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Tencent targets China's 'live shopping' trend with platform changes

As livestream shopping gains popularity in China, local internet company Tencent Holdings Ltd. is looking to take a larger slice of the action by integrating its video and e-commerce platforms.

Similar to TV shopping channels but with a faster route to checkout, "live shopping" was popularized by Alibaba Group Holding Ltd.'s Taobao, China's largest e-commerce platform. Almost a third of internet users in the country have purchased goods via live broadcasts that link directly to product webpages, data from the Cyberspace Administration of China shows.

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Recent Chinese shopping festivals have shown how effective livestreaming can be in converting scrolling time to sales. This is encouraging companies like Tencent to integrate video and e-commerce platforms, which should also result in increased usage across the firm’s services, analysts told S&P Global Market Intelligence.

"Tencent has seen how successful livestreaming sales of goods has become on competitor platforms," said Ben Cavender, managing director of China Market Research Group.

The company plans to link its group-buying platform Xiao E Pin Pin to its short-video streaming platform on Tencent Video to enable live shopping, an analyst close to the matter told S&P Global Market Intelligence.

A TikTok-like feature the company released on its Tencent Video app earlier this year enables users to watch short videos in a spiral sequence. The livestreaming shopping function will be added to this video feature, the unnamed analyst said.

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Tencent also debuted its group, or social, buying portal, Xiao E Pin Pin, on its messaging tool WeChat in April. The new online shopping portal allows WeChat users to buy products with friends at a discount.

Other Chinese e-commerce platforms also recently ramped up livestreaming offerings. JD.com Inc. collaborated with short-video platform Kuaishou for shopping festival 618. Over 1.4 billion yuan of sales were generated on Kuaishou on June 16, while JD.com said it hosted over 300,000 live streaming sessions throughout the festival.

Integrating Tencent Video and Xiao E Pin Pin should boost transaction numbers, Michael Norris, the research and strategy manager at e-commerce consultancy AgencyChina, said. The move should directly lead to an increase in WeChat Pay revenue, from commission from merchants, he said.

Investing in live shopping functionality is not risk-free. On July 1, a set of standards for the self-regulation of live shopping was issued. The standards place the burden of checking product quality on streamers, e-commerce vendors and platform owners.

Although the rules are not legally binding, future regulations may be, Gao Yaping, a partner at DeHeng Law Offices, said.