Steep discounts and KOL endorsements have supercharged live-streaming sales in China, but are the merchants making money?
- For one show, it cost US$43,000 in fixed fees and 25 per cent commission on sales to hire a popular live-streamer to promote a European brand
- The live-streaming market will be worth 961 billion yuan in 2020, according to an iiMedia report
It cost Damian Maib 300,000 yuan (US$43,000) as a fixed fee and 25 per cent commission on sales to hire a popular live-streamer for one event on Douyin, the popular short video platform operated by ByteDance. The influencer also requested a 40 per cent discount on the products sold during the live stream.
“We really sold a lot of products, but we have not always been profitable … because we sold [them] for a very low price,” Maib said.
Maib, founder of the marketing firm Genuine German, based in Berlin and Shanghai, helps promote European companies in the Chinese market. He spends a couple of million yuan each month hiring KOLs in China to promote brands and products, mainly cosmetics and household goods, via live streaming.
“All of the big [KOLs] with a huge base of followers want to promise their fans the lowest price,” he said. “And they mostly have the power to bargain you down, so it quickly becomes a ‘take it or leave it’ deal.”
The live shopping event, which lasted about five hours, generated 3 million yuan in revenue for the brand Maib represented but that was not enough to cover all the costs, such as logistics, platform fee and KOL payment.