TV Shopping Upgraded Into Internet-Celebrity Livestreaming. What Else Changed?

E-commerce livestreaming started with "internet celebrities," but the internet celebrity is no longer what it once was.

After wrapping up an hour of fat-loss and body-shaping instruction, Kuang Zhixi and her partner sat down in front of the camera and began working through the products listed in that day's stream.

Kuang Zhixi is a fitness streamer on Taobao. She recommends products only after she has finished teaching the day's moves, but during the class, viewers who tap the shopping cart icon in the bottom left of the screen can already see what is inside. Every so often someone asks about the discount on a particular item, and regular fans will answer in the comments for her: "Wait until Xixi finishes the moves."

The yoga mat spread across the studio floor gets asked about every few minutes. Once she reaches the "selling" segment, Kuang Zhixi tells viewers who don't know how a livestream purchase works, over and over, exactly what to do: "This yoga mat is link No. 63 — tell customer service the streamer's name to get a 10-yuan coupon, then just place the order once you've claimed it."

Tapping these products takes you to a Taobao store, and buyers have to contact customer service to get the discount, which is also how the merchant confirms which streamer brought in the sale.

More than 60 products went up in the stream that day. Following a script prepared in advance, she and her partner — her husband, Lao Tian — talked through fish oil, Laobaigan baijiu, baby and maternity goods, oral collagen supplements and yoga wear, all sourced from different Taobao stores.

Every product has a number, and in the stream the hosts refer to products by number, so fans can look them up easily and jump to the right merchant's store to claim a coupon and buy.

The two of them speak at least 50 percent faster on stream than they did during our interview, because new comments keep scrolling up at the bottom of the screen and every one of them needs a prompt reply, and each new viewer needs a greeting. Fail to hold a viewer's attention quickly enough and one swipe of a finger carries that person off to another stream.

The products they sell come from different stores. Her stream starts at 8 p.m. every night; an hour before that, Kuang Zhixi goes over the script the operations team has prepared and the products she will cover. For a dedicated stream run with a single merchant, the exact form the discount takes has to be settled in advance too.

The stream started a few minutes late that day, so Kuang Zhixi apologized to the camera and sent fans an Alipay red envelope. Since getting pregnant, she has cut her daily streaming from five or six hours to three, but she still streams every day, because "no matter how big a streamer you are, you can't stop. Fans get used to tuning in at the same time every day. If you stop, they leave, and once they leave it's hard to get them back."

Beyond the fitness and wellness products she has always sold, Kuang Zhixi is now lining up partnerships for baby and maternity goods. Expectant mothers among her fans often ask what she uses, and for months they have been asking her to recommend maternity products; some merchants have also approached her after watching her streams.

Once trust is built between a streamer and her fans, the range of things she can sell keeps widening. Whatever gets used in the stream, fans will ask about and buy.

Streamers like Kuang Zhixi drove 100 billion yuan in sales on Taobao in 2018 — close to a week's worth of transaction volume for Alibaba's entire e-commerce business.

Taobao Live launched in 2016, and Taobao's homegrown brands got in early. Yunifang became known as a "streaming brand" after selling 400 million yuan of goods through livestreams in a single year, and Baicaowei built an official in-house streaming team starting in 2017.

Now one of the four sections recommended on the first screen of Taobao's app is livestreaming.

In 2018, 84 stores sold more than 50 million yuan each through Taobao livestreaming. It is not only Taobao's homegrown brands that take streaming seriously — big companies like L'Oréal and Procter & Gamble have come in too. During Double 11 in 2018, Taobao streamer Viya even took the title of "P&G Global Product Recommendation Officer." A week ago Tide brought in the star Hai Qing to stream with Viya; that day Viya's stream drew more than 5.5 million cumulative views, and within half an hour of going live the sales total broke the record for a single brand session on Taobao Live.

At the cosmetics counters in Taikoo Li Sanlitun in Beijing, you will even see signs listing the shades recommended by Taobao streamer Li Jiaqi. But apart from Li Jiaqi, there are probably very few Taobao streamers anyone would recognize.

According to what Taobao has disclosed, only a fairly small share of Taobao users watch livestreams, but those who do stay for more than half an hour on average, and many order two or more items in a single stream.

For now, the five categories where streaming drives the most sales are jewelry, women's clothing, fashion accessories, beauty and skincare, and children's clothing. In jewelry, the category at the top of that list, more than half of all Taobao transactions come through livestreams.

