China’s E-commerce Live Streaming (电商直播 – Diàn shāng zhíbò)3 min read

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There’s nothing like a new online business craze in China to help you learn a bunch of new words.

E-Commerce live-streaming (电商直播) and selling products 带货 (dài huò) through influencers is the latest big thing.

Dài huò is “the best way to connect with Chinese customers and help them make decisions about what they really want”, according to China’s queen of live-streaming Viya (薇娅).

You can’t get far in any business-y conversation at the moment without mention of 引流 yǐn liú (attracting an audience), 吸粉 xī fěn (attracting fans), 网红 wǎng hóng (internet influencer) or 带货 dài huò.

My favourite is 坑位费 (kēng wèi fèi). It comes from the word 蹲坑位 (Dūn kēng wèi), or ‘place to squat’, which is what you get when you pay to use a public toilet in China.

The kēng wèi fèi is the fee brands pay to online superstars to livestream their products.

Li Jiaqi (李佳琪), the “King of Lipstick” in China, charges a kēng wèi fèi fee of RMB 60,000 and then a 20% commission on sales on top of that.

Although not an alien concept in the west, the Chinese version takes things to a different level. Live e-commerce sales brings together social trends that only China can deliver: influencers (网红) and live-streaming (直播), as well as smart phones and social media.

Even China’s president has had a go. In fact he was an early adopter. Back in late December 2013, President Xi visited a Beijing branch of the Qingfeng Steamed Stuffed Bun Shop chain in Beijing to buy a baozi – a steamed bun.

Social media users called Xi’s breakfast menu the “Chairman’s Combo” (主席套餐). Qingfeng Steamed Stuffed Bun sales exploded in the months that followed and within two years it had increased the number of outlets by more than 70% and started to explore international markets.

E-commerce live-stream selling has been further turbo charged by China’s second largest online shopping festival – 618 – which came to an end last week.

The two-week online selling madness saw China’s big online players hitting record sales of $136 billion in the first post-corona test of Chinese consumer appetite to open their e-wallets.

Everyone is having a go at dài huò-ing. From farmers, to TV personalities and famous entrepreneurs, even leaders of foreign governments.

As of mid-May, more than 40 top flight Chinese entrepreneurs have been generating hundreds of millions through online live streaming.

C-trip’s founder and chairman Liang Jianzhang (梁建章) has hit the RMB 300 million mark.

Dong Mingzhu (董明珠), chairman of Gree Electric, China’s biggest air conditioner manufacturer, sold over RMB 100 million worth of products within hours of opening her broadcast, generating around RMB 310 million in total sales.

She explains the secret of her success:

It’s not just about selling. That alone is hū you (忽悠) [to con someone]. The key is quality of product and the customer experience.

But the competition and pricing is also ruthless.

The fee (坑位费) paid by the brands to the influencer (网红) is paid up-front, and not dependant on sales. It has to be paid whether they turn a profit or not.

Live broadcasters squeeze brands on price. The big names, like Viya, demand the lowest price for a product across the whole internet during a certain time.

So the ‘star effect’ (明星效应) alone is not enough to attract the discerning, price-sensitive Chinese online shopper.

Those that can sell anything on the Chinese Internet have to hit the right price point, focus on quality, engagement and customer experience.

Can dài huò on a Chinese scale happen in the West? What do you think?