Live Selling in Southeast Asia: Basics, key dynamics and opportunities for brands

This blog post is the second in our SEA Social Commerce series. Please see the announcement of our research initiative here, and the full list of social commerce archetypes here.

In this blog post we seek to shed light on the emerging social commerce archetype of live selling, and to help brands and retailers decide whether to invest in live selling in Southeast Asia. 

Much has been written about this topic already, including good resources like this report from MomentumWorks and The Ken’s piece on Zalora’s Z-Live initiative. We hope to take the discussion one step further by sizing the opportunity, outlining go-to-market considerations for brands, and sharing indicative live selling economics for P&L modelling.

First things first: what is live selling

At the most basic level, live selling, also known by names like video commerce, live commerce, and livestreaming commerce, is a combination of internet entertainment and commerce where a presenter broadcasts live on video to an audience with the hope of selling them something. It is, in a broad sense, the internet’s answer to television home shopping (QVC).

Live selling has existed as a fringe e-commerce activity for over a decade, but a perfect storm of increased e-commerce penetration, more powerful smartphones, and faster mobile internet connections, has propelled the trend to new heights in the last few years. 

This is especially the case in China, where live selling exploded around 2019 and now drives more than 15% of all e-commerce according to eMarketer. This growth from the north has created anticipation of a similar boom in Southeast Asia. But we believe there are meaningful differences between live selling in China and in Southeast Asia. 

The focus of this post is the Southeast Asian live selling market and its implications for brands and retailers in the region. We do however recommend studying the Chinese market for clues, and suggest starting with this YouTube video and this profile of Viya, one of China’s top live selling influencers.

Live selling is likely a 13-18bn USD market in Southeast Asia in 2022

Any brand or retailer considering live selling is faced with two key questions when trying to size the opportunity: how many internet/e-commerce users buy through live selling, and what share of e-commerce GMV does it ultimately drive? 

While we are conducting our own primary research to answer these questions and many more in the coming 2022 SEA Social Commerce Report, we have scoured the internet for proxy sources to present an educated guess as a start.

Share of internet users who have made live commerce purchases

The first public sources started estimating Southeast Asia’s live selling penetration at the internet user level in 2020, and more joined in 2021. Estimates of 20-40% for the share of internet users who are participating in live-selling in 2022 seem to be the consensus. For comparison, in China, the world’s most advanced live selling market, equivalent estimates for this year are more than 50%.

Share of e-commerce GMV driven by live selling

Leveraging the insights about live selling penetration above, we can make an educated guess about live selling GMV share in Southeast Asia by comparing penetration rates with markets that are better sourced, like China and the United States. Given the total set of known dynamics, we believe this indicates a live selling market of 13-18bn USD in the region. 

We will share more details on the market sizing, including estimates for each of the regional markets, in our upcoming report. For now, we believe these estimates add credibility to the hypothesis that live selling contributes to a meaningful share of e-commerce in Southeast Asia, and that it will likely continue to grow fast in the coming years. As a result, brands and retailers in the region will need to decide whether to enter, and if yes, how to do it.

The most important live selling dynamics: Platforms, sellers, and economics

Live selling in Southeast Asia is still at the early adopter stage. Consumers are constantly evolving their engagement behaviour, and live sellers and platforms are doing their best to keep up. The result is a very high rate of innovation and a dynamic landscape of sellers, buyers, platforms and enablers. However, some best practices are emerging, and we believe they can be useful for anyone who is considering how to start live selling.

Where to stream? There’s three kinds of live selling platforms today

There are currently three types of platforms for live selling in the region - social and content platforms, e-commerce platforms, and a growing set of app-based native live selling platforms. While tools to simultaneously cast a feed of video to multiple platforms exist, complexities related to audience engagement and transaction capture make it challenging to execute this “multicast” live selling well. In other words, live sellers have to choose a primary platform, and each comes with its own set of trade-offs. We believe the most important traits of live selling platforms are:

• Viewership: How many consumers can be reached and turned into viewers, either through discovery or through an existing brand audience?
  
