By Kaixin Feng, Rongjia Chen, Shijie Li and Qile Chen
COVID-19 hit myriad industries unexpectedly. In particular, it has struck the world’s largest small commodities market hard. As both overseas and in-country traveling are significantly hindered, the merchants of Yiwu has struggled to combat the numerous effects of the virus. Wholesalers around the globe, who were previously engaged in trade relationships with Yiwu merchants, are now impeded by travel restrictions and concerns about the spread of the virus. “After the outbreak of the virus, my business is cut about in half,” said Kuo Liu, a safety product seller in the International Trade Center. The sellers in the “World’s Supermarket” are now similarly concerned about their businesses’ future.
As a means to resolve such difficulties, the international trade center officially re-opened on February 18th, 2020, aiming to alleviate the financial pressure some merchants face. Some policies are implemented for the same purpose, including longer leases, lower interest rates, and free commuting services. Additional to these policies, another seller in the trade center, Ms. Hu, claimed that “live streaming is encouraged, and the trade center has provided a live streaming website [for the merchants]”.
After seeking different ways of doing business, some individual merchants have also reached a consensus: e-commerce and live streaming. It generates some revenue for the small businesses, making up for the reductions due to the virus. As Liu pointed out, “The combination of online and offline selling is the future trend. You can’t be limited to doing business only offline.”
The aggrandized e-commerce industry brings along other industries. In particular, the e-commerce and live streaming training industry has seized the attention of many merchants. “The training course involves acquiring some basic, fundamental knowledge, as well as some practical tips about editing and hosting,” said Qin Mi, a teacher from Zhejiang Media Academy.
The Beginning of a New Industry
Since its outbreak, COVID-19 has obliged country and region officials to impose travel restrictions, which significantly impacts on international commerce. As a result, doing business online seemed to be the only feasible alternative. Not only because it does not require international travel, but online businesses in China also have a user community already. In a report published in 2018, the number of China’s e-commerce users has already reached a stunning 510 million.
The advantages of doing online business and the disadvantages of its alternatives has led to the widespread popularity of live streaming, influencing millions of Chinese people, and bringing career chances along. On Taobao, the number of live streaming sessions increased by 110%, and the average number of people watching a live streaming session increased by 43.13% during the Chinese New Year period (about February 2nd to February 19th). The impact is not limited to people who are used to hosting – many retailers join the wave of live streaming and e-commerce, with more than 30,000 people opening online stores every day in February.
With such popularity, many people could see the potential within the industry. Some investors saw this as an opportunity, marching into the training industry and demanding training fees from avid people. For example, one organization from Zhejiang Media Academy requires 1980 yuan for beginner classes. But the story is not limited to profit-seeking companies. Funded by the local government, The Yiwu Manpower Resource and Social Insurance Office, for example, started 4 public training sessions for free provided that the trainees pass a qualification exam.
Within the industry, details can vary. The free sessions have classes with about 100 students typically, and the teacher could only provide general information; other organizations with private classes could offer individual guidelines and support for its students. “We [the teachers] analyze individual students’ specific situations and then tell them what is best to do,” said Peng Zhang, a teacher from a private organization. Zhang’s classes usually have only 30 students.
The various forms of training are one important thing to consider when talking about the new e-commerce and live streaming training industry.
Every Individual’s Opportunity
One major cause of the development of the training industry is the widespread stories of individuals’ success. Some sellers in the Beixiazhu Village (a region famously known for its live-streaming businesses) could make millions over one single night if their products become popular. Naturally, people hope to succeed in similar ways. Consequently, many training organizations use these successes as an attraction. It becomes a gamble between the audacious trainees and the context of the current market; nobody would mind whether it is a sheer fluke or not if an individual achieves success.
There are different benefits for the training organization and its trainees depending on its operation model. The organization earns training fees and the trainees gain valuable tips, which improve their chances of success in the live streaming and e-commerce industry. Moreover, to make extra profit, some organizations offer products for their trainees to sell immediately after the training session considering that newcomers to the industry could adapt more quickly with initial help.
