- Apr 20, 2020
- Executive Spotlights
Head of JD Live: Pursuing Both Effective Branding and Strong Sales in 2020
by Yuchuan Wang
On April 18th, Guowei Zhang, head of JD’s live streaming business, JD Live, spoke at the social e-commerce summit jointly held online by Youzan (a Chinese merchant services company) and Ebrun (a Chinese e-commerce news portal). The following is an excerpt of Zhang’s speech, “The Turning Point of 2020 E-commerce Live Streaming”:
Guowei Zhang, head of JD Live
As a core business of JD.com in 2020, JD Live will see relatively large investment and development this year. In my opinion, the e-commerce live streaming market has just begun, and it is still in the early stages. Live streaming will be the standard configuration for online merchants and e-commerce platforms in the longer term. As for JD, our first party business model, close relationship with merchants, the high quality e-commerce experience and strength in supply chain and logistics are the prerequisites for us to leverage e-commerce live streaming.
2019 is considered to be the first year of e-commerce live streaming. By my calculations, the number of merchants doing live streaming increased at least four times while the number of MCNs* also increased over four times. Here are the reasons why the business is becoming so popular:
- First, technologies such as 5G have continued to lower the threshold for doing live streaming so that everyone can become an influencer.
- Second, merchants are equipped with private domain operation tools and channels.
- Third, e-commerce platforms are in need of new marketing scenarios and they are willing to collaborate with merchants and MCNs on live streaming.
- Forth, live streaming has brought a brand new shopping experience, from awareness (pre-purchase) to eventual purchase, especially for younger generations and consumers in lower-tier cities.
But the prosperity is also accompanied by a series of challenges, of which I have listed only four:
- First is the imbalance in development of MCNs. Resources are focused on top institutions, so it’s harder and harder for others to acquire traffic and business.
- Second is the relatively high product return rate. On the one hand, customers tend to shop impulsively watching live streaming; on the other hand, “brushing”* has made the market opaque.
- Third is that most of the live streaming sessions lack good ideas and planning, resulting in low order conversion rate. It looks like everyone can be an influencer but the actual threshold is relatively high to do e-commerce lives well.
- Forth is acquiring traffic has become more and more difficult and is a challenge that needs to be figured out by both merchants and e-commerce platforms. I’ve seen many merchants join the battlefield just because others are doing so.
I believe 2020 will be the year for the industry to reach new heights. After the initial surge in 2019, e-commerce live streaming has come to its “turning point”. There are three aspects that the industry will pay attention to: building the ecosystem, including the ecosystem for both merchants and MCNs and influencers; building the infrastructure; and generating quality content.
We will keep investing in this field, integrate JD’s internal and external, online and offline resources and develop in three directions: 1) building a scalable business; 2) building a healthy ecosystem; and 3) building a new ‘quality e-commerce live streaming’ model.
- Building a scalable business: Live streaming will become standard for JD’s brands and merchants. We are targeting 100% of JD’s 1P business and 60% of JD’s third party merchants to do live streaming this year. To achieve this goal, we have introduced a large number of resources and supportive policies, for example, commission fees will be lowered to as little as 1%, and monthly promotions will be held to attract traffic. At the same time, we will provide a large number of coupons, JD points and other subsidies.
- Building a healthy ecosystem: JD is currently optimizing the system for merchants and MCNs to solve problems related to business development, matching demand and supply, etc. For example, we will digitize every step of live streaming and open JD’s data technology to help reach targeted consumers. We will continue to research how to provide a better experience, functionalities and marketing tools. Leveraging technologies such as 5G and AR/VR, we will introduce virtual images and immersive experiences to JD Live.
- Building a new ‘quality e-commerce live streaming’ model: We hope to make e-commerce live streaming not just a sales channel but a brand marketing scenario. Merchants should care more about their customers than about pure sales data, and make sales a natural result of brand marketing. In addition, we will bring live streaming from the broadcast studio out into the field, helping to visualize the supply chain and logistics. I also anticipate that pan-entertainment marketing will be the leading core area of live streaming. The industry should recognize professionally-generated content (PGC)* again. In the past, it was said that PGC does not bring conversion, but in fact, this is because the industry previously didn’t have a good way to leverage PGC.
At JD, we strive to make every live streaming, especially the most important ones, to be professional, popular and interesting, pursuing both effective branding and strong sales results.
*MCN: Multi-Channel Network, act as an agent to connect influencers and celebrities with brands, merchants and e-commerce platforms.
*Brushing: A deceitful technique used by sellers to create fake orders.
*PGC: Professionally Generated Content, which is more specialized than UGC is the content created by special groups with professional skills and technique.