• Engagement tools: Features like emoji reactions, votes, in-stream games and quizzes that are built to keep viewers engaged and watching.‍
• Conversion tools: Platforms need to provide simple and safe ways for consumers to buy through live selling. Native tools are best, followed by third-party tools.

The exhibit below outlines some of the pros and cons of each type of platform. Scroll past the exhibit for more detail on each platform type.

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Social and content platforms

When live selling started to proliferate in Southeast Asia around 2018 and 2019, the Meta ecosystem - consisting of Facebook and to a lesser degree Instagram - was where most of the action started. Brands and influencers with an existing audience were able to find immediate viewership, and new sellers could lean on Facebook’s discovery and sharing algorithms to build an audience. The trade-off however, is that Meta has never taken significant steps to improve its live selling engagement and conversion tools. TikTok has taken a starkly different path, mirroring the integrated e-commerce tools of its Chinese sister-app Douyin to provide fully integrated online check-out, even in its early days of user growth. As a result, the two ecosystems provide different value to live sellers:

• Meta (Facebook and Instagram): Great platforms for audience capture and total viewership due to their large user base and sharing features. However, there are virtually no live selling-oriented engagement tools, and conversions have to happen off-platform or through Messenger. A number of tech-based vendors like vRich (Thailand) and Upmesh (Singapore) have emerged to fill this gap with order management systems. Even with these technologies many viewers find it daunting to buy and pay, limiting conversion rate.
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• TikTok: TikTok features built-in engagement tools, like emoji reactions and simple in-stream games, and an integrated e-commerce engine as part of TikTok shops. The result is a much more engaging and conversion-oriented live selling platform. However, TikTok still has a much smaller user base than Facebook and Instagram, and most brands will have to build a brand-new audience there to succeed.

We believe social and content platforms are a good place to start for brands and retailers who want to try live selling. Facebook and Instagram work well if you have an existing platform audience and the ability to capture e-commerce orders elsewhere, but TikTok is a much more vibrant and live selling-friendly platform that is poised for growth - particularly with younger audiences. 

e-commerce platforms

While the emergence of live selling on social platforms was driven more by enthusiastic streamers than the spartan infrastructure, live selling through e-commerce platforms has been very deliberately instigated by the two dominating e-commerce marketplaces in Southeast Asia, Shopee and Lazada. Both learned best practices from Chinese e-commerce giants like Taobao and JD and applied them in Southeast Asia. More recently, another type of e-commerce platform live selling has emerged, with individual brands or retailers creating live selling destinations inside their website or app. Both channels offer trade-offs:

• Shopee and Lazada: Southeast Asia’s two regional e-commerce marketplace leaders offer nearly identical live selling tools and experiences. Both offer highly advertised “primetime slots” with high viewership to selected brand partners, but the bulk of live selling GMV is spread between thousands of independent sellers who stream daily to a small audience with a product selection and style similar to a weekend market or bazaar. While these platforms provide a great stage for brands to live stream now and then - for example in conjunction with a sale or a product launch - their “wild west” seller landscape, which includes many sellers of fake branded goods, prohibit most brands from taking their activities to the next level.
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• Independent e-commerce live selling: Some large brands and retailers with an existing e-commerce business are creating their own live selling environment to boost on-site/in-app engagement and conversion. In these cases, software vendors like Bambuser (Sweden) and Belive (Singapore) provide technology and services to allow players like Zalora, Uniqlo Thailand, and Rakuten to power their own live selling. These technologies are proven to increase engagement and conversion, but this channel requires significant traffic scale, given the share of D2C e-commerce in Southeast Asia is still very low.

If social platforms provide the best stage for live selling audience generation, e-commerce platform live selling is tailored to help engage and convert traffic that already exists. We recommend most brands and retailers to be more careful on platforms like Shopee and Lazada due to the low viewership and brand-risky seller environment, while any brand with a large existing D2C e-commerce business (>10mn USD per year in sales) should explore independent e-commerce live selling to maximise engagement, conversion and repeat orders.