Livestreaming is something every e-commerce company is doing. JD.com has set up a livestreaming base near its Yizhuang headquarters in Beijing, giving streamers who sell goods a fixed place to broadcast. When Mogujie went public in 2018, it wrote livestreaming into its prospectus, saying streams already accounted for 18 percent of transactions across the platform — though that may say more about how badly Mogujie is doing.

From the other direction, the short-video platforms Kuaishou and Douyin began plugging in e-commerce in 2018. They move goods so fast that the phrase "Douyin commerce" was coined for it.

E-Commerce Livestreaming Started With "Internet Celebrities" — But Not the Ones We Used to Know

In the old webcam-show halls, hosts were called internet celebrities. Internet celebrities have also lived inside the e-commerce ecosystem for years: Ruhnn, which went public not long ago, is in the business of incubating internet celebrities and selling services around them. From 2017, Ruhnn began connecting its internet celebrities to third-party brands — that is, having its own people push other companies' products.

Before she did Taobao livestreaming, Kuang Zhixi ran an internet-celebrity talent agency. Back then, "internet celebrity" meant a host on a webcam-show platform.

She went from running a livestreaming agency to streaming on Taobao herself at the end of 2017. At the start, she and Lao Tian ran that agency together, supplying hosts to various webcam-show platforms; at its peak it had close to 300 hosts under contract.

After the "war of a thousand livestreaming platforms" ended, 10 of the 13 platforms the company worked with had collapsed.

"A whole batch of livestreaming platforms ran off without paying the hosts," Lao Tian recalled. "Almost everything we earned from webcam shows back then went to settling up with our hosts."

The two of them tried to move into e-commerce livestreaming. Given the size of their agency, Taobao gave them five streamer slots.

They picked the five best hosts on their roster. But within three months of going live, every one of the hosts who had come over from webcam shows was struggling. Both are livestreaming in form, but the audiences for e-commerce streams and webcam shows are not the same people at all; the skills demanded of a host are different, and so is the way users spend money.

Of that first group of contracted hosts, only one stayed. Kuang Zhixi decided to step in front of the camera herself.

She had years of dance training and had worked as a print model for several years before running the agency, but Taobao livestreaming turned out to be another thing entirely.

Three months in, Kuang Zhixi finally felt she had the hang of it: "Webcam show audiences are all men, and what they're paying for is flirtation. Taobao livestream users are mostly women, and they really do want to buy things, so you have to know your products."

One time she paired up with her husband in the stream, and both follower growth and sales came in better than usual. That was when she and Lao Tian settled on streaming as a couple.

Looks are not the most important thing; warmth and patience are essential. A host has to know the product well and also has to have a good enough temper, because it is the customers who genuinely mean to buy who ask the same questions again and again. She has to explain it over and over while keeping the rest of the audience entertained, and only then can a sale happen. She is host, salesperson and pre-sale customer service all at once.

Kuang Zhixi draws people in with fitness and body-shaping, but she does not only sell sports products.

That is common enough on Taobao Live. A food streamer who cooks every day gets asked about a lipstick shade now and then, and starts selling makeup alongside the cooking. A fashion streamer who changes outfits every three minutes on camera will, for one of Taobao Live's official sales events, hang a backdrop in her studio and introduce seasonal fruit instead.

In the early days, a new streamer even had to pose as a buyer and order her own products to manufacture some transaction volume, then use the numbers to negotiate with merchants. Once a streamer has a certain level of engagement, she can find partner merchants through Taobao's official tool, V Task.

Brands and merchants mostly reach streamers through V Task. In its back end, a merchant can see a streamer's numbers: the content tags she usually streams under, average views over the past seven days, engagement rate, and the score Taobao Live gives her by combining various metrics. Before committing, a brand will often watch several of her broadcasts to judge whether her style and skill suit the product.

Once a streamer is chosen, the two sides work out the shape of the deal — how the product will be introduced, how deep the discount goes, how much airtime it gets — and samples go out to the streamer by courier.

Kelvin, head of marketing operations at the smart makeup mirror brand AMIRO, told QDaily that it usually takes them one to two days to settle on a streamer, because the ones they pick are all top hosts with more than 2 million followers. After the invitation goes out and samples ship, the streamer's talent team decides within two weeks whether the product has been selected; if it has, the stream is scheduled for one evening in the following fortnight.

