Bilibili climbs on livestream sales wagon, but may be too late

Chinese online video streaming site Bilibili has quietly tiptoed into livestream sales in a bid to curb mounting losses, but it is running up against faster moving competitors as well as a new regulatory crackdown by Beijing.

Over the first nine months of 2021, Bilibili’s net losses ballooned 113% to 4.7 billion yuan ($739.26 million) even as revenues grew by two-thirds to 13.6 billion yuan. On Thursday morning, the Shanghai-based company’s sliding Hong Kong-traded shares tumbled 6.1% to end the session at HK$281, putting it on course of its lowest closer ever.

Bilibili, which is backed by both Tencent Holdings and Alibaba Group Holding, last month began trialing a “shopping cart” function after getting a license to provide payment services through a small acquisition. Now livestream viewers on its app can connect to third-party shopping platforms to purchase items featured on screen.

“Livestream selling is a trend and many well-known entrepreneurs have joined the bandwagon too, so to some extent, livestream selling is an inevitable choice born out of desperation,” said a professor in Guangzhou who follows the sector. “For Bilibili, any profit from livestream sales would be better than nothing, given that they are under huge financial pressure.”

Livestream retail has been shaking up Chinese shopping for the last several years, particularly since the COVID lockdowns of early 2020. During last year’s Singles’ Day sales, video services Kuaishou and Douyin vied fiercely with Alibaba’s Tmall, where the seasonal promotion started, for attention.

A Bilibili livestreamer promotes discount coffee. (Source image from Weibo)

 

The trend has turned thousands of influencers selling everything from cars to lipstick at attractive discounts into millionaires, or even billionaires, almost overnight.

This, though, has recently attracted negative attention from Beijing due to Chinese President Xi Jinping’s “common prosperity” campaign, with the authorities launching a crackdown on tax evasion and other alleged malpractices. Viya, a top influencer on Alibaba’s Taobao Live platform known as the “queen of livestreaming,” received a record 1.34 billion yuan tax penalty last month.

Bilibili, founded in 2009 as a hub for fans of animation, declined to comment on its foray into real-time sales. Named after a female Japanese cartoon character, it became popular among lovers of anime, comics and games. Like YouTube, it also supplied a platform for individual creators to share their work.

But this model has yet to bring in profits amid a fierce battle for the attention of Chinese viewers.

“Bilibili is under great pressure to monetize, and it doesn’t want to give investors a blow if it fizzles out quickly in the new business,” said Zhang Yi, chief analyst at iiMedia Research in Guangzhou.

Adding to its challenges, Bilibili could struggle to squeeze suppliers for the lowest prices demanded by livestream buyers. It also has yet to set up a complete supply chain or an after-sales support network, Zhang said.

Demographics may be another hurdle.

Unlike some competitors with older users who have more cash to spend, the average age of Biblibi users is just shy of 23, with some 86% of users below 35.

Bilibili viewers make text comments directly on screen, a social function that may not always support sales. (Screenshot of Bilibili’s streaming service)

 

By contrast, about 31% of rival users of Douyin, ByteDance‘s Chinese companion app to TikTok, are aged 31 to 40, with 20% between 41 and 50 — key demographics for online shopping.

Recently, a pair of livestreamers dressed as Japanese high school students called on viewers to plunk down cash for a collection of Bilibili anime figure kits, as tantalizing discount offers flashed across the screen.

But many younger users were only interested in window shopping.

“The collection is so cute,” said one live comment that flashed over the screen.

Another quickly added, “I am not gonna buy it because no spending equals saving all the money.”

Big discounts and ensuring trust in livestreamers selling products online will be key for any player in the burgeoning sector, said Daphne Tuijn, chief executive of Chaoly, a data insights and intelligence company in Shanghai.

“There will be a question mark as to how many people would still be willing to shop in live broadcast rooms if discounts are not competitive,” she said.

Author: CISSY ZHOU, NIKKEI Asia

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