The development of information and communication technology, along with the COVID-19 pandemic, has triggered digital transformation across various sectors, including trade and business. These sectors have seen significant growth with the emergence of electronic commerce (e-commerce) platforms, which have completely changed how we shop, sell, and do business. This growth is closely linked to the expansion of internet penetration, the widespread adoption of digital payment systems, and the creation of new technologies that make using e-commerce easier and more attractive. Initially, e-commerce was just a convenient way for people to shop without leaving their homes. But now, it’s become a major driver of global economic growth. According to We Are Social (2021), the average global adoption rate for e-commerce is 78.6%. China stands out as the world’s largest e-commerce market, making up nearly 50% of global transactions. Data from eMarketer shows that in China, online retail transactions have reached over 710 million digital buyers, with a total transaction value of $2.29 trillion in 2020. This figure is expected to hit $3.56 trillion by 2024.
Similar to what is happening in Indonesia, e-commerce has become the largest contributor to the digital economy in 2023. According to Bank Indonesia (BI), e-commerce transactions in Indonesia reached IDR 476.3 trillion in 2022, with a total of 3.49 billion transactions over the course of the year. A report by Google, Temasek, and Bain & Company, titled “e-Conomy SEA 2023,” also projected that the gross merchandise value (GMV) of Indonesia’s digital economy in the e-commerce sector would reach $62 billion in 2023, which constitutes 75.6% of the total. Regarding the number of users, Statista Market Insights indicated that there were 178.94 million e-commerce users in Indonesia in 2022, reflecting a 12.79% increase from the previous year. Observing this upward trend, Statista forecasts that by 2027, the number of e-commerce users in the country will reach 244.67 million.
The practice of shopping through e-commerce has shown increasingly interesting trends since the emergence of live commerce. Live commerce has successfully influenced the online shopping landscape, with many companies incorporating this strategy as part of their omnichannel approach. Unlike more static e-commerce platforms, live commerce offers a dynamic experience. Live commerce was first pioneered in 2016 by Taobao Live, an e-commerce platform owned by Alibaba Group, one of the world’s largest technology companies. From China, the phenomenon of shopping through live commerce has spread to Southeast Asia and has become a common way for people to shop online, as more and more consumers seek interactive shopping experiences.
With a population of over 1.4 billion people in 2023, China has become a leader in adopting and utilizing live commerce. Live streaming platforms in China have become a venue for millions of sellers to interact directly with consumers, showcase products, provide reviews, and answer questions in real-time. Meanwhile, Indonesia, with a potential population of over 270 million people and increasing connectivity, is also showing rapid growth in the use of live commerce. China and Indonesia are two economic powerhouses in Asia experiencing substantial e-commerce growth and have adopted the concept of live commerce on several platforms. Considering the impressive developments in e-commerce in China, Indonesia, with its significant potential, is predicted to have similar opportunities to boost its digital economy and expand opportunities for local businesses. However, cultural differences, regulations, and technological infrastructure will serve as initial considerations for understanding how live commerce is implemented in both countries.
Implementation of Live commerce in China and Indonesia
As two major economic powerhouses in Asia, China and Indonesia each have unique characteristics in their implementation of live commerce, making it fascinating to explore their differences and similarities. The launch of Taobao Live by Alibaba Group in 2016 in China pioneered a new way of online shopping by connecting live streaming with e-commerce stores, allowing consumers to watch and shop at the same time. Today, live commerce has become deeply ingrained in China and has become a shopping culture.
According to the Chinese government’s “China’s Livestreaming e-Commerce Industry Report,” in 2020, live commerce users reached 384 million, which is 39.2% of China’s total population. By 2022, the gross merchandise value (GMV) of live streaming e-commerce in China accounted for 25.3% of total online shopping GMV, with the live commerce market reaching around 3.5 trillion yuan (Statista, 2023). The top five platforms for live commerce are Taobao (Alibaba), JD, Pinduoduo, and Douyin (TikTok) (Rougelink, 2023). Data released by McKinsey (Arora, 2021) shows that the most frequently showcased product categories in live commerce are clothing and fashion (36%), followed by beauty products (7.6%), food (7.4%), and consumer electronics (4.6%). In terms of user demographics, Gen Z and millennials dominate compared to older users.
