(May 29): As a retailer, how do you reach millions of customers locked down in their apartments? Livestreaming e-commerce has emerged as one of the hottest trends in marketing and can change the retail landscape, if it is sustainable.
However, the emergence of livestreaming is too Covid-19-specific to predict how it will develop on a macro level. The challenge going forward is to replicate the face-to-face shopping experience and the interaction, and not just rely on the entertainment factor. The transition from entertainment to actual sales will not be easy though.
Livestreaming has its origins in e-games where it makes sense because it generates multiple revenue streams. Platforms such as Twitch make money off ads, subscriptions, and also take a cut from in-app transactions. Adjusting this model to a broader sales audience remains a challenge.
Livestream’s eye-popping sales are also tempered by a high rate of product returns. This is its Achilles heel. High product return rates confirm this is more an experiential event rather than genuine selling. It is about people reaching out for virtual contact due to Covid-19 isolation rather than a genuine purchasing environment.
The challenge is to work out what is missing from livestreaming events. Is it the absence of touch-and-feel? Or is it the “Does this make me look fat?” question that is left unanswered? 5G has the data capacity to help answer these questions but understanding the reasons behind high product return rates provides an opportunity to develop solutions.
Livestream audience numbers are massive compared with in-person and in-store events but getting a crowd is not the same as getting a qualified crowd. Shopping centres rely on high foot traffic volume to pick up a tiny percentage of genuine shoppers. Singapore malls are filled on weekends with people window shopping and trying on shoes and dresses but they actually spend more of their money at food outlets. It is the same with livestream sessions where the “foot traffic” is large. The challenge is to capture audience wallets in both cases.
Before turning sales staff into livestreaming presenters, retailers need to carefully distinguish between the Covid-19 entertainment aspect and a sustainable business model.
Hiring professional presenters is expensive so some companies are training salespeople to do livestreaming presentations, hopefully at a much lower cost. But this is not as easy as it looks.
While this may seem no different to the in-store demonstration of cookware or the latest kitchen cleaning device, the reality is different. Livestreaming calls for an ability to engage an unseen audience. It is not an easy skill to develop. Talking to a camera is very different talking to a live crowd. If you want to be effective, then livestreaming is not a low-cost option. It takes training and natural skills. Specialist companies like Hong Bao Media led by former TV anchor Mark Laudi are already in high demand to teach business leaders how to talk to the camera effectively in livestreaming environments.
Technical outlook for the Shanghai market
The classic Guppy Multiple Moving Average (GMMA) trend breakout pattern on the Shanghai index failed two weeks ago with a substantial drop below the uptrend line and the lower edge of the long-term GMMA. The GMMA breakout pattern consisted of a test of resistance, a second test and breakout above resistance, and then a test of the old resistance feature as a support feature. These are shown as points A, B and C on the chart. The successful completion of these tests usually confirms the strength of the new uptrend.
The close below the uptrend line on May 21 was an early warning of the breakout failure. However, traders were looking for support to develop around the lower edge of the long-term group of averages. This support did not develop, and the index fell quickly on May 22 to close at 2,816. This is a major change in the trend direction and despite the sharp rebound, it is unlikely the uptrend will resume.
This dip below the trend line closed well below the trend line. This is very bearish. The similar dip below the trend line on April 28 had a low below the trend line, but the close was above the trend line. This meant it was not a signal of a trend reversal.
The key question is: Where is the support level for the Shanghai index? The first support level is around 2,805. This level was used as a recent temporary support level during the strong uptrend. This is not a well-developed support level because it has no longterm historical significance.
However, the sharp rally rebound developed from this level. This rebound has three major resistance features to break before a new uptrend can be confirmed. The first resistance feature is the historical level near 2,855. The second resistance feature is the upper edge of the long term GMMA, currently near 2,865. The third resistance feature is the value of the previous uptrend line. This will now act as a resistance point and has a current value near 2,890.
A retreat from the 2,855 level has long-term historical support level near 2,770. This was a support feature in 2019. This level did not act as a support feature in February or March so investors will not place a lot of faith in it acting again as a support level.
These two weak support features — 2,805 and 2,770 — mean that investors will wait for proof that the market can rebound from either of these levels before they come back into the market.
Confirmation of the new downtrend comes when the short term GMMA moves completely below the lower edge of the long term GMMA. Investors and traders wait for proof the market can consolidate and rebound from near 2,805 before they re-enter the market with confidence.
Daryl Guppy is an international financial technical analysis expert and special consultant to Axicorp. He is also a national board member of the Australia China Business Council.
