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Binomial is an innovation consulting firm helping clients be disruption-ready
August 19, 2021
As many SMEs embrace e-commerce as a result of the pandemic, live commerce can become the next step for them in their journey to grow their customer base and increase customer retention.
Live commerce, a fusion of live streaming and e-commerce, has saved and grown many SMEs across when pandemic bitterly hit the economy. In fact, this is a mutual win for both e-commerce giants and SMEs, where the former enrich and improve customer experience and the latter scale and reinforce customer bases.
For the Southeast Asia market, the development of SMEs leveraging live commerce will help remove the inconvenience of social distancing, improve online shopping experience, and build close ties with customers, leading to a revitalization of the regional economy.
However, as the saying goes,“a journey of a thousand miles begins with a single step.” When the live commerce industry in southeast Asia is still at its early stage, perhaps a look at China's live-commerce industry, whose annual revenue grew from $2.85 billion in 2017 to $144.15 billion in 2020, will shed some light on both SMEs and live-commerce platforms.
"In the past, our shops could only sell a few hundred dough twists per day, but since we started live commerce, the company now has been producing 100,000 dough twists per day; the production capacity is almost at its limit," said Zhang Hexin with a smile, the general operations manager for e-commerce at Yingkou Shengshi Industrial Co Ltd. As a food bakery company with a thirty-year history in Yingkou, a small border town in Northern China, it has reached its unprecedented peak by live commerce in the year of pandemic outbreak and economic downturn.
More than 2,000 kilometres from Yingkou, another live sale was taking place in the City of Guilin, where the mayor became the host and introduced local specialties through Taobao’s live channel. According to the statistics, this live sale had over 400,000 online viewers and more than 16,000 orders sold for over RMB 3 million, significantly driving the brand awareness of local small-medium enterprises.
When China’s economy was hit by the pandemic, SMEs (which accounts for 90% of all businesses) were elevated to a new level of importance for market recovery and growth. Taobao and Jingdong, the two e-commerce giants, began to strategically support SMEs, especially national brands, to help transition them from offline to online, so they can engage a larger consumer base remotely, thus reactivating the domestic economy.
According to iiMedia Research, the market size of live commerce has been growing at a high level during 2017-2019, with an annual year-on-year growth rate of over 200%. It is expected that in 2021, the revenue of the live commerce industry will exceed trillion yuan.
Undoubtedly, the pandemic has led to a profound and irreversible shift of the way consumers shop online and how they view live sales. From the joint research done by Meltwater and Shopee, discussions around live streams and gamification live shopping experienced an escalation by 1890% since March 2020.
During the “circuit breaker” period in Singapore, local users were spending an average of 40% more time per week on Shopee, and more than 200,000 messages were sent per day on average as consumers interacted directly with brands and sellers. When it comes to live streaming to support e-commerce sales, the number of sellers doing live streaming has increased 40-fold in 2020.
“Online shopping presents a massive opportunity for e-commerce platforms and merchants to look for ways in which they can continue to attract and engage customers remotely. Live-streaming has proved to be an extremely useful tool in this regard,” said Mimrah Mahmood, senior director & partner at Meltwater Asia Pacific.
For now, two camps dominate the live commerce market in SEA. One camp consists of traditional e-commerce platforms represented by Amazon, Shopee, and Lazada. Similar to Taobao in China, they have merchants, live commerce rooms and professional salesmen to conduct in-store sales. Another camp has the content entertainment platforms like TikTok, Youtube, Instagram, Facebook, and other social media sites. A brand may cooperate with influencers who match its positioning, and target its followers by using the influencers’ own channels and creating attractive content or videos.
While the space shows tremendous potential, there are teething issues to sort out. On March 9, TikTok completed its pilot livestreaming e-commerce in Indonesia that drew more than 10,000 simultaneous viewers at its peak. But payment channels were limited at that time as e-wallets like Grabpay and Ovo were not supported. Similarly, although Facebook is one of the most accessible live streaming platforms, its functions are not designed for commercial sales. Many supporting facilities such as sales orders management, customer data analyses and payments are still in the process of development
To address the issues, TikTok launched an online education platform for merchants called “TikTok Shop Seller University” in 2021. They also set up an Affiliate league that allows merchants to offer general promotion plans without operating an account. When they upload their merchandise to the Seller Centre, they will pay a 2% commission to attract TikTok influencers to advertise for them.
First, the combination of e-commerce and live-streaming will provide a better experience for existing customers, given that 96% of respondents in a survey found videos helpful when making purchase decisions.
In addition, going live is also a good move for SMEs with limited marketing budgets to extend their reach and acquire new customers. With exposure online, brands can reach prospects apart from those who visit their physical premises, and the more people who come to know about them through their digital storefront, the more likely they will share with others.
What’s more, the traffic attracted by a large live platform will enable data-based improvements for products. Since one of the strengths of SMEs is the ability to be flexible and change courses quickly, the data can be used almost in real-time to make the necessary changes.
Regardless of whether live commerce becomes the next normal of brand operation, SMEs should view it as a strategic long-term opportunity to increase customer acquisition, drive sales, and build brand awareness. The key thing to remember is to ensure that you have clearly defined your brand identity, positioning and marketing strategy before you start with live commerce. If you are trying to figure out whether live streaming is for you or not, and what your live commerce strategy should be, feel free to get in touch.
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