Livestream shopping: making platform partnerships a success

Livestream shopping is now a well-established buying platform in the Chinese e-commerce space and it spiked in popularity during Covid-19 lockdowns. As Western brands, particularly in luxury, continue to increase their presence on livestream platforms, we consider the key areas for brands to consider when joining platforms such as Taobao Live or Alibaba’s Tmall.

Livestream shopping is a live shopping event – think QVC - hosted by a brand on its own, or a third party website/mobile app. Usually, a celebrity, social media influencer or brand worker demonstrates a product and answers questions from a digital audience in real-time. Viewers are able to immediately purchase the item from an embedded link online. Just like presenters on QVC, livestreaming hosts sell a wide range of products, from apparel and cosmetics to electronics and even cars. In China, live streaming is a wildly popular way to shop, with the market worth an estimated US$63bn to its economy in 2019. (but the technology is starting to catch on in the US and UK too).

The first major livestream shopping player emerged in China in 2016 when Alibaba first launched Taobao Live. Since then, platforms like Tmall, Douyin or Xiaohongshu have become key Chinese e-commerce sites and saw a big spike in demand during lockdown as shoppers were forced to shop from home.

Why does it matter?

Given their popularity in Chinese/Asian markets, we would expect livestream shopping platforms to start to increase in popularity in the UK and EU over the coming months and years. As with any third party e-commerce strategy, it is important for brands to reach an agreement with their chosen platform which protects the brand and gives flexibility when launching in a new sales channel for the first time.

What action should you consider?

There are a number of key areas retailers should be considering before they partner with online e-commerce platforms to sell goods into new territories:

Make sure your brand is protected in the territory you are selling into. Before you start selling goods into specific territories, make sure your brand is protected in the relevant territories. Brand audits and related registrations (such as trade mark and domain name registrations) should be carried out before you start selling your goods – especially as rules can vary widely by territory.
IP in the goods you are selling through the platform. Online platforms like Alibaba’s Tmall will want to know that you have the rights to sell your goods into China and will not be infringing third party intellectual property rights. Make sure that you have the right level of protection from your suppliers and protect against any intellectual property infringement in your supply chain.

Understand the commercial risks of selling goods in different territories. Even though you are selling goods through an online e-commerce platform, you may still be liable directly to consumers in the relevant territory for any defective goods (or goods that don’t meet local consumer law requirements). Your returns, exchange and refund processes also need to comply with local requirements. You may be expected to take on these risks and liability as part of your contract with the platform provider, so make sure you understand what local requirements apply.

Your supply chain to deliver sales in the relevant territory. Consider how the goods are going to be distributed from your factory or suppliers to consumers in the relevant territory. To what extent do you or your suppliers make use of bonded warehouses in the territory you are selling into? Will you be partnering with specific fulfilment providers with links to the territory you are supplying or will that be done through the platform itself?

Local knowledge of the market you are selling into. Your ability to forecast sales based on popularity of specific products in the territory and to change the SKUs you offer needs to be taken into account when selling through the portal. This often requires local knowledge of the territory you are selling to, as well as understanding how those changes can be made as part of the contract you are entering into.

Think about how the livestream platform will interact with your existing e-commerce platform. Some livestream platforms will redirect consumers to your e-commerce platform in order to make purchases, so this will need to be workable within your online ecosystem. Other livestream platforms – eg, Amazon Live – can handle payments themselves so this won’t always be an issue.

Consider your approach to contracting with your chosen platform. Are you going to be contracting on the platform’s standard terms? You may have leverage to negotiate additional terms to protect your brand eg, additional warranties; service levels (such as no disruption or black-outs during your live event); and/or, an obligation on the platform to provide analytics on consumers (such as who is viewing your product, the demographics and conversions of sale). 

Don’t forget the influencer. The success of livestream shopping platforms is often attributed to the use of popular influencers or hosts. Think about how you will contract with the influencer (eg, an online endorsement agreement). Be granular and prescriptive within your contract eg, in licensing relevant IP to the influencer (with a licence on the content the influencer produces, back to the brand); warranties to protect the brand and an ‘only use’ clause in relation to the product they are promoting. Lesser platforms may demand warranties/indemnities from you in connection with content streamed by the influencer. Are you prepared to ensure the influencer complies with certain guidelines, and/or to give warranties to the platform concerning the influencer’s IP and privacy rights?