Charisma bypass

Li Jiaqi: disappearance of popular livestreamer has hurt 618 day sales

Even though 618, China’s mid-year online shopping festival, is set to peak this Saturday, the country’s e-commerce giants aren’t expecting a season of bumper sales. Held in the period running up to June 18, the festival is China’s second-largest shopping event after the November 11 Singles Day, which was first created by Alibaba. But interest has been more subdued this year because of Covid controls and weakening consumer spending.

“Compared with previous years, this is definitely the toughest 618,” Entertainment Unicorn warned grimly this week. “Shanghai just came out of the nearly 70-day lockdown and the shadow of the outbreak has not yet subsided. There have also been frequent reports of layoffs and salary cuts. Unlike previous years when brands and platforms would be promoting themselves around-the-clock, this year it’s so quiet that it feels like the 618 party is already over.”

Alibaba’s sales push over the period has also been unsettled by the disappearance of Li Jiaqi, Taobao Live’s biggest money-maker. Li, who is known as the ‘Lipstick King’, hasn’t hosted a livestream since June 3, when his programme was cut short after he presented a plate of ice cream.

The way that the ice cream was decorated resembled the shape of a tank, with a gun-barrel stick of chocolate, leading to speculation that Li had fallen foul of censors before the anniversary of the Tiananmen crackdown in 1989.

The hardworking host hasn’t resumed his regular livestreaming schedule since then, sparking widespread debate online. “Does anyone know what happened to Li Jiaqi? This world is becoming increasingly mysterious. Why is it so hard to make it through this 618 unscathed?” one netizen asked.

Li’s disappearance was more of a concern for Alibaba as he was the last survivor of the mega livestreamers, following the demise of his main rival Viya, who was fined Rmb1.34 billion ($199.75 million) in December and has not been seen on a broadcast since. Together, the two had dominated the sector, accounting for an estimated of 13% of gross merchandise value (GMV) on Alibaba’s e-commerce platforms, way ahead of their closest competitors.

Without leading salespeople like Li and Viya, brands and merchants have been grappling with how to move their products during 618. In the previously announced schedule, brands like L’Oreal, La Mer, SK-II and Olay all expected to feature on Li’s show, to name just a few of his clients. Some vendors have complained that contracts signed with Li’s management company mean they risk breaching legal agreements if they hire alternative stars to sell their goods during the 618 period.

“We already advertised and prepared over 200,000 products in preparation. But Li’s broadcast was suddenly stopped. It’s hard to find salesmen in such a last-minute fashion but the shelf lives of the products are only two or three months so we can’t afford to wait. Otherwise we risk losing millions of yuan,” one vendor complained to New Rank, a portal for influencer-related news.

The e-commerce business of Douyin and Kuaishou have had problems of their own this month as well. Last week, ThePaper.cn reported that Luo Yonghao had resigned from the management company behind his livestreaming work on Douyin to focus on a new tech business.

Luo, another popular livestreaming host, had already cut down his time in front of the camera dramatically since last year (although Douyin’s algorithms seem to be doing a better job in stimulating shopping traffic based on netizens’ niche ‘interests’).

Rival Kuaishou’s host Xinba has also been missing in action so far this year, after becoming embroiled in a controversy over sales of fake bird’s nest. At his peak Xinba (and his many assistants) raked in Rmb13.3 billion in GMV for Kuaishou, or about a fifth of the total on the platform. That percentage is even higher than Viya and Li were able to contribute individually on Taobao Live.

“Now that the biggest livestreamers are no longer reliable, how to get consumers to buy and then buy more has become a source of headaches, anxiety and frustration for all the e-commerce platforms,” Phoenix News commented.

Alibaba had been trying to promote fresher faces in an effort to reduce its reliance on heavyweights like Li and Viya. In 2019, more than a million new hosts tried their luck on Taobao Live. However, few have shown the star power – or the staying power – of the best of the influencers in the industry.

In 2020 Li and Viya accounted for Rmb22.1 billion in GMV on Singles’ Day, or more than 30% of the total merchandise sold on the livestreaming platform. “The millions of new entrants ended up just sitting on the sidelines watching those two,” Yidian Caijing laughed.

With the economy slowing, China’s e-commerce businesses are also going through tougher times. In fact, Tencent’s Deep Web reckons that as many as 90% of the livestreaming ‘hubs’ – industrial park-style locations where online streamers film and are supported by ancillary marketing and logistics services – could go out of business by the end of this year.

In the last few years the number of livestreaming bases had mushroomed in support of all the aspiring influencers. Local governments have also tried to entice livestreamers and their management companies to set up in their jurisdictions with offers of lower taxes and even training centres for aspiring hosts.

“At the moment, 90% of the livestreaming studios are not profitable,” an industry insider told Deep Web. “In light of rising costs, the livestreaming hubs that don’t already have well-developed supply chains or relationships with livestreaming hosts with strong track records now face bankruptcy.”

Without the uber-influencers, JD.com and Alibaba have gone back to basics in their sales campaigns, with discounts to attract shoppers. Also gone are many of the more complicated deals of the past – following previous complaints from consumers that figuring out the discounts on some goods was like completing a maths Olympiad.

Both platforms now offer Rmb50 off for every Rmb300 spent during the 618 festival.

Nevertheless, shoppers still anxious about the wider economic situation say they are not planning to spend with quite the same abandon as previous years. “I’m not buying anything. Cash is king. You don’t need to spend it,” one shopper recommended.

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