Native platforms

The latest addition to the live selling platform landscape is so-called native live selling platforms. These are most commonly venture-backed start-ups and dedicated fully to a mobile experience, either through an app or a mobile website. Notable examples include Livecom (Malaysia) and Ooooo (England). These platforms aim to marry a high-quality set of engagement and conversion tools with integrations to multiple e-commerce sites, allowing influencers and independent presenters to stream and sell easily, and to earn money through a revenue share agreement.

While these platforms are conceptually interesting, most are still in a very early stage of their development and do not offer compelling alternatives to the social or e-commerce platforms listed above. Many also do not have sufficient viewership or activity to warrant focus by big brands at this point. 

Who’s streaming? Competition for eyeballs is split between independent sellers, influencers, and some first-mover brands

Although live selling is still in its infancy in Southeast Asia, low barriers to entry mean that there are thousands of live selling livestreams active at any given moment. Consumers can only view one livestream at a time, so there’s sharp competition for viewership. Three categories of live selling streamers vye for those eyeballs today, each employing different techniques and tactics to engage with and convert viewers. We’ve described each live seller type in detail below:

Independent sellers

This segment, containing micro-sellers of all kinds, is by far the largest by quantity, but at the same time also the hardest to understand. It includes anything from local clothing shop owners to toy importers, and is characterised by a couple of distinct traits:

• Limited merchandise differentiation: Most sellers in the segment rely on products purchased from wholesalers, including many from cross-border sellers on Chinese sites like AliExpress, and their assortment tends to change rapidly with the rise and fall of trends. This segment responds quickly to trends by replicating each other, so assortment across sellers tends to coalesce fast.
  
  
• Hustle and creativity: Many independent sellers also operate shops on platforms like Shopee and Lazada, and started live selling to differentiate themselves through service, community and human touch. They often stream for several hours on end, drive engagement with improvised games and audience outreach, and find ways to overcome platforms’ limitations through creative solutions. For instance, sellers with mature audiences solve for their viewers’ tech proficiency gaps by encouraging their prospective buyers to ask their kids to help make payment.
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• Focus on community: Most sellers stream almost daily, with weekly live hours adding up to a full-time job equivalent or more. While audience sizes vary a lot, most sellers rely heavily on a small set of regulars who tune in often and buy from time to time. As a result, independent live sellers are heavily community-focused and put significant effort into building relationships with regular viewers.

Independent live sellers can appear like an attractive target segment for brands and retailers due to their high aggregate GMV, but lack of scale, high discounts, and branding risks mean that very few organised sellers have succeeded in generating sustained sales through this channel so far.

Brands and retailers

As live selling has become more well-known, more and more established brands are experimenting too. They tend to pick one of two common angles of attack; one group, like Uniqlo Thailand, starts by streaming to their existing Facebook audience with conversions happening on their website, while another, like Adidas Malaysia, partner with an e-commerce platform like Shopee to host live sessions in conjunction with a brand launch or major sale. A couple of dynamics are emerging among this set of established live sellers:

• Low frequency of streaming: Brands and retailers who leverage live selling tend to treat it more like a marketing activation than as a distribution channel. While most independent live sellers stream daily, first-movers in the organised seller segment tend to stream anywhere from once per quarter to once or twice per month.
  
  
• Reliance on presenters: Established brands rely heavily on hired presenters to drive engagement and conversions on their live streams. Many mega-brands started out by leveraging their existing celebrity ambassadors, but have later started relying on specialised live selling presenters and influencers who master the unique live selling skill set better.
  
  
• High production value: While independent sellers normally rely on spartan streaming setups, filming in portrait mode from a smartphone, large brands have a tendency to invest in more elaborate setups. This includes rented or bought recording equipment, but also branded studios and professional editing. These investments ensure that live selling activities look and feel on-brand, but drag down returns on live selling activities.

For established brands that consider live selling, shadowing first-mover brands and retailers is a great way to gain a basic understanding of best practices. That said, the sample size of active brands is still very small, and only a few have successfully evolved live selling from the experiment stage to real recurring operations.

