring a famous influencer, who may also run the risk of being embroiled in celebrity scandals.
Live streaming, especially live streaming commerce, is something that no country in the world has anything on the scale that China has.
Daniel Zipser
senior partner, McKinsey
Tencent launched a product that only needs a three-minute video of a user along with 100 spoken sentences to create a virtual avatar.
The company also has a “Zen Video” platform that allows people to create simple promotional videos with a virtual representative.
Some companies are also combining ChatGPT-style AI with live streaming.
Online retail giant JD.com said its Yanxi virtual anchor product — based on the company’s AI model — was used in live streaming sessions to more than 4,000 brands during Singles Day this year. A virtual streaming for 28 hours straightaccording to JD’s technology arm.
Baidu, known for its search engine and chatbot Ernie AI, has entered e-commerce this Singles Day with the first-ever scale use of its virtual human live streaming product “Huiboxing” on e-commerce platform “Youxuan”. The company claims that virtual people ran 17,000 streams from October 20th to November 11th.
During that time, electronics giant Suning saw its virtual human live stream contribute more than 3 million yuan ($420,000) in gross merchandise value in a single day, according to Baidu. GMV measures sales over time.
The digital human livestreamers are free for merchants to use on Baidu’s e-commerce platform and are based on the big language model behind the Ernie bot, said Wu Chenxia, head of Huiboxing, adding that the product uses big data to create multiple live stream scenarios at once.
Regulators have their eye on the sector.
OpenAI’s ChatGPT is not officially accessible in China. Baidu’s Ernie bot wasn’t available for widespread use until late August, when Beijing gave the go-ahead.
Live streaming success also depends on a stable video connection.
Potential buyers are almost always watching their cell phones, while sellers may try to live stream from the field where they grow the produce.
Mobile service providers China Unicom and China Mobile have started selling data packages aimed at livestreamers in parts of the country.
These packages join the network so that livestreamers receive priority service, similar to how an express lane on a highway might allow buses to use it only to avoid traffic, said Joe Wang of Huawei’s ICT division.
All of this relies on widespread 5G connectivity, which allows livestreamers to broadcast outdoors or simultaneously across multiple platforms, he said.
Looking ahead, 5.5G will theoretically increase download speeds by 10 times compared to 5G and upload speeds by two to three times, Wang said. He expects 5.5G to reach consumers as early as 2025, while the development of artificial intelligence allows businesses to quickly convert 2D images into 3D.
That means, Wang said, that 3D live streaming could become a reality in about two years.
Meanwhile, even companies such as Quantasing that sell adult education courses have grown by hosting e-commerce live streaming – generating a GMV of 13.3 million yuan in August.
CEO Matt Li said Quantasing runs more than 10 live streaming sessions simultaneously and uses technology to decide what types of products and resources to devote to each in order to generate the most revenue.
As fast as it grows, live streaming is subject to China’s strict content regulation.
Analysts have also pointed out that live streaming sales are often impulse buys, leading to many product returns.
From Jo Malone London to Chinese training company New Oriental, companies have turned to live streaming sales as a way to stay connected with consumers in China and get them to spend.
Importantly, businesses are shifting from using influencers, known as KOLs in China, to internal live streams, McKinsey’s Zipser said.
“It’s a clear indication [livestreaming] it’s not hype, but it’s something that companies are embracing and putting resources behind and the result of that is something that’s here to stay,” he said.