Live Commerce solutions have grown extensively over the past couple of years in Western markets with more and more pure players and social media platforms adopting the concept of ‘live shopping’ to combine entertainment with instant purchasing.
This concept isn’t completely new, as decades ago TV shopping channels already existed. However, it’s been revived leveraging the convenience of ecommerce and the interaction opportunities with online consumers ‘in-market’ who connect with brands through multiple digital touch points on a daily basis.
QVC, for example, built their original model on live product ‘demos’ in the US years ago, setting the scene for what has now become a very sought after shopping model, improved by new technological advancements.
In China, pure players like Alibaba’s Taobao already saw a potential in combining commerce and video streaming in 2016. Kuaishou, another Chinese company and a TikTok competitor, backed by Tencent, very recently completed a $5.4B IPO, becoming one of the most important entertainment commerce platforms alongside Taobao Live.
The likes of Amazon and other global pure players, as well as Facebook, Instagram and YouTube are now catching up with China and investing into this new commerce model to combine entertainment and shopping.
It is predicted that Live Commerce will continue to grow extensively and will be worth $423B globally in the next three years:
Source: Videosdk, 2021
Furthermore, specialised startups and entertainment commerce platforms such as OOOOO, Bambuser or TalkShopLive are quickly revolutionizing the shopping experience online, delivering the required infrastructure to provide new engaging livestream shopping events, connecting multiple sellers with a vast consumer audience.
How is this model really defined and what does Live Commerce stand for
Live Commerce is an extension of traditional ecommerce that enhances the online shopping experience through the combination of ‘human advice’ and online convenience. Along with new trends like conversational commerce and personal recommendations, Live Commerce allows brands to present their products through live interactive video streaming. During these events, a customer has the opportunity to directly ask questions to the presenter, often an influencer, and to buy products in just a few clicks.
The live experience is one of the strongest attempts at mimicking the ‘in-store’ experience from the comfort of one’s digital device, adding gamification and pure entertainment to the mix.
Why has this model become increasingly meaningful
The popularity and the growth of this relatively new model has boomed following the COVID-19 pandemic, addressing the need for brands to continue to stay close to and engage with their customers.
The change in landscape driven by the pandemic has also led to the growth of investments into new experiential and tech solutions born out of the closures of physical stores. Brands have had to very quickly remedy the lack of ‘in-store’ shopping by thinking of engaging, entertaining and informative ways to sell their products.
Video streaming appears to perfectly tap into this need as it allows for highly informative content media to be shared across a variety of touch points, providing engaging live experiences which are fun and unique.
Furthermore, the consumption of video content has grown substantially over the years, supported by better smartphone technologies, but also by an appetite to consume content everywhere, making video streaming effortless and easily accessible.
Adobe and Google stated that over 50% of internet users who purchase online tend to watch a video of the products they’re interested in prior to finally making a purchase.
Specifically, social media users who are regularly consuming video content are the ideal target for brands wanting to leverage integrated commerce experiences, especially given that 70% of online consumers discover new products through social networks. Influencers have become brand ambassadors and the perfect Live Shopping presenters to address a broad audience of followers and potential customers.
Asia as the trailblazer, once more
Alibaba’s Taobao Live was launched in May 2016, setting the beginning of a significant chapter for the ecommerce market in China. At that time the ‘live streaming-to-shop' approach was this powerful new concept connecting live streaming to an ecommerce store which would revolutionize the retail industry in Asia.
It quickly became a trademark to promote and feature exciting products during major shopping events like Alibaba’s Singles’ Day, allowing to significantly boost customer engagement and sales.
In 2020, the first half an hour of Alibaba’s Singles’ Day pre-sales campaigns on Taobao Live generated an unprecedented $7.5B, marking a new wave of the ecommerce revolution.
Taobao was also the first transactional platform to develop a culture of live influencers who communicate the value of products online, tapping into their exposure and significant reach. China is now a true pioneer of this online shopping model which has experienced exceptional growth over the years, generating a market worth $170B in 2020 with a +280% growth year on year.
Source: McKinsey Digital, 2021
Live influencers, or Key Opinion Leaders as often referred to, have been a defining pillar in supporting the growth of Live Commerce and key successes include the collaboration between Viya and Kim Kardashian who sold over 15,000 bottles of her KKW perfume in just a few minutes during Alibaba’s 2019 Singles’ Day.
In 2020, approximately 40% of China’s population viewed livestreams and sales from livestreams grew more than 100% year on year with 75% of Chinese consumers admitting having purchased products via livestream in the past two years. This trend has been driven by Gen-Z and Millennials, but senior generations are quickly jumping on the bandwagon.