Once the stream is set, the two sides discuss not just the product's positioning, features and effects, but what kind of interaction during the broadcast will lift viewers' attention to it. AMIRO usually rolls out perks tied to that streamer, such as a "streamer-only price," to push conversion in the moment.

Because the product is something a streamer can actually use on camera, a few minutes of streaming is usually enough to sell several thousand units. AMIRO has made livestreaming its main promotional channel since it launched in the second half of 2017. "Wherever users spend their time, that's where we go," he said.

V Task recently added a tool that lets streamers pick products, called Livestream Connect. Merchants looking for a streamer submit the products they want featured, streamers choose among them, and once both sides agree, the streamer runs the stream as arranged.

Whether the merchant finds the streamer or the streamer finds the merchant, a streamer's main income is a cut of sales. For streamers with a big fan base and high daily engagement, getting a product into the stream also costs an appearance fee.

Compared with pouring a marketing budget into a celebrity endorsement, a streamer works for a brand like an individual, active sales clerk. If a celebrity endorsement exists to make consumers believe in a brand's strength and nudge up the odds they will buy, a streamer is the one actually moving the goods.

Outside the handful of star streamers, everyone else works on a sales commission — simple and direct for brands and merchants alike.

Every commission earned by steering a user to an order comes out of the trust built between fans and the streamer.

Every Streamer of Any Scale Starts to Look Like a Small TV Shopping Channel

"We've tried streaming with celebrities like Yang Yang and Qiao Xin, but most of what we do is with livestreaming internet celebrities — Taobao Live's top host Viya, the 'warm current' streamer Bailu Danfeng, Lie'er Baobei, who hosted the 2019 Taobao Live Gala," Baicaowei's marketing director Qiu Jin told QDaily. "Right now livestream traffic's contribution to Baicaowei's total store traffic is modest, but the overall trend is up — different sessions, the pull of the streamer we work with and how deep the discount is all affect it."

At around the same time Kuang Zhixi started streaming on Taobao, Baicaowei began building an in-house streaming team, pulling people from customer service, operations and planning to stream for the store part-time. Its official streaming accounts have since built up close to 2 million followers between them.

When Baicaowei first streamed for itself, it brought out the product managers for its eight major categories to talk about how they chose products and the stories behind them. Streaming gradually turned into routine work: all stream planning is built on the store's own plan, and the streaming team agrees in advance with the operations and product departments on which products to push that day and how deep the discounts will be.

It is not only company streams that need a team. Ordinary streamers need one too.

Set against a webcam show, where one person can sing and chat in front of a camera all evening, an e-commerce stream is close to impossible to run alone. The streamer — the human face of the room — is only the link that touches fans directly; keeping the whole thing running takes many other parts.

"A solo streamer absolutely can't make it work. Without a team there's no way these days." Every one of the dozen or so streamers QDaily spoke to said some version of this. Even independent streamers with no agency behind them, the ones cooking farm food in their own kitchens while pitching products, rope in parents and relatives to help.

On an e-commerce platform, how fast a store's customer service answers often decides how much it sells. Streaming is no different.

At its simplest, every fan who walks into the stream is a possible order. While the streamer answers one comment, other fans are watching and interacting, and that is where an assistant has to step in and keep talking. Many clothing streams keep an assistant on hand, or run two hosts at once, partly so there is still something to watch while the main host steps off camera to change.

After the stream ends, if the streamer belongs to the store itself, the team that reconciles orders and packs them has to get going, so that everything is processed before the next day's broadcast.

Zhao Yuanyuan, who runs Taobao Live, says that these days going live is not enough to make money; anything mature needs a team behind it — listing, logistics, operations, flash sales. Even just preparing and presenting several dozen products in one evening is more than one person can do.

Taobao Live has also increased its support for streaming agencies. For agencies, it has loosened the original requirement of webcam-show or e-commerce experience: a company now only needs to have been registered for a year with no change of legal representative to sign up. The bar for individual streamers, though, is rising. As far back as 2017, an individual streamer had to show a certain following on Weibo or other social media to prove her social influence. Signing with an agency first and becoming a Taobao streamer second is the route Taobao officially prefers.

At bottom, Taobao Live is TV shopping aimed at one person at a time, and as streaming reaches more and more users it has also become an agency business.

In the past, celebrity talent agencies and brands stood in a supplier-client relationship, with the celebrity signed to the agency. But in the language of the internet-celebrity economy, e-commerce companies signed the internet celebrities themselves, choosing either to train them in-house or to take them to a more specialized agency to build up their popularity.

