A man with a phone walks past a sign from the TikTok app from Chinese company ByteDance, known locally as Douyin, at the International Artificial Products Expo in Hangzhou, Zhejiang province, China, October 18, 2019.
Reuters
BEIJING – Chinese consumers are shopping more via live streaming and video apps – a new trend that is conquering some of the huge market traditionally dominated by e-commerce giant Alibaba.
Popular live streaming and short video apps became major marketing channels in 2020, generating billions in sales to sellers by connecting viewers to existing ecommerce sites or their own.
Take the example of the short video and live stream app Kuaishou, which raised more than $ 5 billion Friday in Hong Kong’s largest IPO since the coronavirus pandemic, according to Wind Information.
Gross trading volume (GMV) for the 11 months through November grew nearly eight times from a year ago to 332.68 billion yuan ($ 51.44 billion), Kuaishou said in his prospectus. GMV is a metric often used in e-commerce to measure the total value of goods sold over a period of time.
The company primarily makes money by selling virtual gifts that users can purchase for their favorite live streamers. Kuaishou shares were up nearly 200% during the open Friday.
Along with different types of ecommerce players emerging in the past 2-3 years, … the appetite of customers on online shopping platforms is diversifying as well.
Douyin, the Chinese version of the TikTok video app owned by ByteDance, saw e-commerce transactions triple to 500 billion yuan in GMV last year, according to a Wednesday report by Chinese tech news site LatePost.
However, most GMVs went to third-party ecommerce sites such as JD.com and Alibaba’s Taobao, the report said. Only about 100 billion yuan in Douyin’s GMV came from the app’s own e-commerce platforms, the report said.
ByteDance said in a statement to CNBC that LatePost’s figures on GMV are inaccurate and third-party sales due to redirected user traffic should not be counted as part of the GMV.
Tencent’s Wechat messaging app, which has more than 1 billion active users every day, has also become a platform for online shopping.
In January, WeChat said GMV for companies running their own mini-programs in the app rose 255% last year to an undisclosed amount, while GMV for physical goods sold through those programs was up 154%.
“In addition to different types of ecommerce players that have emerged over the past two to three years, including live streaming, social trading, etc., customer appetites are also diversifying across online shopping platforms,” Morgan Stanley analysts said in a report last month. They predict that total Chinese consumer spending will double to $ 12.7 trillion in the next decade.
Growing market for all e-commerce players
The video apps GMV reports show how fast the streaming platforms are growing as an online shopping portal, even as established players still dominate.
For example, according to the latest revenue report, Alibaba’s video streaming sales site Taobao Live generated more than 400 billion yuan in GMV in 2020. But the company’s GMV for the November 1-11 buying holiday alone was 498 billion yuan.
“Ecommerce is in high demand in China, so Alibaba, JD.com, they have the market because they are both online and offline,” said Suresh Dalai, senior director at Alvarez & Marsal consulting firm, which focuses on retail operations in Asia.
“They provide a one-stop shop through their ecosystem,” said Dalai. “These retailers are not suffering, even with the arrival of these new e-commerce players.”
Online retail sales of physical goods in China rose 14.8% last year to a total of 9,759 trillion yuan, accounting for a quarter of all consumer goods sold in the country, according to the National Bureau of Statistics.
While the number of online shoppers rose to 782 million in December, the country had more internet users watching videos, at 927 million, the government agency China Internet Network Information Center (CNNIC) said in a report this week.
Notably, the number of live streaming ecommerce users increased by 123 million between March and December, for a total of 388 million, the report said. About two-thirds of these users made a purchase while watching a live stream, the report said.