Livestreamers flow overseas for sales, profits

Despite a current lack of customers, Chinese e-commerce outfits are laying the foundations for the sector's growth in other countries. Yao Yuxin reports.

After spending six hours selling makeup live in front of a smartphone screen and hot lights, Juanita Cerrillos spoke hoarsely and hiccupped a little, but she was excited. Her eyes shone and her face was brightly flushed.

Before she joined the Chinese e-commerce company Newme in Los Angeles, Cerrillos sold property to customers offline. Having started her livestreams in September, she is one of six influencers employed by Newme to sell goods to customers in the United States online.

Despite having just a few hundred viewers, Cerrillos sells goods worth of thousands of dollars on average every session. She has fallen in love with the new sales tool as it makes her feel loved and connected to more people.

In the real-time rolling comments, she is touched when people give her tips for the hiccups, including one suggestion that she eat a lemon with some sugar.

New markets

Like Newme, a growing number of Chinese e-commerce companies are going overseas, trying to replicate the domestic success of livestreaming e-commerce in overseas markets and create a legend like Li Jiaqi.

As China's top influencer, Li sold goods worth 10.6 billion yuan ($1.53 billion) on the first day of the Double Eleven presale in 2021, and doubled it to 21.5 billion yuan last year. Double Eleven is China's biggest online shopping gala.

Last year, the nation's livestreaming market was worth more than 3.4 trillion yuan. That figure is expected to exceed 4.9 trillion yuan this year, according to the first national seminar on the high-quality development of e-commerce held in September.

"I know it's going to become something really big, like in China," said Cerrillos, who is optimistic about the future of livestreaming in the US, despite relatively low sales volumes at present.

As a former head of overseas business for Making Friends, a large Chinese e-commerce enterprise, Wang Huan has long felt the industry's enthusiasm for replicating the model overseas.

When he takes part in offline forums, the venues are usually so crowded that he can't find a seat, so he has to stand in the back row to listen. Domestic e-commerce outfits and brands keep coming to him to seek overseas experience.

Lou Xuxiao, head of Newme's office in Los Angeles, feels the same way. Whether people work in operations, branding, import-export or advertising, "as long as I post on WeChat, many of them will come and talk to me".

Many Chinese e-commerce companies have opened offices in Europe, the US, Southeast Asia and the Middle East, and some have achieved great sales.

In Indonesia, a Chinese oral care brand sold more than 2 million bottles of mouthwash in just three months starting in March last year, making it a best-seller online.

The increasingly fierce competition at home has prompted Chinese e-commerce enterprises to go overseas in search of opportunities, said Ma Zuxin, director of short-video business for Melot Group in the eastern coastal province of Zhejiang, known as the home of Chinese e-commerce.

In China, influencers chase viewers by livestreaming in Tibetan from snowy mountains for four hours to sell down jackets, while others rap and dance or act out a popular TV series in costumes from the Qing Dynasty (1644-1911) to sell skin care products.

By contrast, the overseas market is like an uncontested blue ocean for China's livestreaming companies to swim in.

"Foreign livestreaming e-commerce is at the level of China in 2018 or 2019," said Ma, whose company has recently started livestreaming in the United Kingdom, the US and Vietnam.

Leading in manufacturing, capital accumulation and livestreaming experience, Wang said that Chinese e-commerce companies "are taking a shortcut to a higher dimension".

Building a local team guided by Chinese experience is the consensus of e-commerce outfits going overseas. Like Cerrillos, all the influencers at Newme are hired locally. Wang, who moved to another Chinese e-commerce company in Southeast Asia in October, is the only Chinese national in the 18-member team.

By studying overseas' consumer habits and psychologies, some Chinese e-commerce companies even create local brands rather than exporting existing ones.

Founded in Indonesia, the Chinese makeup and skin care brand Y.O.U has become an online sales hit by empathizing with young local women, many of whom are upset about being urged to get married at family reunions during the Muslim holy month of Ramadan.

Instead, the brand encourages them to blossom into independent, assertive women.

