June 3, 2020
China’s internet stars are changing the
retail landscape and a whole ecosystem has emerged to tap into this phenomenon.
The “internet celebrity economy” –– as one
of China’s new-economy sectors –– is revolutionizing consumption in a broad
sense and creating new business models for traditional e-commerce giants,
social media networks, and even brick-and-mortar retailers, among others.
This new economy, which is partially driven
by demographic changes in the country and the rise of internet platforms, has
experienced strong growth since 2018. According to data from third parties such
as Zhiyan Consulting and Huaon, in 2019, the size of China’s live-streaming
ecommerce market grew 226% YoY to about Rmb433.8bn and the country’s internet
celebrity advertising market reached Rmb51.3bn.
Figure 1: Ecosystem of the
internet celebrity economy
Source: TopKlout, CICC Research
Internet
celebrities: An overview
Internet celebrities (aka “influencers”)
are those who have established a sizeable fan base, which can then be leveraged
for monetization purposes such as for selling and promoting products. They
include content creators on social media, product experts and ordinary
citizens.
In addition to catering to different
audiences, how they operate varies as well. For example, while some internet
celebrities choose to retain their full independence and rely on social media
platforms only, some decide to sign with multi-channel network (MCN) firms to
receive professional support in areas such as content creation and monetization.
Figure 2: Types of internet
celebrities
Source: TopKlout, CICC Research
Figure 3: The number of MCN firms
in China
Source: Kuaishou, TopKlout, CICC
Research
Live
streaming
A particular bright spot in this new economy
is live streaming, which has become a popular way for internet celebrities to
promote and recommend products to their large audiences.
GMV (gross merchandise volume) of live-streaming
ecommerce accounted for about 5% of the entire ecommerce market, and internet
celebrities continue to set sales records. Viya –– one of Taobao’s top
“anchors” –– generated more than Rmb2.7bn in sales during the Singles’ Day
online shopping event on November 11, 2019.
This amount already exceeds the annual
sales of most physical shopping centers in China. It is not surprising that
physical retail channels are facing disruption in this era of the internet
celebrity economy.
Figure 4: Top-tier live streamers
at a glance
Note: Data as of April 2020
Source: Grass-root survey, finance.sina.com.cn, CICC Research
Figure 5: The live-streaming
ecommerce industry has experienced strong growth
Source: iimedia.cn, CICC Research
The
new era impacts both online and offline sales channels
The internet celebrity economy is
diversifying the way people shop, especially for those born in the 1990s and
2000s, and is impacting both traditional brick-and-mortar retailers and ecommerce
giants.
Figure 6: Retailing is more
diversified in the era of the internet celebrity economy
Source: Sohu, Ebrun, CICC
Research
In response to the emergence of the
internet celebrity economy, traditional ecommerce companies have rushed to
enter live-streaming ecommerce. For example, Taobao has done so by building content
and social interaction platforms and introducing key opinion leaders (KOLs) to
generate sales. Such a move could help it drive sales and boost the sales
conversion rate.
Content platforms have also capitalized on
this trend and are promoting live-streaming ecommerce in prominent areas of
their apps to entice users to join their live-streaming rooms. For example,
Douyin, Kuaishou and Weibo have launched shopping tools and built ecommerce
ecosystems. As such, it appears the trend is for e-commerce platforms to focus
more on content and for content platforms to increase their exposure to
ecommerce.
Brick-and-mortar retailers have also sought
to make themselves more popular with internet users and have launched live
streaming to promote sales. In addition to having internet celebrities host
their live streams, physical retailers can also seek the help of product
experts and beauty advisers. Live streaming not only helps them attract users,
but also improves efficiency and reduces operating cost.
Figure 7: Suning.com has
introduced live streaming
Source: Baidu Picture, CICC
Research
For more
details, please see our report Internet celebrity economy revolutionizes
consumption published in June 2020.