Game Theory is a regular series where we speak with a professional with insight into China’s business and tech scene.
Josh Gardner’s China journey dates back to 1995. Living in beautiful Yunnan, Gardner did field work with the Yi minority group and planned to become an anthropologist. After realizing that “No one wanted to hire an anthropologist,” he adjusted his ambition and got into logistics in Beijing in 1997. From there, Gardner’s career path would involve starting several businesses, ranging from sourcing to ecommerce and data consultancy.
After a stint in the US, Gardner moved to Shanghai in 2013. He’s currently the CEO of Kung Fu Data, a data and e-commerce group that helps brands, ranging from Fortune 500 companies to mid-sized firms, with on-shore e-commerce operations. Below, Gardner shares his insight into China’s dynamic e-commerce sector and whether livestreaming is make-or-break for brands in China.
What sparked your interest to return to China and work in e-commerce?
I had two Chinese friends (now partners) who worked with me in China. They came to [the US to] visit on holiday but during the time they visited, they said you really need to come back to China and do e-commerce.
I ended up listening to them and first went to check things out in 2012 and one of my partners, a best friend from childhood, had started a company. He was originally a Taobao distributor for Kappa but then helped other brands like North Face and went on to become one of the most successful Tmall partners.
At that time, my partner said I should come over and join, and I ended up convincing my wife that the opportunity was better in China than it was in the US, and so I moved my family to Shanghai towards the end of 2013 and we launched the business in 2014.
From your understanding, when did livestreaming and KOLs begin to play a larger role in e-commerce sales?
We first have to decouple livestreaming and KOLs. As early as 2005, livestream culture began in China when public video chat streaming [platforms] like YY were used by influencers to host public performances. That was the first wave of livestreaming, but I think the more significant wave was around 2013. The ecosystem had matured and had involved actual communities that had trained the livestreamers. So by 2013, people were consuming influencer-led communications, traffic, travel and a type of streaming content was already being consumed on mobile. It was like that when I first moved to Shanghai seven years ago.
But it was really over the last few years that [livestreaming] started to become recognized as a different way to sell for certain categories, and in 2019 it just went to a whole new level. So, I think people are marking it post-COVID, but actually even by last year’s Single’s Day Festival it was already on its trajectory. Right now, it’s the soup du jour so to speak and it really is a powerful medium, but it’s not everything to us. It’s still just one tool in the arsenal.
I think the KOL ecosystem really skyrocketed with Weibo and WeChat. The difference [now] is that those ecosystems have changed, TikTok created a whole new world for short video and the KOL community. From there, KOLs started launching Taobao stores to sell stuff to followers. I think Big Eve started back in 2011 or 2012, and she was one of the first to really start moving product. She was part of a KOL incubator in Hangzhou that invested heavily in her profile. It was like commercializing a traditional KOL, and that really started over the past several years, it’s not really last year’s news.
Can brands still find success on Chinese e-commerce platforms without engaging in livestreaming
Absolutely. It’s all about having an unfair advantage in a certain category, it doesn’t matter what tools you’re using. Today’s tool might be livestreaming, but next year it may be completely different. It’s China – you can change your strategy 10 times in the same year. While livestream could be a portion of sales when you do it with a top livestreamer, you don’t do it everyday – otherwise you won’t make money. It’s a great amplification tool, but you still need all your basic stuff in place.
The component for success isn’t a livestreamer. Let’s say you want to book Austin Li. He won’t do it if you’re a zero, he looks at the same criteria that we do, which is brand strength and reputation. So it’s not livestreaming that pioneers success, it’s having a defendable position – something worth selling. I think livestreaming is here to stay, but is it going to be 90% of my sales for the next five years? I don’t think so.
I have a new department at my company focused on commercial incubation, and the leader of that group is a former daigou who was huge in five or six commodities, but when she lost her business she went into incubations – growing brands in China. She’s seen it firsthand. Livestream is valuable, but it is flooded. She is already working to get ahead of the trends to do other things for our clients that will continue to drive sales.
This interview has been edited for clarity and brevity.
For more Game Theory, click here.
[Cover image provided by Josh Gardner]
0 User Comments