Kevin Hong is a professor and Bauer Senior Fellow in the C.T. Bauer College of Business at the University of Houston. His research interests are in the areas of future of work, digital platforms, user-generated content, and human-AI interactions. He joined Ada Yang on The China E-commerce Podcast to discuss the development of livestreaming and how it has been used by online sellers to interact and build trust with consumers.
The following is a lightly edited, condensed transcript of the podcast:
What is so unique about livestreaming compared to traditional communication tools? Why is it so popular right now?
First, let's try to understand the nature of live streaming. What is it? So live streaming, as we define it, is a form of user-generated content (UGC) that has become quite popular over the years. There are places like YouTube and short-video platforms like TikTok. Both of these applications are platforms that provide services for users to post their videos in the form of either recorded content or stream content.
Let's compare the broader category of UGC with traditional TV programs. For the younger generation, even for older generations, people seem to be more fascinated by the free content created by other users, which is authentic, also free. I'll give you some statistics in the US. According to e-Marketer's survey, 50 million people are expected to cut their cable or satellite TV subscriptions by next year, which is 2021. They will be getting into social media. They're going to get into live streaming and user-generated videos, as the TV market is shrinking.
The new media platform format attracts millions of individuals on both sides. Because when you're talking about the content, you have the content creators and the content consumers. For TV programs, you just have limited choices. There are millions of individuals or companies that create and provide a wide variety of diverse content. And then you have a larger audience on the other side, which means that everyone, by and large, can find something they are truly interested in, and they can watch anytime, on various devices. On top of the user-generated content part, livestreaming further adds the elements of interactivity, which has been shown to be an important factor in driving the popularity of this media format. Because that's something even the traditional UGC, not to mention the TV programs, they are really lacking.
Your research paper is about streaming driving online sales. What are the consumer behavior and psychological drive behind the growth and adoption of livestreaming.
We all know that consumers don't like uncertainty. They want something they exactly know what it is. Therefore, after being exposed to this livestream, which is also very interactive, they can also talk to other users in the livestreams. So that's one part. The other part that I think is more fascinating is a lot of the times a streamer is also connecting to the users not simply for displaying the products or presenting information, but they are trying to connect with them at the personal level. They show their charisma, or show a slice of their life. And then they create a fan base. It's about people.
In your research, you grouped the products into two categories for your research: search goods and experience goods. After the adoption of the livestreaming strategy for online shops, experience goods sell almost 28% more than sellers who sell search goods. Why are the results so different?
Experience goods are the products that consumers need to use before they can get a good idea about the quality and the fit of the product. Whereas search products are those consumers can easily identify the product quality and attributes just by searching for their information. There is the information part, the streamer is providing the information, but in addition to providing the information, there's also the experience side, the streamer shares her experience or she shares her lifestyle and try to build a fan base for that. It doesn't matter if it's a search product or experienced product, it's just going to have an effect. Because people trust them. They have credibility. They buy the product to help or support this streamer.
You also had some live streaming experience. Is it possible for everyone to be a star? What are the challenges for regular people to become successful?
Nowadays as you know, a lot of teachers are live streaming for students. It has kind of become a mandatory thing, survival skill for students to have a nice screen presence, like being able to record nice videos might be a very useful skill for your future job. A lot of people assume that you are in this space, you will be professional and really good at livestreaming. But it takes some special talent and takes a lot of practice as well. Luck is a big factor.
The US and China are at a very different stages of e-commerce integration with live streaming. It's interesting that you are based in the US but chose a Chinese platform for your research. Why is that?
In the US setting, if you think about the largest live streaming platform, Twitch TV, Instagram, TV, YouTube, it’s very difficult to keep track of where their store is, because they aren't really directly integrated with e-commerce sites such as Shopify, Amazon or eBay. The US is lagging way behind in the e-commerce scene. It's not that social. Think about Amazon and eBay, the business models are kind of a purchase funnel. People try to create awareness when they livestream and they tried to pull those people into their merchant stores like Shopify stores, but not as directly as what some of the Chinese sites are doing.
Do you think people will eventually get tired of livestreaming one day?
I tend to think that it's probably not going away anytime soon, especially I think in the US, it's just starting. And a lot of the things haven't really been connected. Before the new breakthrough technology is created, I think we'll be there for a while.