Livestream warfare

There are ONLY 1.4 billion people in China and all the platforms are trying steal their screen time. Livestream today isn’t just to drive engagement or sales. It’s used to wage war among each other.

Douyin unleashed a first strike. They officially announced that 3rd party platform links will be banned starting October.

Prior to this, streamers and short video creators could sell products by embedding marketplace links. Now they’ll have to do so using the Douyin's native ecommerce store.

There’s only one explanation behind this sudden move. They’re going after Taobao. That’s because most of Douyin’s sales are happening through Taobao links. Bytedance (Douyin’s parent company) wants that piece of the pie.

This move is shocking because it's way too soon. Douyin’s native store is far from becoming mature.

Livestreaming (and short videos) has become an economy of its own and today Alibaba is still the king of this hill. Taobao Live did 250 billion RMB (U$36 billion) in 2019 and is on track to hit double that amount by the end of 2020. Kuaishou is well on its way to 250 billion RMB this year and Douyin is going for 200 billion RMB.

Data Source: 36kr

Bytedance already owns tremendous traffic. It’s no wonder that they want to own the revenue generated through its videos.

Bytedance was unofficially friends with Alibaba when it opened its doors to integrate with Taobao 2 years ago. Now all of a sudden, it declares itself a rival.

What’s interesting is it didn’t pick a side like thee rest of China's internet where 2 superpowers run the show: Alibaba & Tencent. Bytedance wants to become super power of its own.

Kuaishou formed its own alliance with JD (team Tencent). This will create a superb livestream shopping experience by leveraging JD’s tough QA and advanced logistics system.

But Alibaba is ready. Earlier this year it launched "Project Star X”-- A network for content platforms to easily connect with the Alibaba ecosystem. Weibo, Baidu and Xigua are all a part of this already. It’s meant to include as many KOLs as possible by making it easier for them to monetize through Taobao. This project is also offering all sorts of resources to content partners: Data services, training programs, event support and help with logistics.

That’s because people follow people in China and KOLs are at the heart of livestream commerce.

Livestream has merged the battlefield for ecommerce and entertainment. Every ecommerce platform has adopted livestreaming and content platforms are all building up ecommerce capabilities.

If you look at the livestream commerce landscape… you can categorize the platforms based on 2 criteria:

Within this mix, people on traditional ecommerce platforms like Taobao & JD have high intent of purchase. Their livestreams are very brand-driven as the platform itself is structured to help sell products. At the core of the platform, Taobao is still a product centric platform even though its content has become super rich over the years.

Do you know who started livestream ecommerce? It wasn’t Taobao.

It was Mogujie. It’s an ecommerce platform specialized in fashion. It’s the only one where livestream is the main source of income: 50% of total GMV.

Mogujie's community started off purely with content for consumers. Since the beginning, the platform empowered KOLs to provide fashion services to its viewers, essentially becoming like personal stylists and image consultants. This created a strong community so livestream ecommerce became an immediate success.

Its strength is also its weakness as an ecommerce platform. It is extremely focused on women’s fashion so expanding beyond that is almost impossible.

Similarly, Xiaohongshu is also a content-centric ecommerce platform driven by KOLs. People go there to see genuine thoughts on new and unique brands and products.

The problem here is that when people expect genuine content from streamers, selling too much can backfire. The viewers aren’t stupid. They can smell brand-sponsored content from a mile away and too much of it will undermine trust in the KOL. That’s why some streamers on Xiaohongshu do much better monetizing through ads rather than products.

In the end… Trust is the prerequisite before a purchase. KOLs build that trust by continuously producing valuable content. Livestream has paved way for a consumer journey completely different from traditional ecommerce.

In the coming years it’s worth looking out to see how the roles of content driven platforms and product driven platforms change.

Do you think a single platform other than Taobao can dominate the livestream commerce landscape?