A few weeks back, we hosted our Unveiling Live Commerce in Southeast Asia event, which received great feedback. Led by our own Crystal, we distilled insights from our Live Commerce report into a fun session where we shared the market logic of the Live Commerce ecosystem along with insights into the different regions and key players.

In a poll, we asked participants why Jd.id was doing live commerce on TikTok. Interestingly, 41% of participants voted that Jd.id was doing it for cheap traffic, while 36% felt that it was to increase sales! You can read a quick recap of the event here.

We had a very interesting and heated discussion in the chat group, which was quite entertaining. We also received more than 20 questions during the event, all of which we did not have enough time to answer during the one-hour session. We took the time to go through all the questions and answer them for you.

Live commerce ecosystem 

1. What is the future direction and expected challenges for live commerce in China and eventually Southeast Asia?

We expect live commerce to be a permanent feature in China. Though its explosive stage has ended, we are now entering a stage of standardization. We feel the regulatory crackdown could even be good for the ecosystem as it could standardize how different players make profits. It could weaken the bargaining power of top influencers and potentially send traffic to other hosts and brands’ self-operated stores.

In Southeast Asia, it is unlikely that it will follow China’s exact trajectory of explosive growth. However, we expect the region’s live commerce ecosystem to leverage China’s capital, experience and talent, just as the ecommerce ecosystem did. Correct adaptation of strategies, operational tactics, and ecosystem development will be a good springboard for live commerce in the region.  

2. Is there a difference in the effect of live commerce in Tier-1 and Tier-3 cities? 

Yes. There are different needs for entertainment and shopping – Tier-1 cities might have more demand for luxury goods while Tier-3 cities may pay more attention to lower-priced common goods. Also, with fierce competition among ecommerce platforms in countries like Indonesia, it is hard to differentiate in top tier cities with similar supplies. 

3. Could you elaborate what are the challenges platforms, sellers, buyers, and hosts face in Southeast Asia?

The whole live commerce ecosystem is not mature yet. Each player still needs to figure out their priority, how they work with other ecosystem partners, etc. Eventually, all players need to work in sync to keep enhancing the user experience. 

Platforms will be the main driver and they may need to take the initiative to grow the ecosystem by connecting the various touchpoints in the consumer (buyer) experience. The other side, which is influencers, would also require some innovation to ensure sustainable business building in the space.  

4.What is live commerce’s share in ASEAN or Indonesia’s total e-commerce GMV today?

It is hard to get an exact number. A lot of activities at TikTok are heavily incentivised and do not represent the normal stable behavior. Moreover, a lot of live commerce is happening on Facebook and Instagram, which is linked to 3rd parties, and this is hard to track. Overall, it is a small percentage of ecommerce. 

5. Isn’t live commerce a bit too early in Southeast Asia? On a scale of 1-10, how far is live commerce in Southeast Asia compared to China?

As we discussed in the report, Southeast Asian countries are in different stages of development. What really matters is how fast it will grow and evolve over the next 2-3 years and not whether it is at stage one or two.

6. Didn’t China have several years of ‘only fans’-like live streaming prior to live commerce taking off? Without that fertile ground (no pun intended), what’s the case for live streaming in ecommerce in Southeast Asia?

We didn’t exactly get the pun, but live streaming development in China prior to live commerce not only prepared the consumers to accept live (in fact we think it is a small factor), but also tested the product system, enhanced video quality, and provided basic infrastructure. Southeast Asia could leverage all these products and operational experiences from China. The question is whether different parts of the ecosystem will develop coherently. 

Supply End – Sellers, manufactures, distributors

7. How much does a merchant have to pay to a livestreamer in China and in Southeast Asia?

It depends on the host. In Southeast Asia, it is much cheaper because viewership is typically much smaller compared to top streamers in China. 

It is worth looking at how platforms like TikTok distribute traffic. There might be room for small but creative hosts (agencies) to leapfrog.

8. What are the differences between merchants/sellers in China and in ASEAN? Would these differences influence the take up of live commerce (can the merchants in ASEAN afford the KOLs)?

In China, we have already seen that a lot of branded goods have entered live commerce while in Southeast Asia, there are still a lot of individual sellers. 

Branded goods definitely help consumers build trust towards live commerce. We expect to see more brands tap into live commerce themselves or through channel partners.

In a market, there is always supply and demand. The price will settle the equilibrium. If nobody can afford the KOL price, KOL will lower the price. 

9. If the unit economics for merchants remain low (given cost of traffic and share given / cost to KOLs) for live-streaming vs. other platforms (Tokopedia, Shopee…), how can live commerce be sustainable going forward? And wouldn’t it just be a tool for brands to increase brand awareness and ultimately sell on other cheaper platforms and/or direct?

There are brands that do Flash Sales in Shopee/Lazada while others don’t. Flash Sales are a high-frequency, high-volume approach to increasing a brand’s followers. Some brands don’t like Flash Sales, but if both types of brands start to invest resources in live commerce, it could help further grow the industry…

10. Livesellers tend to sell a wide variety of products – do you have any insights on whether branded or Shopee type products perform better through live selling?

Branded goods definitely. In much of Southeast Asia, we are in the early stages of direct to consumer brands, so existing and established brands probably play important roles in kickstarting the live commerce ecosystem.

11. Do you think the cost of selling via live commerce would be expensive than traditional methods? Would it be like current S/L platform as merchants will give % of commission to creators if the merchant doesn’t have KOL inhouse ?

Refer to question 8.

12. How about 1-1 interaction between sellers and customers? What kind of live commerce opportunity does this space present? Is it a viable entry for brands?

Any business is looking for a scalable model. 1-1 is less scalable than 1 to many. Would you rather invest in a consulting business or a product business? 

1-1 works when customers attach a high premium to the experience of 1-1; for example, the now banned online education in China. 

By the way, in traditional ecommerce, when you chat with customer service it is already 1-1. 

Live commerce is both 1-1 and 1 to many. The host’s personality can play a role in creating FOMO, going beyond the usual flash sales, time limited discount, etc. Technically, brands may have an easier time playing the FOMO game in live commerce without sacrificing margin but time will tell.

You can find the second part here.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].