To cope with Beijing’s clampdown on internet celebrities, retailers are shifting their strategies away from livestream super hosts.
Livestreamers in China used to sell billions worth of yuan of products in hours. But they gradually went offline after Chinese tax authorities knocked on their doors. Others, such as Lipstick King Li Jiaqi , simply evaporated in three months after inadvertently stumbling on political sentiments.
Sources tell Bloomberg that businesses are now evading long-term contracts with influencers and instead focusing on the short-term versions. In the past, online celebrities used to gain long-term deals typically.
The people added that companies are also establishing their own studios for livestream broadcasts and developing internal influencers who are easier to manage.
Several international brands have already switched to the in-house model, including Nike, L’Oreal, and Uniqlo. They have amassed more than 20 million followers on their company-run livestreaming pages on Taobao, an Amazon-like platform developed by Alibaba. Local brands such as Anta Sports Products have also implemented the strategy.
The crackdown has also ushered in the rise of digital influencers. Luxury jewelry retailer Tiffany & Co is collaborating with Ayayi, who made her social media debut on Xiaohongshu last year. Forrester Research estimated that 20% of China’s business-to-consumer firms will employ virtual personalities by 2023.
Dave Xie, a Shanghai-based principal of consultancy Oliver Wyman, tells the publication, “Amid the recent falls of the superstar livestreamers, brands are now actively speeding up the development of their own livestreaming studios.”
Xie added that retailers are also changing to smaller platforms.
The scandals have shaken customers as well. As the outlet cited a survey by consulting firm AlixPartners, three-quarters of consumers say they would watch a livestream or make purchases through the sales channel this year, down from 97% a year ago. The study gathered answers from roughly 2,000 people in China. Some shoppers said that hearing negative press about the hosts made them less interested.
Jelly Li, a civil servant in Guangzhou, said her interest in livestreaming has been much lowered. She previously watched China’s top livestreamers daily to get everything from snacks, cosmetics, and dresses to shampoo.
As several livestreaming stars remain silent during the 11.11 Singles Day, the annual event is widely expected to report flat to moderate transactions. Furthermore, China’s economy is in a downturn, and customer confidence is affected by persistent COVID lockdowns and global inflation. In the past, the extravaganza enjoyed meteoric growth since its launching in 2009 by Alibaba, with live streamers selling billions of yuan worth of products in hours.