How big will livestreaming ecommerce get in Southeast Asia?

This durian season, Lawrence Lim, who runs traditional confectionery store Gin Thye, is turning to ecommerce platforms Lazada and Shopee to livestream his shop’s products. That’s on top of the livestreams it conducts regularly on Facebook via partnerships with third-party seller pages like KakilangSG that have their own following.

In a recent one-hour livestream on Shopee that drew close to 900 viewers, a host unboxed Gin Thye products, showcased their packaging, shared her “honest” reviews, and answered queries in real time. “It is really silky and smooth… If you’re a durian lover like me, you’d definitely not want to miss this!” she exclaims, while eating a durian mousse.

Gin Thye livestream on Shopee Live

A livestreamer sells Gin Thye products on Shopee Live.

In China, livestreaming ecommerce was a US$61.2 billion industry in 2019, a figure that’s expected to double this year. Three main players dominate the Chinese market: Alibaba’s Taobao Live, which was launched in 2016, as well as short-video apps Douyin and Kuaishou.

Covid-19 has accelerated the pickup of the ecommerce format in Southeast Asia, which is home to over 650 million people. While Lazada introduced its LazLive feature as early as in 2018, Covid-19 has given the trend a further boost, as pandemic-induced lockdowns across the region in the past few months forced many to explore other ways of discovering new products.

Lazada said it welcomed over 27 million active live audiences in April, adding that it has over 65 million annual active consumers.

US tech giant Facebook is the latest to want in on Southeast Asia’s thriving ecommerce scene. The launch of its free-to-use selling tool Facebook Shops in May and a recent investment in Gojek are strong indicators of its ecommerce ambitions in the region.

How big is the opportunity?

While the scale of livestreaming in Southeast Asia has yet to match China’s, the region has great potential, says Xiaofeng Wang, a senior analyst at market research firm Forrester.

The growth trajectory of livestreaming in China could shed light on how fast and how far the phenomenon can take off in Southeast Asia.

In its Singles’ Day shopping festival last November, Taobao Live recorded a gross merchandise volume (GMV) worth nearly 20 billion yuan (US$2.8 billion), which accounted for over 7.5% of the group’s total sales in the one-day event.

Between April 2018 to March 2019, Taobao generated more than 100 billion yuan (US$15.1 billion) in GMV through Taobao Live. Ecommerce sales from livestreaming grew at a pace of 150% year-on-year between 2017 to 2019, according to Taobao.

However, it appears that livestreaming makes up only a small percentage of ecommerce sales even though Taobao Live is also available to Tmall merchants.

It’s likely that livestreaming will feature as part of a broader suite of services including games, social networking, and in-app chats, which collectively work to increase user engagement and time spent on the platforms. At the same time, traditional ecommerce is expected to continue its dominance.

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Shopee and Lazada have declined to disclose the percentage of total ecommerce sales being driven by livestreams.

But because Shopee Live is still in its infancy – it was rolled out in June 2019 – the number is probably not significant yet, based on Tech in Asia’s back-of-the-envelope calculation for Shopee.

Shopee’s GMV was US$17.6 billion in 2019.

  • Using a generous estimate of 1.7% (Taobao Live’s contribution to total marketplace GMV in 2019, its fourth year of operations), Shopee could potentially see US$299 million in GMV from livestreaming transactions just a year after its launch.
  • At a take rate of 4.1% in FY 2019, Shopee could soon record US$12.3 million in annual revenue from livestreaming. To put that into context, Shopee made US$731 million in marketplace revenue in 2019.

If Southeast Asia follows China’s trajectory, livestreaming can play a sizable but niche role in ecommerce.

Accelerated by the pandemic

There are signs, however, that Covid-19 has given the trend a major boost.

Total GMV generated through LazLive climbed 45% month over month in April, at the height of lockdowns across Southeast Asia as cities shuttered malls. Lazada aims to increase daily livestreaming sessions by 50% and expects total viewers to rise by 40% month-on-month by the end of June.

Pomelo Live stream

Pomelo has reached over 13 million people through livestreams it held between March to May. / Photo credit: Pomelo

Much of the growth is being driven by offline consumers going online. While users between age 18 and 34 are the most active on Shopee Live, the platform is gaining higher viewership from people aged between 34 to 50 across the region.

Fashion retailer Pomelo is also seeing more offline shoppers buying online. “That’s what’s driving the doubling of new customers,” says CEO David Jou.

Livestreaming viewership on the Thailand-based ecommerce platform, which streams on its app and on Facebook, has also grown 1,100% between March to May, albeit off a small base, Jou admits. Pomelo has reached over 13 million people through livestreams it held between March to May.

