A man holding a phone passes a sign on the TikTok application of the Chinese company ByteDance, known locally as Douyin, at the International Artificial Products Expo in Hangzhou, Zhejiang Province, China, October 18, 2019.
Reuters
BEIJING – Chinese consumers shop more through video and live streaming applications – a new trend that captures a portion of the massive market traditionally dominated by e-commerce giant Alibaba.
Popular real-time, short video streaming applications have become significant marketing channels in 2020, generating billions of merchant sales by connecting viewers to existing or their ecommerce sites.
Just take the example of the short video and live streaming app 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) for the 11 months to November increased almost eight times a year ago to 332.68 billion yuan ($ 51.44 billion), Kuaishou said in his prospectus. GMV is a value commonly used in e-commerce to measure the total value of goods sold over a period of time.
The company primarily earns money by selling virtual gifts that users can buy for their favorite live streamers. Shares of Kuaishou rose nearly 200 percent at Friday’s opening.
Along with the different types of e-commerce players that have emerged in the last 2-3 years, … the appetite of customers on online shopping platforms is also diversifying.
Douyin, the Chinese version of ByteDance’s TikTok video application, saw e-commerce transactions triple to 500 billion yuan in GMV last year, according to a report Wednesday by Chinese technical news site LatePost.
However, most of GMV went to third-party e-commerce sites, such as JD.com and Alibaba’s Taobao, the report said. Only about 100 billion yuan in Douyin’s GMV comes from the application’s own e-commerce platforms, the report said.
ByteDance said in a statement to CNBC that LatePost figures about GMV are incorrect and that third-party sales resulting from redirected user traffic should not be considered as part of GMV.
Tencent’s Wechat messaging app, which has over 1 billion daily active users, has also become an online shopping platform.
In January, WeChat said that GMV for companies running their own in-app mini-programs increased by 255% last year to an undisclosed amount, while GMV for physical goods sold through these programs increased by 154%.
“Along with the different types of e-commerce players that have emerged in the last 2-3 years, including live streaming, social commerce, etc., the appetite of customers on online shopping platforms is also diversifying,” Morgan Stanley analysts said in a statement. a report last month. They predict Chinese consumer spending in general will double to $ 12.7 trillion over the next decade.
Growing market for all e-commerce players
Reports about GMV video applications show how fast streaming platforms are growing as an online shopping portal, even if established players still dominate.
For example, Alibaba’s video streaming site, Taobao Live, generated more than 400 billion yuan in GMV for 2020, according to the latest revenue report. But the company’s GMV for the November 1-11 holiday alone was 498 billion yuan.
“There is a huge demand in China for e-commerce, so Alibaba, JD.com, have the market because they are both online and offline,” said Suresh Dalai, senior director at consulting firm Alvarez & Marsal, which focuses on on retail operations in Asia.
“They offer a one-stop shop through their ecosystem,” said the Dalai Lama. “These retailers are not suffering even with the release of these new e-commerce players.”
Online retail sales of physical goods in China rose 14.8 percent last year to a total of 9.759 trillion yuan, 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 by December, the country had more internet users watching videos, to 927 million, the 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 these users made a purchase while watching a live stream, the report said.