Livestreaming is an e-commerce format and marketing and sales method. It integrates live product demonstrations, live Q&As, time-limited pricing promotions, live negotiations, and instant ordering through online streaming services hosted either by an influencer studio, or online store.
Livestreaming removes barriers between brands and consumers. While it is focused on driving short term sales, livestreaming can enable firms to improve marketing efficiency by combining brand marketing and performance marketing. There are certain factors that will increase the chance of success. While this approach is incredibly successful in China, it may not work in other markets.
Livestreaming e-commerce is an unstoppable trend in China's consumer goods industry; it's turning the entire country into a market where "face-to-text" interactions happen at an unprecedented scale.
Brands could leverage livestreaming not as a short-term sales booster but as a long-term avenue to remove barriers between brands and consumers. Specifically, brands could demonstrate their products in a better way, tell fuller brand stories, introduce emotional and cultural elements to their products, obtain instant feedback, conduct product trials, create buzz around new product launches, improve marketing efficiency by combining brand marketing and performance marketing, use different livestream hosts to fine-tune segmentation and targeting and build a captive 'private domain' of consumers to cultivate brand loyalty.
Livestreaming is not without drawbacks, however.
Regulations: For ads on TV, China has clear rules to forbid brands parading the before-and-after effects of health products. The restrictions are not clear yet for internet-based livestreaming, and health products are frequently promoted by livestreamers. We need to continue to monitor regulatory updates carefully.
Fake orders: Some brands use livestreamed sessions as a cover for self-seeking bogus conversions. Sometimes these fake orders are placed by a brand's legitimate distributors, who purchase these items by bulk and later dump them at a price violating minimum price contracts, distribution zone or category agreements. These behaviours may make a livestreamed session look like a success but create future complications if there is no governance or robust measurement structure.