Western markets, where the pandemic acted as a catalyst to further develop new online selling experiences and new channels, are now catching up with the trend and McKinsey is already predicting that by 2026, approximately 20% of ecommerce sales globally will be generated through livestreams.
New players and Live Commerce popularity in Western regions
Following China’s lead and innovation, Western retailers, marketplaces and social media giants are now heavily investing in Live Commerce models and have become even more active in this space over the past two years, incentivised by the pandemic and the required online shopping adoptions.
Amazon Live was initially launched in the US in 2019, attempting to replicate and elevate the QVC model. It has since been growing extensively, especially across Fashion, Beauty and Gifting categories. Walmart piloted a livestream fashion event on TikTok in 2020, increasing its follower base by 25%. Other more local retailers such as beauty specialist Douglas tested early livestream shopping in Germany and CDiscount launched their own CDiscount Shopping Show platform. AliExpress also launched their AliExpress Live Shopping channel, starting with Russia and then expanding to their core markets.
It is social media giants, however, who are heavily investing in this space, leveraging the plethora of influencers who are already sponsoring brands and acting as their ambassadors on channels like Facebook, Instagram, TikTok, and YouTube.
Instagram introduced Live Shopping in 2020 to capitalise on the growth of ecommerce functionalities on the platform. In fact, according to a 2020 Instagram Trend Research Study, 44% of people use Instagram to shop weekly, thus making it a perfect destination to mix entertainment with shopping. More recently, Instagram launched their first big shopping event: 10 Days of Live Shopping, taking inspiration from Chinese marketplaces. The event regrouped a range of celebrities streaming product launches in the app across lifestyle, beauty and fashion categories, showcasing the capacity of livestream shopping for connecting with Instagram’s audience.
YouTube also announced their first ‘Live Shopping Event’ en masse, starting November 15 2021, announcing that the company is now ready for a larger test of its live shopping platform, with plans to host a week-long live shopping event: YouTube Holiday Stream and Shop. The event will allow viewers to shop new products, unlock limited-time offers and engage with creators and other viewers via Q&As and polls, attempting to replicate the highly engaging experiences delivered by marketplaces in China.
However, the Live Commerce experience in the West is still far from the Art of Live Commerce that has been mastered by China.
Brands are often desperately trying to leverage social media channels and influencers to expand their reach through what often feels like hidden advertising. They compete on advertising spend, investing thousands of dollars to produce their shopping videos, which ultimately benefit the platform who make substantial money regardless of conversions taking place or not.
In China, Live Commerce is entertaining, it is a show where music artists and influencers are using gamification to deliver a memorable and engaging experience which features product placements in a unique setting. The mobile shopping experience is also fun and creates a broader shareable moment where consumers interact with one another during these live experiences.
OOOOO is a platform that finally seems to crack Live Commerce in the West, delivering a similar experience to what Chinese platforms have been doing since 2016. OOOOO, founded by Wish and TikTok’s veterans, is creating an app-based platform to help top-tier brands utilize live streaming in a tactical manner. OOOOO offers live streams that are unscripted, entertaining, and make you feel like wanting more. The concept is to deliver entertainment first with some integrated shopping along the way. What brands need is an easy way to showcase their products through the right host in a spontaneous and entertaining fashion.
To this point, platforms who will become successful in this space are the ones that offer the right technology support, but also the access to a pool of hosts / brand ambassadors and finally to dedicated production studios to create the right content.
OOOOO has developed a video commerce app with gaming features to reward their community-based growth through coupons / price incentives when inviting new friends. Once again this concept isn’t new, but rather similar to what Pinduoduo has been offering in China.
The US market has also grown significantly in terms of live streaming shopping, initially with Amazon Live, but then through the rise of emerging platforms in the space like TalkShopLive, CommentSold, and NTWRK. This market is expected to reach $11B by the end of 2021 and hit $25B by 2023 in the US alone, according to Coresight Research.
The role of technology in pushing Live Commerce forward
The growth of Live Commerce has been boosted not only by circumstances and a global change in consumer trends emphasized by the COVID-19 pandemic, but also by technological advancements.
5G is allowing for better connectivity, faster connections, thus acting as a catalyst for consuming more content on the go on smart phones and especially video content. Live streaming technology has also substantially improved, becoming more popular with brands and ecommerce companies.
