A man holding a phone passes a TikTok application board from Chinese company ByteDance, known locally as Douyin, at the International Artificial Products Expo in Hangzhou, Zhejiang province, China, on October 18, 2019.
Reuters
BEIJING – Chinese consumers are buying more through live streaming and video apps – a new trend that is taking a slice of the huge market traditionally dominated by e-commerce giant Alibaba.
Popular live streaming and short video apps became significant marketing channels in 2020, generating billions in merchant sales by connecting viewers to existing e-commerce sites or their own.
Take the example of the short and livestreaming video application Kuaishou, which on Friday raised more than $ 5 billion in Hong Kong’s largest IPO since the coronavirus pandemic, according to Wind Information.
The gross volume of goods (GMV) in the 11 months to November has grown almost eight times over the previous year to 332.68 billion yuan ($ 51.44 billion), Kuaishou said in its prospectus. GMV is a metric commonly used in e-commerce to measure the total value of goods sold in a given period of time.
The company mainly makes money by selling virtual gifts that users can buy for their favorite live streams. Kuaishou’s shares rose nearly 200% in opening Friday.
Along with various types of e-commerce players emerging in the past 2-3 years, … customers’ appetite for online shopping platforms is also diversifying.
Douyin, the Chinese version of the ByteDance-owned TikTok video app, saw e-commerce transactions triple last year to 500 billion yuan in GMV, according to a report on Wednesday by the Chinese technology news site LatePost.
However, most of the GMV went to third-party e-commerce sites, such as Alibaba’s JD.com and 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 numbers at GMV are not accurate and that third-party sales resulting from redirected user traffic should not be counted as part of GMV.
Tencent’s Wechat messaging app, which has more than 1 billion daily active users, has also become a platform for online shopping.
In January, WeChat said that GMV for companies running their own mini-programs on the app increased 255% last year to an undisclosed figure, while GMV for physical products sold through those programs increased 154%.
“Along with various types of e-commerce players emerging in the past 2-3 years, including live streaming, social commerce, etc., customers’ appetite for online shopping platforms is also diversifying,” said Morgan Stanley analysts. in a report last month. They predict that Chinese consumer spending in general will double in the next decade to $ 12.7 trillion.
Growing market for all e-commerce players
GMV reports for video apps show how quickly streaming platforms are growing as a portal for online shopping, even if established players still dominate.
For example, Alibaba’s streaming video sales website, Taobao Live, generated more than 400 billion yuan in GMV for 2020, according to the latest earnings report. But the company’s GMV for the November 1-11 shopping holiday was 498 billion yuan.
“There is a lot of demand for e-commerce in China, so Alibaba, JD.com, they have a market because they are online and offline,” said Suresh Dalai, senior director at consultancy Alvarez & Marsal, with a focus on retail operations in Asia.
“They provide a one-stop shop in their ecosystem,” said Dalai. “These retailers are not even suffering from the launch of these new e-commerce players.”
Online retail sales of physical goods in China increased 14.8% last year, to a total of 9.759 trillion yuan, representing a quarter of all consumer goods sold in the country, the National Bureau of Statistics said.
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.
In particular, live streaming e-commerce users increased by 123 million between March and December, to a total of 388 million, the report said. About two-thirds of those users made a purchase while watching a live broadcast, the report said.