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Behind Chinese top live streamers’ break with L’Oreal: what’s wrong with Livestreaming e-commerce?

L'Oréal, which previously topped Tmall's Double 11 cosmetics sales chart, has recently been atop Weibo's hottest searches because a wave of consumer complaints has erupted after many discovered that the price of the brand's masks (¥429, $67), advertised as the "lowest price of the year", was 66 percent higher during presale livestreams hosted by Viya and Austin Li, who are top live streamers in China, than during L'Oreal's livestream on November 11 (¥257.7, $40).

Later on, on 18th, L’Oréal has issued an apology after deal-seeking shoppers accused this company of deceiving consumers during this year’s Double 11 shopping festival, prompting two of the country’s best-known live-streaming influencers to pause partnerships with the company.

Different attitudes on the Internet

On the internet, there are a variety of viewpoints. Some are against L'Oréal because of its dishonest behavior in deceiving consumers and breaking contracts with live streamers, while some believe it makes sense because live streamers have taken too much profit from customers and brands, and it's time for live streamers to relinquish their price and sale power, allowing consumers to make their own decisions. There is also a neutral viewpoint that assumes the brand ruined the promise by refusing to cooperate with live streamers in order to cut costs.

L'Oréal misled consumers by advertising the price in live streamers' presale livestreams as the "lowest price of the year," but then offering other discounts to use on the Double 11 shopping festival following presale. It harmed the interests of consumers who made the purchase in livestream shopping. Even after L'Oréal apologized and compensated these individuals, they have already labeled L'Oréal as a dishonest brand from which they will not purchase in the future.

Some people believe that live streamers are to blame because those who brought things via livestream shopping suffered losses. These live streamers negotiate with the company to ensure the best price, encouraging viewers to buy through their livestream. Why is it that the brand is unable to provide a lower price elsewhere? Livestream shopping should stop gaining profit from consumers! L'Oréal has no problems with offering coupons in its own livestream shopping. live streamers have an illegal monopoly!

The real issue

To begin with, L'Oréal did definitely engage in deceptive advertising that persuaded customers to purchase products during live streamers' pre-sale livestream shopping. Consumer accusations and live streamer halts show that L'Oréal's brand image has been hurt, as this is a business honesty issue.

Second, in the case of monopoly, a subject that has significant market power charges overly high prices. Those who think live streamer has a monopoly feel that the live streamer leverages traffic advantage to manipulate product prices, even interfering with other channels, such as offline goods prices, in order to guarantee the "lowest price in the livestream shopping" and attract more customers. Many things in live stream shopping are actually not the lowest costs due to the large commissions of the live streamers. As a result, many customers believe live streamers have too much negotiating power to not always protect their interests, but to make more profit for live streamers themselves. These customers also despise livestream shopping and shopping festival because it is time-consuming and more complicated.

In this case, the real issue was a conflict of interest between the consumer, the brand, and the channel (live streamer). Because brands need to attract customers, they work with internet influencers and offline malls to increase traffic. Live streamers and other online influencers must keep their recommendations appealing to consumers regardless of price or quality. Livestream shopping was popular at first because it allowed customers to save money by reducing the number of retailers involved and offering time-limited discounts. For many buyers, the "lowest price" has become the most appealing feature. Since live streamers now demand a significant fee, consumers' profits have declined, for the profit that brands offer stakeholders has remained relatively stable.

Consumers could obtain low-cost, high-quality products in the past through a variety of methods, including mall discounts and other purchases. However, according to certain claims, some brands have paused or restricted these channels in order to secure "the lowest pricing" in livestream buying. There is also a case to be made that the brand did this to protect its brand image and maintain pricing stability. In fact, the lowest price isn't so necessary for livestream buying because customers will go wherever the lowest price is decided by the business. Austin Li stated in one of his interviews that the key to livestream shopping is companionship. If live streamers do have a monopoly, such as alleging brands to choose between two options, the government should look into it. Consumers should safeguard their interests and not place too much faith in live streamers or brands, as everyone in the market is concerned with their own profit.

What changes will there be in China's livestream shopping? May be consistent with what Austin Li said, Livestream shopping is about the company. The main direction for the next level for livestream shopping in China may be content and community.

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