Highly receptive to new things, the large number of young people partly explains why livestream shopping has spread across Southeast Asia in a very short space of time, Wang said. The region has a population of 620 million, the third-largest in the world, and about 45.3 percent is age 20 to 50, meaning that the demographic contains prime online consumers.

Low prices have boosted the popularity of livestream shopping in the region, too. According to Statista, a provider of market and consumer data, the top-selling products in Southeast Asia last year cost less than $25 each.

Last year, the gross merchandize volume of livestreaming e-commerce in Southeast Asia rose by 306 percent from 2021, while orders surged by 115 percent, according to data provided in June by Omise, a payment gateway for Thailand, Japan and Singapore. It predicts that a $19 billion market will develop for livestreaming e-commerce in the region this year.

"Top influencers have earned more than some celebrities," said Chinese-Indonesian Li Lina, founder of cosmetic brand Bioaqua and e-commerce enterprise Onelink. Her company has two of the top 10 influencers in Indonesia.

Chinese e-commerce companies are also bullish on the US market, as it is vast and has numerous wealthy customers. Given the huge sales volume but low prices in Southeast Asia, "the US is a place to make profits", Ma said, noting the higher prices of goods in the US.

Yet such great success only belongs to a few. Despite the sector's rapid growth, many companies are struggling to make a profit through livestreaming sales.

Luo Weizhe, founder of e-commerce company Parrotok, has temporarily suspended the livestreaming project after trying for approximately three months from March to June last year.

In the Los Angeles office, Luo's influencers were surprised when they heard that Li Jiaqi could sell hundreds of thousands of lipsticks per livestream in China, but they quickly became frustrated because US viewers see the format as entertainment, meaning audience numbers fall off a cliff as soon as the sales pitch begins.

Their best-selling item is a sports water bottle. Over 20,000 viewers are amused to see Li and an influencer take turns running to the bathroom in a two-hour competition to see who can drink the most water.

"Americans come to watch the livestream for entertainment, not to shop," Luo said. In a rare highlight, he and his influencers sold goods worth about $4,000 and received 10,000 likes. Most of the time, they lose money. "We are on the right track, but it is not the right time," he said, noting that the livestream shopping bug has yet to bite the US.

Diverse forms of entertainment and abundant shopping methods also divert US customers' attention away from livestreams. Gu Jun, CEO of Newme, said TV shopping is still very popular in the US, and his staff members even learn sales skills from it while watching shows over lunch at restaurants.

Meanwhile, Wang's new company, Content and Commerce Partner, is barely breaking even in the Southeast Asian livestreaming business. Cultural and linguistic differences have set up roadblocks.

He was once torn between annoyance and a desire to laugh when his local employees found him a TV news anchor after he requested they hire an influencer. The Mandarin words for "influencer" and "news anchor" are the same, so the translator misunderstood his request.

Moreover, a lack of industrial clusters also makes livestreaming e-commerce less effective in Southeast Asia. Wang recalled that when he was in Zhejiang province, "just a few calls and some coffee chats nailed down one-third of the promotional campaigns for the Double Eleven shopping festival".

Logistics, supply chains

As one of the first Chinese retailers to take e-commerce overseas, in July 2020, Yao Enhao employs more than 30 local influencers to sell makeup, clothes, 3C goods (computer, communications and consumer electronics) and baby products in Indonesia. He said the internet infrastructure, supply chains and logistics in Southeast Asia lag far behind those in China.

UltraHD Blue-ray is not widely available in Southeast Asia as it requires more bandwidth to provide stunning images, Yao said.

Also, internet speeds are much slower as 5G is far from common, and a lack of cold-chain systems means it is impossible to deliver some fruits and agricultural products. "It's like there are 81 hurdles in front of you, and you just cleared the second one," he said.

Yet the Chinese businesspeople are optimistic about the future of livestreaming overseas. Shifting his current focus to short videos, Luo is biding his time to restart his livestreaming business in the US. Ma's company has rented a 3,000-square-meter warehouse in Vietnam to shorten delivery times, while Gu opened a new office in New York in December.

"Taking livestreaming e-commerce overseas is like going to an unknown place," Gu said. Despite that, he said he knows that the demand is there… somewhere.