“Just having a static product page is just not that interesting anymore for a lot of users. They want to see the product live, they want to ask questions, they want to interact. If they can do all that, they are more likely to convert,” Jou observes.

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While livestream content focused on fashion, health and beauty, and electronics is already popular among Southeast Asian users, livestreams for food products, groceries, and general merchandise have gained momentum amid the Covid-19 crisis, Lazada said in May.

Will shopping behavior persist even as the pandemic subsides? Shoppers may continue purchasing consumer packaged goods online, but they may return to stores for items such as food and produce due to their perceived freshness, Forrester’s Wang says.

Facebook’s foray

While livestreaming ecommerce could very well grow on its own in Southeast Asia, it’s tech behemoth Facebook that could end up reaping a sizable chunk of the market share.

In China, Alibaba didn’t need to contend with Facebook, but that’s not the case in Southeast Asia, where the social media giant’s apps continue to hog eyeballs.

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The company’s Facebook Pay feature could soon be launched in Indonesia and offer Gojek’s GoPay as a payment option. The move will deepen Facebook’s reach in the archipelago, where GoPay is a dominant mode of transaction.

The integration of shopping features across Facebook, Instagram, and WhatsApp channels will create closed-loop purchases across the various platforms, pitting it against Shopee and Lazada.

Facebook Shops’ live shopping feature will also allow businesses to feature product launches and tutorials, among other content, in real-time. Currently, more than 800 million people all over the world engage with live video on Facebook and Instagram daily, Facebook CEO Mark Zuckerberg said in a May announcement.

Compared to ecommerce apps, user engagement is more organic on Facebook, where products are pushed to users as they scroll through their feeds, says an analyst who isn’t authorized to speak to the media. Clicking and opening an ecommerce app for the sole purpose of browsing products is “a conscious decision and hence a friction point,” the source notes.

However, the analyst predicts that professional merchants are likely to stay on Shopee and Lazada, whereas Facebook and Instagram will facilitate the “amateur or occasional” sellers.

Players in Southeast Asia aren’t worried. “Facebook Shops is going to be a great tool for small sellers. […] For us, the point of differentiation for our users is in pickup,” Pomelo’s Jou says, referring to how the platform allows shoppers to try on clothes before they complete their online purchase. Bad fit or wrong sizing remain the largest pain points in shopping for clothes online.

Photo credit: Panithan Fakseemuang / 123RF

Forrester analyst Wang doesn’t consider Facebook a big threat to Shopee and Lazada. That’s because for the most part, consumers in the region are more used to shopping at online marketplaces compared to social media channels.

Without serious investment in local markets, it wouldn’t be easy for any foreign company to build a successful and sustainable business in the region. Having a variety of options, especially for local products is very important to consumers in Southeast Asia, Wang says, which is why “Amazon Prime isn’t as attractive as Redmart to local consumers.”

For Lazada and Shopee, being able to charge for merchant services that Facebook can’t offer works in their favor. Both platforms have also built logistical fulfillment networks with regional partners. This is an essential service particularly for sellers looking to ship overseas, given Southeast Asia’s underdeveloped infrastructure and patchy logistics network.

Alibaba’s payment affiliates in the region, including TrueMoney in Thailand and GCash in the Philippines, also make a user’s shopping journey as seamless as possible.

“Ecommerce isn’t a strength of Facebook. It [hasn’t] mastered social commerce in its home market yet. I doubt it will become a threat to Lazada or Shopee in the near-term,” Wang adds.

Lazada is confident that its closed-loop ecosystem of logistics, payments, and technology will prime it for success. “We think all the foundations that are required for livestreaming to take off are already there,” says chief product officer Raymond Yang.

The merchant equation

While livestreaming is free on Southeast Asia’s major ecommerce platforms, success is more likely for those who have some help, whether in marketing or logistics. Shopee and Lazada can provide such services at a small fee.

Merchants have had to adapt quickly. “It does take a lot of coordination [and] back-end setup. Selecting the right person in place to host the live stream is very key,” Yee Ling Lee, digital marketing manager at JBL for Asia Pacific, tells Tech in Asia.

The US-based audio equipment company has been running livestreams on LazLive since 2018. It also regularly holds livestreams on Shopee Live and occasionally taps Instagram Live.

Shopee has a range of advertising and production tools to help sellers get started, including hiring social influencers to host livestream sessions or designing homepage banner ads to maximize their reach, says Agatha Soh, the company’s head of regional marketing.

To educate brands and sellers, Shopee also provides step-by-step guides, regular tutorial webinars, as well as tips and tricks on how to improve the effectiveness of their livestreams.

Lazada offers similar marketing tools as well as studio venues for rent. The price range of such services, which includes marketing support, is “not expensive at all,” says product executive Yang.

