Luxury groups experiment with China’s livestreaming boom


Amanda Xie was sceptical when Tiffany, the luxury US jeweller, asked the online influencer to promote a $3,500 diamond necklace in a livestream from her Shanghai apartment.

“I don’t have a lot of confidence in selling luxury goods online, there is no discount and you don’t get the in-store experience,” she said. Like many of her peers, Ms Xie, who has 414,000 followers on the popular fashion platform Xiaohongshu, thinks livestreaming is best suited to raising brand awareness.

Yet she and another two “key online influencers” sold 300 of the Tiffany necklaces in the broadcast viewed by more than 5,000 people, most of them wealthy women in small cities.

After coronavirus lockdowns closed stores and footfall since reopening has been sluggish, brands from Lanvin to Louis Vuitton have launched livestreaming promotions in China.

The need to experiment to lift sales is pressing: analysts are forecasting a drop in global luxury revenues of 17-35 per cent in 2020. And while stores are reopening, at Beijing SKP, the nation’s largest luxury mall, assistants said a resurgence of virus cases in the city was deterring wealthy consumers and footfall was half that of pre-pandemic levels.

Brands hope to ape the huge success of online celebrities in marketing products through livestreaming in China. Chinese consumers drove 80 per cent of the growth in the €281bn of luxury goods sold last year, according to Jefferies, and accounted for 40 per cent revenues.

Jo Sun, a Shanghai-based influencer with 693,000 followers, sells an average of 70-80 items worth more than Rmb1m, in three hours for brands including Gucci, Chanel and Louis Vuitton. In contrast, a top-performing luxury store in Shanghai or Beijing achieves between Rmb500,000 and Rmb700,000 in sales a day, according to store managers.

Few businesses can afford to ignore China’s “live commerce” boom. The industry more than tripled its gross merchandise value to Rmb434bn last year from 2018, according to consultancy iiMedia. In contrast, China retail sales grew 8 per cent over the same period, the slowest pace in 30 years.

The pandemic has propelled the sector yet further. Daily active livestreaming shoppers on Kuaishou, a video sharing site, surpassed 100m this month, up from fewer than 50m at the end of last year, according to TF Securities. Goods up for grabs range from Rmb30 salted duck neck to Rmb370,000 Hermès bags.

Livestreaming offers a chance to broaden brands’ reach. Zhu Liang, owner of Yanzu Culture, a digital marketing agency, said the channel appeals to small city residents, an increasingly important consumer segment as luxury looks to lift sales in China but one with limited knowledge of the brands themselves. 

“A 30-second TV commercial or a full-page magazine advertisement isn’t enough to tell you how the brand becomes what it is,” said Mr Zhu. “A 30-minute live broadcast serves the purpose.”

In an added boon for luxury, 73 per cent of China’s active livestream shoppers are aged 20 to 40, according to Data100: the cohort, says fellow consultancy McKinsey, accounted for 78 per cent of luxury sales in 2018.

But industry observers warn the channel’s reputation for discounts is at odds with luxury’s desire for exclusivity and elevated prices. “There is a natural conflict between livestreaming and luxury goods,” said Gao Ming, director of luxury practice at Ruder Finn in Shanghai, adding that few western brands are “ready to take the challenge”.

“We would rather lose money than cut prices to boost sales,” said a marketing manager at French luxury house YSL in Shanghai, “discounts are detrimental to a brand’s reputation”.

Some brands including Louis Vuitton and Chanel have raised prices in China as they seek to ensure exclusivity.

Another concern is how the down-to-earth approach of influencers and livestreaming runs counter to the exclusive nature of luxury goods. “It is very easy to hurt the brand with the wrong [influencer],” said Simon Tye, executive director at CSG Worldwide, a market research firm in Hong Kong.

A Louis Vuitton open live stream in March hosted by renowned influencer Yvonne Ching received a mixed reception, with many local commentators describing the setting as “cheesy”. The French label said it had no immediate plans for another open broadcast and was watching how trends play out.

However, Mr Tye said the success of livestreaming should not be judged by viewers: “more important is the conversion of sales”.

But most luxury consumers remain to be won over to livestreaming. Patricia Kan, a clerk at a state bank in Beijing, said poor shopping experience deterred her from buying through livestreams.

“The showroom doesn’t look high-end, nor does the sound effect,” said Ms Kan, who spends Rmb50,000 a year on luxury, “that makes me reluctant to place an order even if the goods are real.”

Livestreamers understand the risk. Ms Sun said the key to winning customers was professionalism, adding: “Buyers will walk away if they hear you pronounce [the classic Hermès bag] Birkin as Brikin.”

Additional reporting by Wang Xueqiao



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