FOCUS Equity Research 8 July 2020 China eCommerce INDUSTRY UPDATE Video Live Streaming: The Crucial U.S. Internet Piece of the eCommerce Jigsaw Puzzle POSITIVE Unchanged The Key Takeaways: We view live streaming as a crucial function in the differentiation of eCom service offerings, as it creates an interactive scene to seamlessly connect U.S. Internet consumers with sellers and boosts the conversion rates. The function generated Gregory Zhao CNY451bn (US$64bn) GMV in CY19, c.4% of China’s eCom GMV, and is forecast to +1 212 526 2268 reach CNY2.9tn (US$410bn) in CY22, representing c.16% market share, according to
[email protected] BCI, US iResearch. We view eCom platforms and short video apps as the primary beneficiaries of the tailwind – noting the former’s comprehensive eCom infrastructure and the Ross Sandler latter’s considerable top-of-funnel user traffic – enabling both to embed eCom live +1 415 263 4470 streaming into their ecosystems. The Covid-19 lockdown has given live streaming an
[email protected] BCI, US opportunity to gain market share from offline, with a wide product spectrum from apparel to fresh foods reached by live broadcasting. As eCom and short video Jane Han companies both explore the best model to maximize their financial economics, we think +1 212 526 9317 the win-win strategy is for the two to harness their respective advantages and
[email protected] cooperate with each other. We view the Street’s concerns over the threat from the BCI, US “decentralized” eCom of short video apps as overdone, as the industry expertise of eCom companies and their well-established supply chain and logistics services are hard to disrupt in the foreseeable future.