Specifically, some up and coming technologies are having a significant impact on the advancement of Live Commerce:
- AI
Artificial intelligence provides an opportunity to offer personalised recommendations to a consumer, which can translate into one-to-one livestream shopping actions between a seller and a customer, but also into more personalised conversational commerce events for live shopping advice.
2. VR / AR and immersive events
Virtual reality and augmented reality can be integrated within live interactions between a brand and a consumer, allowing a customer to participate in live events such as fashion shows, but also to virtually try on clothing, accessories and visualise furniture within real spaces.
3. Real-time interactivity
New technologies are enhancing live communication and improving networks. Live streaming allows for real-time connectivity on a virtual platform and can also translate into a live dialogue between a seller and a customer through chat, therefore strengthening the bond between brands and consumers.
4. Video pattern and image recognition
Better and newly developed AI image recognition technologies facilitate product tagging and linking on video content to easily direct consumers to the right product landing page, ultimately generating higher sales conversion.
Concluding remarks and key advantages of Live Commerce
Large ecommerce players and nascent short-video platforms’ startups are now combining entertainment, gamification, commerce and live communication to deliver highly interactive shopping experiences. Inspired by the first Live Commerce models launched in China some years ago, Western companies have also embarked on this journey accelerated by the COVID-19 pandemic which has generated a need to compensate for the lack of ‘in-store’ interactions.
The old retail model is turning into a thing of the past and I strongly believe these new ways to deliver engaging and entertaining shopping experiences will grow and continue to complement traditional ecommerce and ‘in-store’ shopping, becoming a key pillar of omnichannel retail.
Innovative, forward-thinking retailers and brands should continue to leverage new technologies and new platforms to master the art of Live Commerce and tap into ‘in-market’ consumers throughout the online journey. Delivering unique experiences and building direct relationships with consumers are key factors to strengthen brand awareness, but also to ultimately drive higher sales’ conversion.
China’s success is a strong evidence of how important it is to fully leverage one’s digital real estate and keeping up with the behaviour and needs of newer generations of consumers looking for interactive and entertaining experiences to participate in. Entertainment commerce platforms may become part of any brand’s retail strategy moving forward and Live Commerce already has some clear advantages to be grasped:
- Higher sales conversion rates
On live streaming platforms, customers are engaged while the content is being delivered in real-time and they tend to participate and show up ten times more for live events than for standard ecommerce browsing sessions. Furthermore, companies have reported conversion rates approaching 30% when selling through Live Commerce, up to ten times higher than in conventional ecommerce.
2. High consumer engagement
The ability to engage with consumers through innovative gamification tactics such as offering exclusive deals, coupons, discount vouchers to be used during Live Commerce events is a new strategy to interact with new audiences.
- Real time interactivity
The real time interaction of a live stream allows for adjusting the presentation based on the needs of the audience as well as revise it if products sell out. This makes it a perfect medium to introduce new products on the market or to sell products with limited availability.
- Leveraging your internal staff and expertise
Pulling in retail staff to demonstrate and present products during Live Commerce events is another perfect use-case of live stream shopping that allows brands to clearly communicate about their products capitalising on their internal staff expertise to closely match the ‘in-store’ shopping experience.
- Maximising the culture of influencers to build brand loyalty
Bigger brands are asking celebrities and key influencers to showcase their products live, tapping into broader audiences who are seeking inspiration from their favorite influencers and who are open to discovering new brands. Overall customer value then increases as online shoppers create personal connections with the brand ambassadors they follow, thus creating long term brand loyalty.
- Improved customer experience
Influencers can act as customer service representatives and ‘floor’ salespeople. They demonstrate product features and functionalities, answering customer pain points and addressing customer needs. Furthermore they can compare different products live and directly interact with customers, helping brands and retailers increase overall customer value.
- Reduced distribution costs
The Live Commerce model allows sellers to sell products directly from warehouses, limiting distribution costs and supply chain complexities. This can be efficient for brands with limited distribution capacities and brands with smaller product assortments.
Live Commerce is still nascent in Western markets, but a plethora of new startups, established pure players and social media channels are already reaping the benefits of this model and investing into it as a future component of the omnichannel retail landscape.
In the US for example, Live Commerce is predicted to become mainstream in the next ten years and will likely be as popular as what has been experienced in China already.
While commerce platforms are still not offering the best user experience in the West and are still fragmented when it comes to entertainment and Live Commerce, they will certainly evolve to master the art of Entertainment Commerce. Leveraging new technologies to mix entertainment, commerce and gamification will become a key component of ecommerce moving forward, addressing new generations of consumers looking for ‘human’ interactions, fun, deeper connections with the brands they love and convenience.