Influencers

Social media influencers is no new concept in Southeast Asia, where the vast majority of brands and retailers work with ‘key opinion leaders’ to generate awareness, engagement and conversion around new launches, sales and more. But live selling influencers, who have risen to fame due to their infectious personalities and selling skills, are a very different breed:

• Known for live selling: Live selling introduced a third dimension of capability for social media influencers. In addition to their raw audience size and brand fit, they also had to be good at selling live. The result is that the biggest live selling influencers today are a very different set of people than the broad influencer top lists. Hannah Ohlala moves millions of dollars of beauty products annually without being in the top 20 of Vietnamese influencers, and Pimrypie ranks far outside Thailand’s top 100 Instagram accounts while reportedly crossing 200,000 transactions in a past 3-hour Facebook live selling session.
  
  
• Curation of deals: While some live selling influencers started with an existing following from broader content creation, most have generated their audience purely from live selling. They’ve done so by succeeding at turning commerce into genuine entertainment, but also by being very selective about which deals to feature. Since their primary business model is promoting other brands and manufacturers’ products in return for a share of revenue, they are very skilled at negotiating a deep consumer-facing discount and meaningful revenue cuts. The result is high unit sales, but often also poor economics for brands.
  
  
• Prefer social platform selling: Live selling influencers live and die by their audience, so they tend to prefer streaming on platforms where they have a higher degree of ownership of their audience. For this reason, they mainly stream on social platforms like Facebook and Instagram. They tend to be largely absent from e-commerce platform streaming, except in cases where brands or platforms hire them specifically to generate awareness and viewership there. 

Influencers hold massive sway over what moves in live selling, making them an attractive tool for brands and retailers that want to grow live sales fast - whether through the influencers’ own channel or by hiring them as a presenter for the brand’s channel. We caution aspiring sellers to be careful in evaluating the brand-fit of each influencer, and to structure commercial terms in a way that guarantees success both at the topline and bottomline. There are many agencies and multi-channel networks that are emerging to help brands make these decisions, like Nuffnang Live (Malaysia) and Pongo (Indonesia).

What are the economics of live selling? Expect steep discount costs and rich revenue share with influencers

Like e-commerce in general, live selling ultimately only makes sense if it generates profit. The costs of live selling depend greatly on how it is carried out; for example, whether an e-commerce platform like Shopee takes a cut of sales, whether a famous influencer is needed to help drive traffic, and whether tech vendors and agencies are required. Two cost elements deserve extra attention in live selling P&L modelling:

• Discounts: The live selling channel is characterised by great deals and deep discounts to match. Rates of discount vary across categories, but 30-50% is not uncommon.
  
  
• Influencer/presenter costs: Presenter costs vary greatly based on the job to be done. The lowest costs are found when hiring a presenter or influencer to host a stream for a brand’s own audience, while live selling influencers can charge a significant percentage of sales to activate their own audience for a brand. 

We’ve shared an illustrative example of live selling unit economics below, based on a scenario where an established brand partners with a top live selling influencer to sell through a social platform, with commercial arrangements that still seek to achieve a positive bottom-line result for the brand:

As a general rule of thumb, live selling carries a similar cost structure to general e-commerce, except for a slightly higher discount provision and the fact that digital marketing spend is replaced by revenue share fees to the influencer generating sales. 

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Conclusion

Live selling is a large and fast-growing part of the Southeast Asia social commerce landscape. It was created in an unlikely crucible of Western social platforms (Facebook and Instagram), local e-commerce leaders (Shopee and Lazada), and a healthy dose of inspiration from the Chinese e-commerce market. Now, a couple of years on, those elements are coming together in a selling environment that is unique to Southeast Asia.

While independent sellers and influencers have been quick to seize the opportunity of this new market, established brands and retailers as a whole have not done much. We believe this is more due to a lack of go-to-market guides, tools and case studies than any inherent risks or disadvantages of live selling as a sales channel. Brands that aspire to lead in their e-commerce category in Southeast Asia must contend with this new space and set a strategy for live selling.

We will continue to expand our set of live selling resources for brands and retailers, including granular market sizing, go-to-market guides and case studies. Please sign up to the Chalawan Insights newsletter below to receive our coming posts, and e-mail simon@chalawan.asia for any further assistance or feedback.

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This post is created in collaboration with Matias Singers and Sarabjit Singh.