However, it’s less of a monetization opportunity and more of helping merchants get acquainted with the service, he explains. Shopee and Lazada are tight-lipped on how much their livestreaming-related services cost.

From the merchant’s perspective, a range of costs are involved in setting up a livestreaming session. To maximize visibility on a livestream, additional dollars have to go into external marketing pushes to direct traffic from its target audience to the session. This can take up a bulk of the costs of running a livestream, JBL’s Lee says.

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On the whole, however, livestreaming is still a relatively more cost-effective option compared to TV advertising, she says.

But how effective is it in driving sales? “I would say that livestreaming is part of your marketing mix, and I would generally classify this as more of a brand [and] product awareness mechanic, [rather] than a conversion activity,” Lee points out.

She adds that the eventual sales conversion depends on the product category, with customers less likely to make an impulse purchase for items with a higher price point.

Since livestreaming is a new approach in Southeast Asia, merchants will need more help in general.

While the livestreaming service is free, Gin Thye’s Lim says its products on Lazada and Shopee are sold at a discount of between 10% to 20%, in exchange for the marketing and livestreaming support it receives. “We support each other,” he explains.

Lim believes that passive listings on an ecommerce site no longer cut it. While Gin Thye also lists its products on other platforms like Qoo10, Ezbuy, and Redmart, a single livestream session on Shopee or Lazada can easily trump two weeks of sales from regular product listings because of higher visibility.

Visibility matters when so many merchants are competing to get a shopper’s attention. Frontpage ad placements, which platforms provide at no extra cost (at least for now), have been crucial in garnering eyeballs, Lim notes.

But livestreaming slots are limited, and that’s an issue that merchants like Lim face. As a result, Gin Thye continues to run sessions on other platforms such as Facebook, even though doing so requires more effort, such sourcing for its own livestreaming hosts.

Since livestreaming is the trend now, “you’ll have to do it more often and regularly,” Lim says. But as the concept catches on, merchants could see diminishing returns on livestreaming.

Building a foundation

In a wildly successful instance in China, appliance manufacturer Gree Electric Appliances sold 310 million yuan (US$43.5 million) of goods in a 90-minute livestreaming event on Kuaishou.

“People we speak to say livestreaming does bring in more sales,” an equity analyst who requested anonymity tells Tech in Asia.

But unlike shoppers in China, consumers in Southeast Asia are less digitally empowered and less willing to experiment with new technologies. This, in turn, slows down the adoption of new tools and experiences, whether in livestreaming ecommerce or in mobile payments, in a market that’s “more fragmented,” according to Forrester’s Wang.

“Consumers are still forming the habit of shopping online, let alone livestreaming,” she explains. To grow at China’s pace, livestreaming offerings will need to match up in terms of the quantity and frequency of sessions, participating brands, product variety, and video quality as well as the professionalism of hosts and aggressiveness of promotions.

In Southeast Asia, the kinks are still being worked out.

Malaysia fashion retailer Naelofar launch on Shopee Live

A livestream by Malaysian celebrity Neelofa on Shopee Live / Photo credit: Shopee

“One of the main differences is that you need to start with the entertainment side and then transition to the shopping side,” Pomelo’s Jou says. In China, “it’s all about using influencers to sell products.”

In Thailand, Pomelo weaves in shopping with content that’s driving the most engagement: food, healthy living, and inspirational material. It has featured chef recipes, work-from-home routines, and morning workouts in its livestreams.

“[Consumers] are coming for the content. If they discover a great product in the process and you make it easy for them to shop, that works,” Jou says. “But if you just say, ‘We’re going to have an online livestream shopping experience,’ that isn’t as attractive, especially if you don’t have really large discounts or mega promotions.”

Another challenge is the lack of livestreaming talent.

“If you’re a brand that wants to go into livestreaming, which of your employees can do that?” asks Yang, who spearheaded product development and innovation for Chinese commerce site Taobao before joining Lazada in 2017.

Taobao Live alone plans to train more than 10,000 retail sales people across China to become livestreamers who can each reach audiences of 10,000 or more, and another 100,000 hosts who can potentially earn a monthly income of over 10,000 yuan (US$1,400) each.

Compared to China, Southeast Asia doesn’t have such a readily available talent pool.

To bridge that gap, Lazada has launched a LazTalent program in Thailand and Vietnam to recruit and train brand hosts, with the hope of them eventually becoming key opinion leaders or KOLs. “It’s like a matchmaking marketplace between them and brands who need promoters,” Yang explains.

It seems like it won’t be long before armies of hosts will be hawking all kinds of products across Southeast Asia.

Currency converted from Chinese yuan to US dollar: 1 yuan = US$0.14.