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Smartisan founder turned e-commerce livestreamer: Luo Yonghao debuts on Douyin

The big-talking entrepreneur sold USD 15.5 million goods and gained 200 million new followers on Douyin following his first e-commerce livestream.

Leveraging online influencers has been a key part of Shein's marketing. Image credit: Unsplash

On Wednesday night, Luo Yonghao, the flamboyant and charismatic founder of indebted Chinese smartphone brand Smartisan, sold more than RMB 110 million (USD 15.5 million) worth of goods, including gadgets, snacks, and even laundry pods during his first ever e-commerce livestream on Douyin.

The 3.5 hour long e-commerce livestream on ByteDance’s short-video app Douyin started at 8 pm and topped the platform’s top chart within two minutes, earning Luo millions of “Vibes” from viewers—the virtual currency on Douyin. Per Douyin’s data, he ended up receiving 36.32 million Vibes, which is equal to RMB 3.62 million, and attracted more than 200 million new followers after the show. Cumulatively, more than 48 million viewers flocked into the livestreaming room.

The list of goods he sold ranged from ice cream to gift cards for bubble tea chain Naixue’s Tea, which has filed for a US initial public offering. Among other products, Luo sold skincare sets, video projectors, AI recorders from Sougou, and phones by his former competitor Xiaomi, in particular, the latest flagship, the Mi 10.

Xiaomi’s vice president Lu Weibing even entered the livestreaming room for a period and sent a red packet worth RMB 500,000 (USD 70,414).

Luo Yonghao’s Douyin debut accumulated 48 million viewers. Source: screenshot from Douyin’s Weibo account

Luo’s debut in the hot e-commerce livestreaming sector seems to have gained initial traction and could maintain a large potential upside. The livestreaming sales format generated RMB 300 billion (USD 42 billion) gross merchandise volume (GMV) in 2019, according to a report from China Merchant Securities which Luo cited as part of his motivation for entering the space.

Could he succeed this time?

Luo Yonghao has experienced ups and downs in his various business ventures.

The 48-year-old never graduated high school and began his career very early. He worked as a construction worker, stall owner, and second-hand bookseller. He taught himself English and became a teacher at the renowned English education company New Oriental in Beijing in 2001, where he gained internet fame in China. His students posted his witty and entertaining lectures online. Those videos, titled “Lao Luo Quotations,” launched his celebrity as one of the first generation internet influencers in China.

His notoriety continued to increase, as he quit New Oriental in 2006 and opened a blogging site named “Bullog.cn” later that year. The portal hosted a batch of opinion leaders and public intellectuals at that time, considered by many to be a space where netizens could satirize popular social issues in the country. However, such a site didn’t last long, as it failed to meet government content standards and ceased operation just three years after its debut.

Since then, Luo has explored several new sectors, including opening a language tutoring institution, writing an autobiography, and directing a short film, named One step away: Pony.

In 2012, he founded Smartisan Technology, the now debt-ridden smartphone company, to pursue his ambitions in the mobile sector. The typically outspoken Luo once claimed he could purchase American tech titan Apple and that Smartisan was offering “the best smartphone in the eastern hemisphere.”

Although Smartisan amassed a cult following, which included setting a Guinness World Record for the largest attendance for a technology product launch, the company floundered amongst the stern competition. In six years, the firm sold only around 3 million units. In a brutal comparison, domestic smartphone champion Huawei shipped 240 million phones in 2019 alone.

In November 2019, Luo was barred from taking planes or high-speed trains, as well as any sort of extravagant spending, because his company failed to comply with a court ruling from a contractual dispute. He called himself a “deadbeat” and said in a Weibo post that he would work hard to repay the debt. His next venture, into the e-cig sector, also quickly failed, following a crackdown from the authorities which removed e-cigs from e-commerce platforms, drastically reducing available sales channels, KrASIA reported.

A competitive livestreaming market

Next, Luo decided to try his hand as a livestreaming salesperson, in tow with Li Jiaqi, the top livestreamer on Alibaba’s Taobao with 22 million fans on the platform, who sold USD 145 million goods within five minutes on last year’s Singles Day, the nationwide online shopping festival.

Different from 28-year-old Li, which reportedly has a net worth of between USD 1 million and USD 5 million, and chooses to conduct his livestreaming on e-commerce platform Taobao, Luo decided to go with ByteDance’s short-video platform Douyin.

The partnership seems mutually beneficial as Douyin boasts an impressive 400 million daily active users (DAUs) but has been searching for new ways to monetize its base beyond its lucrative ads business. However, Douyin’s transition to e-commerce faces stern competition from incumbent leader Taobao, which has garnered more than 400 million users on its livestreaming service since 2015.  Douyin even faces competition in e-commerce from rivals within the short video space, as Kuaishou started a similar service in 2016 and boasts its own lineup of well-known sales livestreamers.

As the e-commerce livestreaming space becomes more crowded, there is potential for fragmentation in the market, with new entrants like Shanghai-based social e-commerce company Pinduoduo, who recently announced a private fundraising round which will in part augment their interactive livestreaming experience.

Luo’s debut on Douyin gained quite a lot of attention and with competition set to intensify in the hotly contested e-commerce livestreaming market, platforms and aspiring salespeople must all seek to differentiate their offerings or risk being left behind in the next era of e-commerce.