White Paper of Video Content-driven E-commerce Industry in ChinaWhite Paper of Video Content-driven E-commerce Industry in China——full edition for free

Source:iResearchSeptember 28,20204:58 PM Overview
Development History of E-commerce

Diversifying in types, the nearly matured e-commerce market comes to a stage of exploiting existing online shoppers with content as a major tool

Since the emergence of e-commerce, the competition pattern and operation mode of Chinese e-commerce market have gradually been shaped, and the ecosystem gradually been refined. With the penetration rate of Internet users and online shoppers approaching saturation, and the e-commerce market has entered an era of stock mining. Under the shadow of double giants -Alibaba and JD - diversified subdivided tracks have become the breakthrough direction for long tail enterprises. Meanwhile, content and social networking have also become important means for e-commerce to tap the market under the traffic bottleneck.

Stage of Development

Currently in the surging period, e-commerce driven and video content driven platforms step towards co-opetition

During 2016-2017, as internet dividend faded, traditional EC platforms urgently need new traffic entrances, while content platforms sought for new revenue generators. EC platforms, represented by Taobao and video content platforms, represented by Kuaishou,  pioneered to combine video content with e-commerce. In 2018, with the rapid penetration of short video and live-streaming, EC and short video platforms connected each other. Since 2019, live-stream shopping has gone trendy. Initial success shows in EC platforms' content building and video platforms'    EC system building. Their deep collaboration gradually became co-opetition.

Market Drivers

Exhausted traffic dividends leads content to be the new traffic entrance

Recently, the Internet penetration rate in China has reached over 60%. The internet demographic dividend has come to an end. the growth of e-commerce GMV has slowed down, and the competition of e-commerce platforms has entered a stage of competition for existed users instead of new e-commerce users.
Because of the narrow traffic source, customer acquisition cost of traditional e-commerce platforms is continuously rising. It is urgent to develop new low-cost traffic entrance for traditional e-commerce platforms.
High-quality content can attract the attention of users and efficiently lead traffic to e-commerce platforms. Due to the development of mobile internet, the creation and propaganda of content become efficient and convenient. Thus, cost of content creation reduce and content becomes a cost-effective mean of acquiring traffic.



Larger audience base and higher user acceptance

Because of the longer online time of internet users, the continuous penetration of e-commerce platforms in third- and fourth-tier cities and below, the increasing consumption ability of users in lower cities, the interactivity of live streaming and the fragmentation of short video, video content-driven e-commerce forms represented by e-commerce livestreaming has become hotspot in recent years.

According to CNNIC's 45th China Internet Development Statistics, as of March 2020, the number of e-commerce livestreaming users has reached 265 million, accounting for 29.3% of the total Internet users. Rich and high-quality content and diversified video content e-commerce modes not only make users easily accept video content e-commerce, but also help the platform to expand the user scale and accumulate loyal users.



Continuous user growth and promising e-commerce monetization method

Since 2016, the short video and live streaming industry have developed rapidly and the user size has grown continuously. Short video/live streaming platforms represented by Douyin and Kuaishou have become new traffic highlands, and started to explore more traffic monetization channels to increase revenue.

Video content-driven e-commerce companies, including short videos and livestreaming, have natural advantages in customer loyalty and traffic aggregation capabilities. They are suitable for recommending products to others, and the platform environment is favored by e-commerce sellers.

Benefited from the excellent monetization potential of short video/live streaming, Red, Douyin, Kuaishou, and other platforms with short video/livestreaming content have successively expanded their e-commerce business.



Budget tilts towards video content for its well-acknowledged marketing effectiveness

As Internet users prefer entertaining and fragmented content, video content has become the major type of content that reaches consumers, substituting text & graph.  Consequently, video content has increasing spreading capacity. Meanwhile, advertisers favor video content for its integrated marketing effect of branding and sales: on one hand, video content communicates brand value effectively and efficiently through its nature of high information density, authenticity and interactivity, thus accelerating brand building; on the other hand, video content helps merchants acquire store traffic efficiently with its capacity in aggregating traffic rapidly and matching users accurately. Therefore, video content has become a key tactic of online marketing.



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