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Is Livestream Shopping Taking Over or Is It in Decline?
Join us for a livestream discussion on this topic at 12:30 p.m. EST. Follow this link: https://www.crowdcast.io/c/livestreamweek-oct-2023
Livestream shopping, a captivating and innovative retail experience, is being touted by many as the future of digital commerce. Being live means it’s unedited, and this often adds more momentum and energy to the experience. Shoppers can interact and feel engaged when the host responds to their questions, comments, or requests in real time.
Livestream shopping first gained success in China with Alibaba’s 2016 Singles’ Day and was first identified by Coresight Research. In 2022, “an estimated $500 billion in goods were sold via livestream on apps like Douyin, the Chinese version of TikTok, or Kuaishou, another short video platform — an eightfold increase since 2019,” according to the New York Times.
One recent livestreaming event took place from Oct. 9 to 14, when Good Housekeeping partnered with TalkShopLive, an online livestream shopping platform. During the week, shoppers were able to tune in live every day and shop exclusive deals from guest celebrities and influencers.
Each guest had a specific program. For example, Dolly Parton offered a copy of her first album, “Rockstar,” and her upcoming book, “Behind the Seams: My Life in Rhinestones,” and Paris Hilton unveiled her new cookware line in collaboration with Walmart. Having an event with well-known celebrities makes it more likely that devoted fans will be primed to tune in and buy the products offered.
According to Chain Store Age, TalkShopLive’s CEO Bryan Moore explained how they have “created a scalable live commerce solution for any publisher, retailer, brand, or creator to go live across multiple domains.”
CNBC recently noted that TikTok, Poshmark, and eBay are all currently testing livestream shopping and are “rushing to grab a piece of the action here in the U.S.” eBay’s chief product officer, Eddie Garcia, claims that the company is bullish for this new shopping experience and is investing in it. Garcia, who oversees the company’s livestreaming platform eBay Live, stated that eBay is currently “focused on fashion and collectibles, with plans to expand from there.”
In a specific example, CNBC shared how “Anthony Velez, CEO of Bagriculture, a small business selling pre-owned designer handbags,” went from making up to $100,000 a month in his brick-and-mortar store to up to $100,000 a day with no physical stores, thanks to livestream shopping.
Now, all eyes are on TikTok’s foray into live shopping, and while eBay’s Garcia thinks “the sky’s the limit,” Forbes thinks otherwise.
In China, shoppers quickly embraced using influencers and social channels for product discovery, thanks to a seamless blend of social and commerce. Alibaba’s innovation introduced the live shopping element, and the pandemic further accelerated its growth. By 2019, live shopping had gained traction in the Western world and was firmly established in China, with ByteDance’s subsidiary, Douyin, entering the market.
In 2021, livestream shopping in China generated $327 billion, a 108% increase following a 220% growth in the previous year. This represents about 10% of China’s e-commerce market, a notable but relatively small portion in comparison to the vast retail market of around $6.4 trillion. In contrast, the U.S. saw approximately $20 billion in live shopping in 2022, making up about 2% of the e-commerce market and only 0.3% of the total retail market.
The market structure varies significantly between the two countries. In China, Alibaba’s TaoBao dominates with an 80% share, while Douyin and Kwai account for the rest. In the U.S., the landscape is more fragmented, with Meta discontinuing live shopping on Instagram and Amazon playing a prominent role.
Even in China, there are signs of potential challenges ahead. Douyin, the second-largest player in the live shopping market, anticipates stagnant growth, with livestream shopping potentially peaking within the next two years at approximately 20% of total e-commerce sales.
Additionally, there’s another facet of livestream commerce that receives little attention. According to reports from Gartner, North American retailers have reported conversion rates reaching as high as 40% during livestream events. However, within Douyin, a substantial 80% of its sellers’ revenue often hinges on just one or two products. In certain categories, like jewelry, “buyers’ remorse can lead to return rates as high as 80%.”
Discussion Questions
Does it seem like livestream shopping only matters for consumers who look to celebrities and influencers for purchasing decisions? Do you think livestream shopping will continue growing in popularity and increasing production values in America?
Poll
Loading …BrainTrust
Melissa Minkow
Director, Retail Strategy, CI&T
John Lietsch
Chief Operating Officer, Bloo Kanoo
Livestream shopping will certainly grow in popularity. But I think it will hit different levels of market share in different countries. I doubt it will ever enjoy the level of popularity in the USA as it does in China. To me, livestream shopping is the perfect ecommerce equivalent to the physical pop-up shop. Product launches, celebrity events, limited edition offerings. Testing and market research.
It all sounds very sexy and convenient, but it also sounds very short on data at the moment. The profitability of ecommerce is still being figured out, and I suspect the same will be true with livestream shopping. When return rates of 80% are thrown into the equation, that becomes a rather significant caveat. It becomes a question of what customers want versus what brands and retailers can afford to implement.
Social shopping is the new TV, especially among younger audiences.
Retail leaders (like Walmart, Amazon, Meta and Ulta) are testing and perfecting livestreams. Partnering with celebrities can attract viewers and shift habits. In time, products may emerge as the real stars of the show.
Live shopping will grow in popularity as retail and tech companies integrate their systems for a seamless customer experience. Success factors include agility, inventory and logistics to support unpredictable, content-driven demand and real-time sales.
I continue to be a believer in livestream shopping, but am very aware that it’s struggling to break through in the US in the ways it has abroad. If brands can create more appeal for the medium, I still see it becoming more popular, but it will require creativity because the current model isn’t cutting it.
