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Indonesian beauty specialist Richard Lee made $800,000 in less than three hours selling his skincare products in a live shopping stream in August.
“We aimed for 2 billion [rupiah] in two-and-a-half hours but we got 8 billion [rupiah] instead!” said Dr Lee, in a recording of the stream posted on social media.
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In another live streamed shopping event in early September, Dr Lee made 5.5 billion rupiah ($500,000) in one-and-a-half hours selling his skincare products.
“It was definitely very surprising. I didn’t see it coming at all,” he told the ABC.
“Some big shops have to wait one month to get that much profit, but we managed to secure it in a couple of hours.”
Live shopping is on the rise in Indonesia, with retailers finding they can make huge profits in a matter of hours.
But the Indonesian government is unhappy about the trend and plans to crack down on live shopping, because of concerns the practice harms offline retailers.
Live shopping is when a salesperson, sometimes an influencer or celebrity, spruiks products during a live stream on a social media or shopping platform app.
Buyers can chat with the sellers and purchase the items, often at a discount, while sales information is fed back to the vendor in real-time.
Dr Lee was selling his products on Shopee Live, a live stream platform on the Shopee App.
Mr Lee said it was “very easy” to sell products on a live stream, as he only needed two or three staff or co-hosts to get the sales started.
“And you can go live from anywhere, it doesn’t have to be from your shop. You can do it at home too,” he said.
“All you need is a phone and you’re all set.”
‘Because they offered a promo, I decided to buy’
Shopee Live was the most popular platform for live streamed shopping in Indonesia, followed by social media platform TikTok Live, according to a survey by market research company Populix.
Another Populix survey of Indonesian consumers published in May found 800 out of 1,000 consumers had tried shopping on social media, and TikTok Shop was the most popular social media shopping site.
Live shopping has become more popular in recent years in Indonesia due to the massive growth of internet access combined with the large population of millennials and Gen Z.
Avi, who works at an Indonesian e-commerce company called Tokopedia, often shops impulsively on TikTok Live.
She requested to be anonymous in this story because TikTok Shop is her company’s competitor.
“I shop at TikTok not because I need to, but because I like scrolling there and sometimes when I do that a random live shopping video just pops up,” she said.
She has bought things such as key chains, pillows, and clothes that she didn’t plan to buy before.
“[When I see shops that sell] small key chains which I think are cute, for example, I would stay on the live stream usually for almost 15 minutes and end up buying them,” she said.
“On another occasion, I bought some packets of tissues for $1, which I didn’t really need but because they offered a promo, I decided to buy.”
Avi also mentioned how “serious” the live-streaming hosts were, which managed to convince her to make the purchases.
Government ban plan
Despite growing live shopping sales, Indonesia is planning to ban transactions on social media under new trade regulations.
Ministers have repeatedly said that e-commerce sellers using predatory pricing on social media platforms were threatening offline markets in South-East Asia’s biggest economy.
Current trade regulations do not specifically cover direct transactions on social media.
“Social media and social commerce cannot be combined,” Jerry Sambuaga, Deputy Trade Minister, told Indonesia’s parliament last week, using the example of sellers using “live” features on TikTok to sell goods.
“Revisions to the trade regulations that are currently under way will firmly and explicitly ban this,” Mr Sambuaga said.
Indonesian media have reported small businesses that do not sell online have recorded declining profits, because customers are comparing their products’ prices to discounted ones available during live shopping streams.
TikTok Indonesia spokesperson Anggini Setiawan said that separating social media and e-commerce into different platforms would hamper innovation.
“It would also disadvantage Indonesian merchants and consumers,” she said.
TikTok has 325 million South-East Asian active users every month, and 125 million were in Indonesia, according to parent company, Chinese tech giant ByteDance.
The company said there were 2 million small businesses on TikTok Shop in Indonesia.
On the employment website Indeed, there were more than 200 job advertisements for live streamers in Jakarta and other locations in Indonesia during the past 30 days.
Yeta Purnama, a researcher at the Center of Economic Studies and Law Studies (CELIOS), said that if the live streaming shopping market kept growing it would open up more job opportunities.
However, Ms Purnama also highlighted an emerging gap in sales revenue between standard small businesses, compared to shops owned by public figures or influencers.
“Small business owners might not get any viewers or buyers when doing live streaming,” she said.
“Meanwhile, the influencers and public figures have their own privilege, which also affects buyers’ interests towards the products being sold.”
Start-up inspired by business model in China
The popularity of live shopping in Indonesia has also seen growth in related businesses.
Two months ago, a video showing multiple sellers promoting products in rooms separated by partition walls garnered millions of views on Instagram and TikTok.
The sellers appear busy talking to a phone or tablet installed on mini tripods while holding products they are trying to sell to their online audience.
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The video shows what’s inside Social Bread, a creative start-up technology company that was inspired by the live shopping business model in China, according to the company’s co-founder and chief operating officer Lydia Susanti.
“We created a platform to connect small and medium local businesses and local brands with local creators and streamers,” she told ABC.
Their Jakarta office has two floors with a total of 14 small and large “boxes” to accommodate about 20 streamers per day.
The streamers are “young people with content-making skills” who are treated as partners, the company said, adding they provide training for them and pay them according to the projects they handle.
They are equipped with gadgets and video shooting gear for two-hour live streaming sessions selling products on TikTok Live.
To access the service, small businesses pay the company social media management fees which range from $600 to $750 per month.
Ms Susanti said the company’s greatest achievement was helping a local shoe business make $180,000 in one month.
“Live shopping is one of the most perfect ways to sell your products,” she said.
“And the interaction is also live, which makes it good, unlike live shopping on TV where it’s just one-way communication.”
Dr Lee, who continues selling his beauty products on live streaming platforms, sees it as the future.
“I can guarantee live shopping is sustainable because I’ve seen the trend of offline shops becoming quiet and live streaming becoming packed,” he said.
“Whether you like it or not, this is what Indonesia’s facing going forward, so we, the entrepreneurs, will have to transform to digital.”
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ABC/Reuters
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