Be careful, Alibaba. Chinese language video apps are additionally shortly turning into e-commerce gamers
A man with a phone in his hand walks past a sign on the TikTok app made by the Chinese company ByteDance, locally known as Douyin, at the Hangzhou International Artificial Products Exhibition in Hangzhou, Zhejiang Province, China on Jan. October 2019.
BEIJING – Chinese consumers are shopping more via live streaming and video apps – a new trend that is capturing part of the huge market traditionally dominated by e-commerce giant Alibaba.
Popular live streaming and short video apps became major marketing channels in 2020, generating billions of retailer sales by connecting viewers to existing or proprietary ecommerce websites.
Take the example of the short video and live streaming app Kuaishou, which, according to Wind Information, brought in more than $ 5 billion in Hong Kong’s largest IPO since the coronavirus pandemic.
Gross Goods Volume (GMV) rose nearly eight times in the eleven months to November year over year to 332.68 billion yuan ($ 51.44 billion), Kuaishou said in its prospectus. GMV is a metric widely used in e-commerce to measure the total value of goods sold over a period of time.
The company primarily makes money selling virtual gifts that users can buy for their favorite live streamers. Kuaishou shares rose nearly 200% on Friday open.
Along with different types of e-commerce gamers that have sprung up in the past two to three years … the appetite of customers for online shopping platforms also varies.
Douyin, the Chinese version of ByteDance’s TikTok video app, tripled the number of e-commerce transactions last year to 500 billion yuan in GMV, according to a report by Chinese tech news site LatePost on Wednesday.
However, most of the GMV went to third-party e-commerce sites like JD.com and Alibaba’s Taobao, the report said. Only about 100 billion yuan in Douyin’s GMV came from the app’s e-commerce platforms, the report said.
ByteDance said in a statement to CNBC that LatePost’s numbers on GMV are incorrect and that third-party sales resulting from redirected user traffic should not be counted as part of GMV.
Tencent’s Wechat messaging app, which has more than 1 billion daily active users, has also become a platform for online purchases.
In January, WeChat announced that GMV for companies running their own mini-programs in the app increased 255% over the past year to an undisclosed amount, while GMV for physical goods sold through those programs increased 154% has risen.
“In addition to the different types of e-commerce gamers that have emerged in the past two to three years, including live streaming, social commerce, etc., customers’ appetites for online shopping platforms are also diverse,” said analysts at Morgan Stanley in a report last month. They predict that overall Chinese consumer spending will double to $ 12.7 trillion over the next decade.
Growing market for all e-commerce providers
The reports on the GMV of video apps show how fast the streaming platforms are growing as a portal for online shopping, even if established players still dominate.
For example, Alibaba’s video streaming sales site Taobao Live generated over 400 billion yuan in 2020 GMV, according to the latest earnings report for 2020. For the November 1-11 shopping vacation alone, the company’s GMV was 498 billion yuan.
“There is a lot of demand for e-commerce in China. Alibaba, JD.com, has the market because they are both online and offline,” said Suresh Dalai, senior director of consulting firm Alvarez & Marsal, focusing on the topic concentrates retail stores in Asia.
“They offer a one-stop shop through their ecosystem,” said Dalai. “These retailers aren’t even suffering from the new e-commerce providers.”
Online retail sales of physical goods in China rose 14.8% last year to total 9.759 trillion yuan, accounting for a quarter of all consumer goods sold in the country, according to the National Bureau of Statistics.
While the number of online shoppers rose to 782 million by December, more internet users watched videos in the country, 927 million, the government agency China Internet Network Information Center (CNNIC) said in a report this week.
In particular, the number of live streaming e-commerce users rose 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 livestream, the report said.