The growth of the live commerce ecosystem in China continues to surge, supported by robust infrastructure. According to the China Internet Network Information Center, as of June 2023, internet users in China reached 1.079 billion, which is 76.4% of the population. In 2022, 90% of urban residents and 82% of rural residents in China used digital payments (Wong, B.A., 2022). Additionally, the practice of live commerce is bolstered by various ongoing initiatives, such as involving dedicated talent agencies, academies offering specialized courses for live commerce presenters, and studio companies equipped with supporting gear (Criddle, C. & Murphy, H.).
Similar to what’s happening in China, live commerce in Indonesia is also experiencing rapid growth, pushing businesses to adopt new innovations. Although the number of internet users in Indonesia is still lower than in China—215.63 million or 78.19% of the population (APJII, 2023)—e-commerce is the largest contributor to Indonesia’s digital economy, accounting for 75.6% of the country’s digital economy GMV (US$82 billion) (Google, Temasek, and Bain & Company, 2023). A survey by Jakpat (2022) revealed that 83.7% of Indonesians have accessed live commerce. The top five products most often viewed during live commerce are clothing (82.6%), beauty products (47.2%), household appliances (39.3%), food (30.7%), and plants (9.8%). The survey also noted that 65% of respondents had purchased items from live commerce. Different generations have distinct preferences for accessing live commerce platforms: Gen Z favors TikTok Shop (75%) as their preferred platform, Gen X leans towards Shopee Live (66%), while Millennials are split with 61% choosing TikTok Shop and 65% opting for Shopee Live.
A 2023 study by Populix titled “Understanding Live Streaming Shopping Ecosystem in Indonesia” found that 69% of respondents chose Shopee Live as the most frequently used live commerce platform in Indonesia, with a usage rate of 83.4%. TikTok ranked second with 42.2%, and 34.1% of respondents used Instagram for live shopping. Shopee Live is the most popular due to its user-friendly features, lowest prices, most free shipping offers, and largest discounts/cashbacks.This data highlights that the high consumer interest in live commerce for online shopping is driven by factors like lower prices, no shipping costs, the flexibility to shop anytime and anywhere, and the convenience of comparing products across different stores.
Trend dan Peluang Live Commerce di masa mendatang
The booming live commerce market in China, which grew from $3 billion to $171 billion in just three years (2017-2020), indicates significant potential and opportunities for live shopping trends (Jetcommerce, 2023). Now, a shift in trends is occurring in China’s e-commerce landscape. Instead of relying on influencers, the live commerce industry prefers employees or virtual hosts to promote products during live sessions. According to JD.com, revenue involving virtual hosts surged nearly 400% during recent sales (Dewi, R.I., 2023). McKinsey has predicted several potential developments in the coming years (Arora, 2021):
- Micro and nano influencers: Using influencers who have fewer but loyal followers can create a more personal and trustworthy relationship with consumers.
- Expansion into new sectors: As live commerce extends its reach, industries including healthcare, engineering, and finance are expected to grow.
- Innovative formats: Shopping experiences can be enhanced with augmented reality (AR) and virtual reality (VR). These formats provide users with a physical environment where they can view both the real world and virtual objects. For example, furniture shoppers may want to see how a sofa looks in their home, so they can view chairs or furniture displayed in real-time. Both technologies offer many benefits and can enhance consumer trust by allowing them to visualize products before making a purchase.
Additionally, the future of marketing research in live commerce can be explored from broader perspectives, such as how to use Key Opinion Leaders (KOLs) to market products during live streaming and how to build brand strength in live streaming to promote the sustainable development of a product (Han, W. 2022). Bhardwaj, A., & Verma, S. K. (2023) also mention that the future use of drones could extend into the e-commerce sector, potentially solving delivery issues like those addressed by Amazon Prime. Moreover, the implementation of artificial intelligence (AI) holds the promise of making it easier for consumers to find exactly what they’re looking for, presenting new trends in the future.
Meanwhile, on the opportunity side, the future of live commerce is expected to enable consumers from various countries to watch global live commerce broadcasts and shop for products from abroad. In Indonesia, there are opportunities to conduct training for sellers and content creators to produce more engaging and informative live streams. Additionally, another opportunity to seize is empowering SMEs by providing an accessible platform and facilitating direct engagement with consumers to foster growth. These trends and opportunities are anticipated to drive significant growth in the live commerce industry.
