Dystopian Influencer Farms Are Fueling China’s Live Shopping Industry
Incubators that train China’s biggest live shopping influencers are gaining steam as the burgeoning industry is poised to surpass $500 billion in revenue. As more details about these operations come to light, the underlying uneasiness of using humans as QVC robot sellers becomes apparent.
Few people in the Western world have heard of Ruhan, but the Chinese company has emerged as one of several “influencer incubators” that are transforming the face of e-commerce in the country. Occupying a gray high-rise in a drab part of industrial Hangzhou, the operation can be seen as the gears that keep online influencers—known as KOLs, or “key opinion leaders”—churning out content during hectic eight-hour daily shifts. There, influencers live-stream content in cramped studios stuffed next to each other like factory farm chickens in empty warehouses. Each studio is equipped with tripods, ring lights, and a webcam, and hundreds of workers answer customer service inquiries, handle logistics, and edit photos for Ruhan’s vast stable of stars.
These operations are becoming increasingly common as China continues to embrace live-streaming platforms such as Taobao, owned by the country’s Amazon equivalent Alibaba, where influencers sell fashion and cosmetics products to online shoppers in the internet’s version of the QVC network. Popular in Asia but still nascent in the U.S., China’s live-streaming e-commerce market skyrocketed more than 280 percent between 2017 and 2020, when it reached an estimated $171 billion in value. The pandemic only escalated its rise, with sales expected to surpass $500 billion this year, according to Coresight Research. By June 2020, the country recorded 309 million live-streaming consumers, accounting for one-third of its internet users.
Competition to be the next star influencer is hot, thanks in part to high visibility, healthy paychecks, and the outwardly glamorous lifestyle it affords. (Research from Chinese tech company Tencent shows that 54 percent of college-aged respondents picked “online celebrity” as their top career choice.) Ruhan executives tend to favor up-and-coming young women who appeal to their own demographic. Perhaps the most famous is Viya, whose success was bolstered in large part by incubator Xinhe. With more than 80 million followers, the 36-year-old celebrity was able to sell $8 billion worth of goods on Taobao—equivalent to a third of the global sales reported by the American department store Macy’s—before authorities removed her account and fined her $210 million for tax evasion as part of a broader crackdown.
“You have companies that are literally trying to train thousands of young women to become live-streamers, teaching them how to talk, how to do more flattering lighting or whatever it is,” Kim Leitzes, the founder of KOL marketplace ParkLu, tells Business of Fashion. “Then you have Ruhan—its history and core is an apparel manufacturer, and so what they provide is the whole supply chain, products, merchandising, research, support, and manufacturing, and the value added was having genuine, authentic marketing face to front each brand, and they build a brand around each KOL.”
Despite high numbers and analysts who insist that livestreaming is the future of retail, it has yet to take hold in the West. Coresight predicts that livestream sales in the U.S. will barely break $20 billion this year, a fraction of China’s. After early experiments, Facebook is shutting down its live shopping platform to instead focus on short-form video. Even TikTok paused expansion of its TikTok Shop after lukewarm reception in the UK. Some results are promising: a 2020 livestream fashion event Walmart held on TikTok grew its follower count by 25 percent, and the streetwear-focused live-shopping app NTWRK raised $50 million from Kering and Goldman Sachs in a recent funding round as interest in the platform surged during the pandemic. (Surface partnered with NTWRK for a virtual design festival in 2021.) Though Gen-Z consumers love video, tough economic times will likely deter brands from embracing any new marketing strategies that haven’t yet proved profitable.