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The pandemic changed the way we do pretty much everything. One of the hardest-hit sectors of the economy was retail. Shopping in-store with hoards of people was no longer an option, and the masses had to utilize eCommerce just to feel something. But society has even become fatigued with online shopping at this point, and innovation is crucial. The question is– how can companies still keep the masses spending money while adhering to this new way of life? Livestream shopping, of course.
The launch of Alibaba’s Taobao Live back in May 2016 marked a new beginning for sales. The Chinese retail giant had pioneered an influential new approach: linking up an online livestream broadcast with an eCommerce store to allow viewers to watch and shop at the same time.
It didn’t take very long for livestream shopping to become a fixture in sales campaigns for the iconic Singles’ Day event and, more broadly, as a reliable digital tool for boosting customer engagement and sales. In fact, last year in 2020, the first 30 minutes of Alibaba’s Singles’ Day pre-sales campaign on Taobao Live generated an impressive $7.5 billion in total transaction value.
The Secret Sauce
A key player in the success and expansion of livestream shopping is its ability to allow brands to have direct engagement and interaction with shoppers in real-time. Instant gratification has become the only spark in the mundane lives of a pandemic society, and livestream shopping utilizes this.
It’s nearly impossible for the distance that eCommerce creates between brands and their customers to completely disappear. However, livestream shopping helps to lessen the gap, while guaranteeing a comfortable, almost parasocial shopping experience. Having a real person showcasing your products live humanizes your brand, encouraging viewers to let their guard down and enjoy the experience as they would in real life. Especially in the beauty and apparel industries.
No longer are the days when consumers had to fully trust reviews and customer photos. The floodgates have opened for brands to find new, interactive ways to add a layer of authenticity and familiarity for shoppers. Having live content where customers can ask questions and engage with real people makes your products more desirable and trustworthy. And anyone who has worked in an adjacent industry whether it be retail, eCommerce, or even development can attest that consumers have a lot of questions.
Platforms that allow instant connectivity between consumers and brands allow customers to actively participate from their couches. For example, your brand representatives can casually talk to viewers like a genuine friend, making them feel seen and heard. Even when shopping in stores lately, there’s a level of disconnect between associates and consumers, most likely from pandemic burnout. Livestream shopping bridges this gap.
Producing human-centered content also gives brands the opportunity to gain loyal followers who look forward to your livestreams simply because they can relate to them and they feel a sense of belonging to that respective community. These consumers will continuously come back for more, and brand loyalty might just be the most crucial aspect in customer retention and revenue building. In China, influencers are often referred to as “key opinion leaders” or KOLs, and they have fans who show up regularly to watch their streams.
As mentioned prior, eCommerce has evolved rapidly in China, taking under five years to develop into a sales channel with an estimated penetration of an impressive 10 percent. According to research from McKinsey, the value of China’s live-commerce market grew at a CAGR of over 280 percent between 2017 and 2020, to reach around $171 billion (with a B) in 2020. This growth spurt has been intensified by the COVID-19 pandemic, and Chinese sales are expected to reach $423 billion by 2022.5
Unsurprisingly, the product categories most often showcased in live commerce are apparel and fashion, with a 36 percent share, followed by beauty products and food, with roughly 7 percent each. Consumer electronics account for roughly 5 percent.
Demographically speaking, Gen Z and Millennials dominate, although live commerce is starting to attract middle-aged and more-senior consumers. By March 2020, live commerce was used by 265 million people, which is roughly 30 percent of Chinese Internet users, which is quite a large chunk. Taobao currently remains the world’s biggest player.
However, in the U.S., the livestreaming market was worth about $6 billion last year and could almost double, reaching $11 billion by the end of this year, according to consumer market research group Coresight Research. It expects the market could eclipse $25 billion by 2023.
So, who’s raking in the livestream cash? In the fashion sector, Tommy Hilfiger recently extended its livestream program to Europe and North America following major successes in China, where one show attracted an audience of 14 million and sold 1,300 hoodies in just two minutes. Last December, Walmart piloted a livestream fashion event on TikTok that amassed seven times more viewers than expected and added 25 percent to its TikTok follower base.
Recently, Walmart further diversified its livestreaming and shopping with a Cyber Week special that spanned multiple platforms. Walmart hosted the first shoppable livestream on Twitter, broadening its efforts to link social content with commerce for the holidays.
Walmart hosted a half-hour variety show led by Jason Derulo and filmed at the musician’s Los Angeles home. Timed for Cyber Week, the festive program promoted product offerings in numerous categories.
Meanwhile, Bloomingdale’s has hosted an impressive 50 shoppable livestream events during the pandemic. The streams have ranged from make-up tutorials to cooking lessons to fitness classes to conversations around sustainability in fashion. The Macy’s owned company hasn’t yet disclosed how much sales it derives from each stream, but it said the events are helping to drive purchases and to gather that ever-importantt juicy information on its customers.
Don’t worry, we didn’t forget to discuss how Amazon is utilizing livestream shopping. The company has embraced livestreaming on its site, featuring a rotating slate of QVC-style, interactive videos from brands and influencers at nearly all hours of the day. Their dedicated platform, called Amazon Live, takes the fun and interactive nature of live video and joins it with online shopping.
Amazon Live has also become a fixture of the holiday shopping season and Prime Day, Amazon’s discount extravaganza. As the company becomes loaded with markdowns, brands will attempt to draw in deal-seeking shoppers by promoting discounted wares on Amazon Live. Last holiday season, more than 700 businesses streamed on Amazon Live.
Furthermore, as part of its push into eCommerce, YouTube launched Holiday Stream and Shop. The weeklong event started in the beginning of December and featured influencer celebs like MrBeast and Patrick Starrr, selling merch right from YouTube.
Enlisting in internet personalities is a big deal; In October, a Chinese internet celebrity known as “The Lipstick King” sold a staggering $1.7B of beauty products during a 12-hour (!!!!!!) livestream.
The Future of Livestream Shopping
Interestingly enough, Coresight data found that returns are 50% lower when items are bought in a livestream. Experts theorize that because of the U.S. consumer’s focus on sustainability right now, that is what could ultimately drive livestreaming.
Livestreaming isn’t going anywhere anytime soon. The numbers are just too enticing. In fact, since the innovative shopping method took off, a plethora of specialist start-ups have also emerged, including NTWRK, which features shows where guests talk about streetwear drops, and Buywith, where viewers watch hosts browsing the platform and chatting via webcam.
Consumer demand is building: a recent survey found that almost a quarter of adults outside China would like to discover new products via a livestream featuring an influencer or brand representative.
This method has always been right under our noses– QVC and The Home Shopping Network have existed in somewhat of a livestream format for eons, and they still make billions a year, while tech companies haven’t fully cracked the code.