At livestreaming agencies, the arrangement changed again.

An agency's job is not limited to matching brands with streamers and training them. It has to take part in every link of the e-commerce chain, upstream and down.

Many streaming agencies used to make text-and-image or short-video content inside Taobao and already knew how the platform worked. Moving into Taobao livestreaming is still people from one circle playing a game inside that circle.

According to figures Taobao has published, more than 100 streamers make a million yuan or more a month, 81 streamers have driven more than 100 million yuan in sales in a year, and there are already more than 600 e-commerce streamer agencies.

And every streamer of any scale ends up looking like a small TV shopping channel.

TV shopping programs such as Oriental Shopping, Happigo and Home Shopping have in fact all opened rooms on Taobao Live. Store Treasure (《镇店之宝》), the first PGC show Taobao Live produced itself, more or less lifted the production team behind Hunan TV's variety program The More You Shop, the Happier You Get (《越淘越开心》) and set it down on Taobao Live.

"Go order this one right now — 38 yuan for the first, the second is free, say the streamer's name and take another 5 off, which works out to 16.5 apiece. Go, order it now." That patter, common in streams, is not far from TV shopping's "Not 998, not 888 — 368 takes it home today, plus a free three-piece gift set."

But a livestream is obviously more interactive than TV shopping. However awkward a fan's Taobao username is, the streamer will try to read it out when replying to the comment, so the user on the other side of the phone feels the host is speaking straight at her — nothing like the gap between a TV screen and a phone hotline. A livestream shopper picks up the phone, types a question and asks, with the stream still floating on the screen, and can finish the purchase there.

The cost of reaching each user through a stream is far below the cost of a TV station making a program, so streams are not confined, the way TV shopping is, to high-margin, high-markup goods. As long as a merchant is willing to put a product in the room, a streamer can sell it.

"A lot of people still haven't worked out what livestreaming is, and they don't want to put their goods in," Zhao Yuanyuan told QDaily. Measured against the full range of product categories on Taobao, less than 20 percent have made it into streams — and that is counting categories, not products.

From its launch in 2016 to now, Taobao Live has passed through three stages: in 2016, hardly anyone streamed and hardly anyone watched; by 2017, whatever you streamed found viewers; and in 2018 the agencies moved in and it exploded, growing 300 percent in a year. Taobao president Jiang Fan told Alibaba's investor conference in September 2018 that much of Taobao's category growth and user growth was coming from livestreaming.

As more people pile into the business, what to sell and where the goods come from have become problems the streamers and the agencies behind them have to solve. Kuang Zhixi and Lao Tian's company is preparing to move from Beijing to Hangzhou, mainly to "get closer to the supply chain."

Even with dedicated teams for operations, logistics and after-sales, choosing what to sell is the part each streamer holds onto herself. Working with the supply chain and improving it is the skill a streamer has to grow once she reaches any scale — and it was not a consideration at all in webcam shows.

As Lao Tian tells it, the area around Hangzhou, and the south generally, has a reasonably mature supply-chain base for every category, while the brands and merchants they could reach in Beijing were limited. On top of that, big brands put their e-commerce departments in Hangzhou or nearby, so moving there simply makes doing business faster.

In places like Hangzhou, where clothing wholesale markets cluster, wholesalers have already begun building livestream supply-chain bases. Such a base gathers clothing from many brands and factories, with sample rooms of more than 10,000 square meters for streamers to choose from and finished studios ready to broadcast from.

From the second half of 2018, Taobao began seeking out industrial clusters where one category is concentrated — Jieyang in Guangdong, Zhenping in Henan — and offering training and services to the stores and sellers there so they could start streaming without a high barrier.

Douyin and Kuaishou are doing much the same. Open their streaming platforms and you find hosts in orchards, on fishing boats, at the stove, picking, hauling in nets and cooking as they go, selling goods from the place they are produced to consumers scattered across the country.

What livestreaming solves is the problem of trust between a product and a consumer, by pushing a person to the front. In a video from an orchard, the streamer busy picking will bite into a freshly picked apple every so often; the picture quality may be poor, but it makes you want to buy more than a still, high-resolution photograph does.

We spoke to a jewelry streamer in Shanwei who goes by Qicai. She told us that by day she hunts for stock at the jewelry market and by night she holds each piece up to her fans in the stream. Rough stones picked up at a market stall only become something a consumer will order after being matched and worked on during the broadcast.