While sales numbers may look promising for live streaming in the U.S. the truth is that even more sales happen during replays. American culture is more challenged than other countries to sit still for a live video scheduled at a specific time. We have become accustomed to having access to video content on demand, and even mildly resentful if we’re expected to make a spending decision under the pressure of time. And for retailers, the cost of shipping, large number of returns erodes a lot of the profit on live sales. And importantly, there is the specter of brand resentment that comes from making a purchase that not only didn’t meet expectation, but made you feel like you were rushed to decide. Not to say there aren’t shoppers who will continue to enjoy the dopamine rush of a livestream sale or auction, but adoption by the larger portion of consumers in the U.S. is a long way off.
Technically, livestream shopping isn’t new in the US. Home shopping networks, like QVC, have been doing it for years. However, while sizable they are a relatively niche part of the market. Newer, digital livestream platforms are growing but they won’t dominate online commerce or retail. Why? Simply because this is not the way the vast majority of people want to shop all of the time. It can be great for occasional entertainment or discovery, but it does not beat the convenience or simplicity of more static ways of online shopping. So, growing yes; dominant, no.
You are channeling my thoughts, Neil. Much online shopping is utilitarian in nature, a smaller fraction is entertainment-focused. Not many folks are heading to Tik Tok to find their next refrigerator.
Neil, I have a similar stance. Home shopping networks, which often feature celebrity-owned brands, have had success in the US for many years, and have been particularly popular among baby boomers. That being said, I definitely think that livestream shopping on apps like TikTok will capture the attention of the younger generation, but not to the extent that it would be the preferred way to shop.
I’m definitely biased about livestream shopping but believe in all aspects of “live video shopping,” “shoppable broadcasting” (aka livestream shopping) and shoppable videoconferencing.” I’ve bought backpacking gear during a pre-scheduled, online, virtual session with an expert and believe there’s an opportunity there. After all, the session allowed me to skip a 1 hour round-trip outing to my favorite outdoor store. As with everything, we need to ignore the hype and focus on the underlying technology and opportunity. China has definitely experienced amazing success with livestream shopping but China operates under a completely different set of condition and that means the technology must be considered differently outside of China. Finally, I think retailers who can use third party (or proprietary) software to enable their online assets (like websites) to offer “live video shopping” will benefit by leveraging their brand while allowing their customers to shop on their websites without leaving the live video experience (or the recorded video experience in the case of shoppable video).
I have clients who easily exploded their sales using Facebook Live. They were smart, jumping on live shopping as soon as Covid hit and have never stopped. Their sales continue to be strong, but retailers who start now have a tougher time gaining traction. The deep pockets of the companies mentioned will help.
Social commerce and livestreaming represent the future of shopping and engagement with the emerging next generation of customers, GenZ and Gen Alpha. Conceptually, livestreaming has existed in other formats, including what QVC and the Home Shopping Network offered for decades. For the moment, live streaming may appear to be a niche engagement strategy. However, US livestream sales are forecast to reach $50 billion in 2023, per Coresight Research, as platforms like TikTok, Poshmark, and eBay try to replicate the format’s success in China.
In today’s digital-first world, an optimized commerce strategy requires a resilient, agile, scalable, customer-centric operating model to provide the content, engagement, and personalized experiences consumers expect. We will eventually face an inflection point where social media, led by TikTok, Instagram, and YouTube, will become synonymous with commerce.
As we wrap up 2023, throughout 2024, we should expect that livestreaming will continue to gain momentum. Interactive and personalized experiences will become more prominent in livestreaming. Collaborations with influencers and creators will continue to gain momentum as brands recognize the authentic storytelling appeal they bring to livestream campaigns. This is only the beginning.
Livestream shopping has been around since the days of the Home Shopping Network, and as technology has changed, so has the experience and the appeal. What we are seeing now is the evolution of this interaction point, enabled by advances in technology as well as the consumer’s appetite for engaging with brands in different ways. The only limit on livestream shopping is brand creativity and their ability to create interesting and appealing content that is modern, fun and makes consumers say “I want that!”
Livestream is like watching a live TV show – in this case, it’s like QVC or HSN. And, no reason why those livestream shows can’t be saved and viewed later by customers doing a search. There is SO MUCH power behind video. Savvy retailers will exploit the combination of search with video for a better customer experience.
Celebrities and Influencers have been key to driving livestream shopping in the US. The question is, will livestream continue to grow without them; as retailers and brands start to take a more active role in this space.
Second, the back-end production costs for livestream shopping can be a detourant and often don’t offset the spike in revenue on only a a few items that sell for only a few days.
I’d say the jury is still out on a livestream take over. Frankly, if livestream were the future of retail, QVC would be household name instead of a warm memory.
Still, given the nature of retail, anything is possible between now and the next shiny object, including a new shopping format that outshines even livestream.
Livestream shopping events that include celebrities and influencers like Good Housekeeping’s are more likely to see success due to the hype and star power involved. Still, there are opportunities for livestream shopping to see success without those factors. Livestream shopping has the potential to help solve some existing gaps in the online customer journey, mimicking the in-store experience with a salesfloor associate but in a virtual setting. This can be especially valuable for luxury brands or retailers who sell large-ticket items where clients want to walk through the product before purchase, such as smart appliances, home repair or reno solutions, or more traditional considered purchases such as cars and jewelry.
What will help make the technology successful is seamless integration into the eCommerce shopping experience and appropriate customer targeting. As of yet, I’m not sure there’s enough data about the technology to show the impact it will have on production values in America.