Everyone has the same entrance ticket to this industry – people from various backgrounds could try out their luck in live streaming. A representative training session could have audiences in their mid-50s, recent graduates from university, or even some parents who brought children with them. “Our audience included members of the Women’s Federation of the villages, laborers, and merchants from the International Trade Center,” said Ms. Zhu, a public live streaming training teacher.
There are two main reasons for people to be involved in such training. On one hand, the suppliers, perhaps from the Yiwu Trade Center, could not continue their overseas businesses due to travel restrictions. To prepare themselves better for setting up online businesses, many of them choose to participate in the training sessions. The basic knowledge and tips provided by the training are sufficient for them.
Some others saw this as an opportunity to try out this seemingly popular industry, especially in public, free training sessions. “I always thought about starting my live streaming channel,” said Ms. Zhang, a trainee from a public class, “The training would allow me to determine more specifically what I will do.” A few people find competition unsurmountable, while many others see bright hope. “Live streaming is the future trend considering the broader context,” added Zhang.
The Industry’s Future
“Although the industry is at a stage where it is growing bigger and becoming more popular, the supply chain is extremely immature. There are still many problems.” Zhang says.
The e-commerce and live streaming industry – the root of its training industry – is problematic from some perspectives. In order to increase attractiveness, some companies are engaged in a price war, so the prices of products are already cheap; consider the intermediary businesses and platforms and customers would be rather suspicious of the product’s quality. In fact, it is true that products sold at such low prices are often of low quality. According to the China Consumers Association, 37.7% of buyers are unsatisfied with their purchased products during live streaming.
Some of the cheap supplies come from training organizations. A training organization in Yiwu sells its shampoo supply to its trainees at a price of 2.99 yuan per 500ml; its trainees then sell it at a price of 9.99 yuan during a live streaming session. The expected price for a usual 500ml bottle of shampoo is much higher.
How could the shampoo be sold at such a low price? Quality is decisive. Low-quality goods which worsen the reputation of the training industry might discourage potential trainees from participating in such programs.
Furthermore, the difference between certain training organizations is not negligible. As previously mentioned, some organizations offer much more substantial help for their students than others. “In the industry, the entire chain of actions is actually longer than expected, so many differences could potentially be made,” Zhang commented. These differences include the ability of the host of the live streaming session, the quality of goods supplied, the level of operation, the advertisement, and the planning. Zhang believes that a better organization “could make a big difference from these aspects”.
But from a non-professional person’s point of view, it could be difficult for them to judge. Unfortunately, there is no solution proven to be effective yet. Zhang states that “this [disadvantage] could only be gradually eliminated by the market itself”.
Moreover, trainees need to have a better understanding of the harsh competition in the industry, as this is often overlooked. During a free training session hosted by soucai.com, for instance, the lecturer barely spent time talking about failures in the live streaming industry. In comparison, numerous successful cases are introduced and analyzed.
The trainees had their eyes glistening with bright hope. But the cruel reality lies in front of them. According to a study by the Bureau of Market Development of Yiwu, during January and April 2020, there have been 34,201 live sessions with 85,678,000 clicks in total. In comparison, 5 or 6 live streaming sessions by famous hosts Jiaqi Li or Ya Wei could have the same result. A few get the biggest share of the cake; the majority “drowns” in the big tide.
It is depressing. But for every success, there needs to be a clear understanding of potential difficulties – and this should become a role taken by the training sessions. Without comprehensive knowledge, more people would inevitably fail.
Regulations have not been strictly imposed; the balance of power and control within the industry is rather unstable; the transparency of the training courses and the products’ transactions could also be challenged. But the industry is as capable as it is immature. Being tied closely with the e-commerce and live streaming industry, it would be the first beneficiary from the rapid development. The training industry’s maturation could eventually reduce the effects of its disadvantages, as a more complete system of rules and regulations is implemented.
Time will tell.