The stallholders sometimes say streaming makes money fast, but they will not start streaming themselves, because it takes the ability to explain a product and it means staying up past midnight every night. Turning a stallholder into a streamer is not easy either.

Even averaging only 4,000 viewers a night, she can still take tens of thousands of yuan in commission over a month.

As Livestream Selling Becomes an Agency Business, Streamers Become Replaceable

After nearly a year streaming from a relative's shop, Qicai picked the work up quickly. After this year's Spring Festival she opened her own Taobao store and started streaming and selling jewelry on her own. The first month or two are the hardest for a new streamer; she pulled friends out of her WeChat groups to come in and comment.

On the day that marked exactly two months of streaming, Qicai broke down on camera. She had assumed that once she was streaming the sales would follow, but there are no sales to speak of in a room nobody watches. That day her back end still showed only a dozen or so followers, and she was afraid she would not last through this stretch of building an audience.

Taobao's recommendation algorithm decides this: only when a stream has accumulated enough hours and hit certain engagement thresholds does it earn the right to surface inside Taobao Live. Otherwise fans coming in from the Taobao home page could scroll forever and never reach that room.

The higher a room's engagement, the more weight the algorithm gives it in the back end. In other words, the more views and purchases a stream gets, the more likely it is to be shown on the home page and handed traffic by the platform.

Even how many streamers a contracted agency may put on air is set by rule.

Two years into Taobao Live, Kuang Zhixi's agency has gained enough weight inside Taobao that its allotted slots grew from five to fifty. Even so, it has only put ten streamers on air. The most important thing those two years taught them is that what a streamer needs is nothing like what a webcam show needs.

They tried recruiting streamers in large batches, but many newcomers could not take the hardship at the start. A streamer has to grind out the first three months, building followers and engagement, with no income during that time. Even with a dozen viewers in the room she has to push on, because only once she has banked enough engagement will the system weight the room with traffic; only with traffic is she seen by users; and only then come the partnerships and the commission on sales.

From April 2018, Taobao Live began running a monthly ranking contest to spur streamer sales. During the contest, every fan who enters a room sees the streamer's rank within her category hanging under her avatar. Sometimes fans deliberately buy more to push a streamer's ranking up — the same logic as fans sending virtual yachts in webcam shows, except that in e-commerce all of it turns into real transactions.

To encourage interaction, Taobao has written an elaborate set of game rules of its own. A streamer can require fans to reach a certain "closeness" score before they can claim a coupon, and that score only goes up by completing tasks: following her, liking her, interacting with her, watching for a set length of time, sharing the room with friends.

Taobao's channels have become blunt about money. In 2015, Alibaba's advertising revenue was 37.5 billion yuan against platform GMV of 3.092 trillion yuan, meaning a merchant spent an average of 1,213 yuan on advertising for every 100,000 yuan of goods sold. By 2017 that figure had jumped to 1,657 yuan. By 2018 it had climbed to 2,543 yuan, and that is before the service fees Tmall stores pay. Basically, at least 2.5 percent of everything sold on Taobao becomes advertising revenue for Alibaba — and the real share is higher, because GMV includes goods eventually returned and even orders that were never shipped.

Livestreaming, by comparison, is not nearly as crowded, so merchants are willing to come in. Across 2018, the number of Taobao stores with streaming switched on tripled.

The supply chain has been growing more mature through all of this.

Taobao Live signs agreements with industrial clusters directly, and the big streaming agencies work with those clusters too, helping move sales out of offline first-tier wholesale markets and into streams. Some companies that handle supply-chain work inside Taobao have built streaming bases of their own to make the supply chain behind a broadcast run better.

The streamer, in all this, has turned into the link that is easiest to replace.

That is not to say streamers stopped mattering. It is that streaming now involves more moving parts, and the agencies that can plug into the supply chain more efficiently are the ones that will catch growth several times faster than the platform's own, before this new channel runs into its ceiling. At that point "streaming" is no longer the one skill that matters, unlike Huya, Douyu and the webcam-show platforms before them, which threw heavy money at the handful of star hosts performing for the camera.

With 618 approaching, Taobao held its Taobao Live merchant conference more than a month ahead of time, explaining how the interaction works for this mid-year exam in e-commerce.

In mid-May, Kuang Zhixi posted a screenshot of her V Task back-end data on Moments and started recruiting partners for 618.

Cover image from Tmall's 2018 Double 11