The disappearance of the Chinese king of online sales is a blow to Alibaba

The abrupt demise of China’s leading online shopping host from Alibaba’s Taobao platform may only deal a short-term blow to the e-commerce group, but it highlights the risks of relying on few influential figures, according to analysts.

Rumors swirl around Li Jiaqi’s whereabouts after his popular show on Alibaba-owned Taobao – where he uploads a dizzying array of products to 64 million subscribers – was abruptly cut short on June 3. He cited technical issues but failed to show up for an online sales session days later and has since disappeared from the radar.

Li’s canceled program had featured tank-shaped ice cream and cookie cake, just a day before the anniversary of the 1989 Tiananmen crackdown, when military vehicles and troops poured into the largest square public in Beijing and killed pro-democracy protesters.

It sparked widespread suspicion that Li, 30, had been sidelined by censors in mainland China, where any reference to the decades-old event is banned, especially in the days leading up to his birthday on June 4.

Known as the “Lipstick King” for selling 15,000 hits in five minutes on Taobao, Li ranks atop China’s sizzling live-streaming sales industry, which has grown in popularity in recent years as lockdowns of Covid-19 have kept millions of impatient shoppers at home.

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His sudden disappearance could be a blow to the brands that have hired him to promote their products – from Dior foundation and La Mer skin cream to makers of household furniture and pet supplies – during the current 618 shopping festival as well as Singles Day in November.

These events are the two biggest trade events of the year in China, which together can account for more than half of a brand’s annual sales.

“There will undoubtedly be an impact on Taobao as well, but I think it would be manageable,” said Chen Tao, senior analyst at consulting firm Analysys. “We expect the actual amount of live sales on Taobao to be only a small percentage – around 10% – of the total sales on Alibaba’s e-commerce platforms.”

Still, Alibaba has bet on live streaming as it grapples with slowing growth and growing competition from rivals and Pinduoduo, while live streaming rivals including platforms of short videos Douyin and Kuaishou, also bite his heels.

The e-commerce group, which recently recorded its slowest quarterly growth since its IPO in 2014, has seen its market share fall from more than 80% to less than 50% in the past seven years.

In March, Taobao and Alibaba’s Tmall saw their year-on-year decline in transaction volumes for the first time, with the pace bottoming out in April.

The livestream is driven by frenzied bids for cheap deals from social media influencers, and Li was at the heart of this blitz.

It moved $1.9 billion worth of goods in just 24 hours to kick off Singles Day last November, and once topped Alibaba founder Jack Ma’s sales in a top-selling contest -headed.

Neither Alibaba nor Li’s agency Meione responded to requests for comment on Li’s situation, but his legion of fans expressed dismay on social media.

“I hope Li Jiaqi can restart the live broadcast soon. Otherwise, I will surf Taobao less often,” one wrote.

Li is the latest among several high-profile Chinese influencers to suffer a fall from grace in recent months.

Viya, one of Taobao Live’s top influencers known as the “queen of live streaming”, was taken offline late last year and fined a record $1 tax evasion. .34 billion Rmb ($200 million).

Several other influencers have also been hit with penalties for tax evasion and logged out as authorities crack down on the sector to support a wider effort to narrow the gaping gap between rich and poor in China.

“It’s another public relations crisis,” said Hu Yuwan, associate director of Shanghai-based research consultancy Daxue Consulting. “For marketers, the main role of livestreamers is to increase brand exposure, attract more traffic and drive short-term sales. But they shouldn’t be the only or primary sales channel. . »

Together, Li and Viya accounted for about 13% of the total transaction value on Alibaba’s e-commerce platforms, well ahead of their closest competitors.

“The reason why Viya and Li Jiaqi were so influential was that Taobao needed models to attract many influencers to its platform,” said Zhang Yi, chief analyst at Guangzhou-based iiMedia Research. “So Taobao provides these top influencers with plenty of promotions and opportunities to reach a wider audience.”

Alibaba has been diverting some traffic to smaller influencers since last year, which could pave the way for new names to emerge in place of Li and Viya.

“If Taobao provides the same access to other influencers, they might also become more influential,” Zhang said.

But some say Li’s career is unlikely to be over.

Like many Chinese people born after Tiananmen, he may not even have been aware of the sensitivity of a tank-shaped dessert given the government’s decades-long effort to keep the bloody event a secret, said a Beijing-based journalism professor, who asked not to be identified.

“From the censors’ point of view, Li’s streaming should have been stopped permanently,” he said. “But I think it could restart in the future.”

A version of this article was first published by Nikkei Asia on June 8, 2022. ©2022 Nikkei Inc. All rights reserved.

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David A. Albanese