Innovation That Matters

Viya Huang and Kim Kardashian collaborating on a live stream | Photo source Tmall

Trend Explained: Live Streaming eCommerce

Trend Explained

While live commerce cannot completely replicate the in-store shopping experience, its appeal is undeniable.

Although chatbots, AI and one-hour delivery have brought a degree of personalisation to online shopping, the social aspect of in-person shopping is still missing. To fill in this gap, online retailers are turning to live-streamed e-commerce, or live commerce. This works much like late-night TV shopping channels, combining live streaming with online sales.

Chinese eCommerce platform Taobao was one of the first to develop live commerce. At the time, the site primarily sold low-to-mid-range clothing marketed to female shoppers aged between 18 and 23. Because the average value of each transaction was low, boosting conversion rates became a priority. 

Taobao’s live commerce featured hosts who would try on different clothes and interact with users through live chats. Viewers could ask questions about the fit and material of the clothes or ask hosts to try on different accessories. Customers use mobile payment and one-click options to purchase the clothes during the Livestream.

Since its inception, live commerce has shown extraordinary success on three levels – in providing the entertainment and “real-life” connection often missing during online shopping; in building loyalty, by helping customers to learn more about products — and activating sales — by creating a relationship between host and user.

Lei Jun, Xiaomi’s founder | Photo source

Where is live commerce growing fastest?

From its beginnings, live commerce took off rapidly, especially in China and elsewhere in Asia, where consumers were already using popular chat and mobile payment platforms like WeChat. 

Today, Taobao is the world’s largest eCommerce site and has a dedicated streaming app that allows tens of thousands of entrepreneurs to sell using consumer-to-consumer streaming. The most successful hosts can achieve celebrity status and earn millions. 

Following the 2018 launch of AliExpress Live, a subsidiary of Alibaba, that company reported up to 320,000 goods being added to carts per one million views — an extraordinary conversion rate. The following year, Singles Day — a major shopping “holiday” in China — saw live streams on TMall alone generate €2.6 billion in sales.

Taobao estimates that in 2021, live streaming will generate more than 500 million sales transactions. In addition to big sellers like jewellery, women’s fashion, accessories, cosmetics and children’s fashion, live-streamed sales of farm products are also performing well, and are generating much-needed income for agricultural workers.

While live commerce is growing fastest in Asia, with an average compound annual growth rate of 46.4 per cent, it is slower to penetrate the US and European markets. In 2019, Amazon and Wayfair both launched live-streaming services, and a number of individual brands have also embraced the trend.

Makeup brand Kohl was an early adopter, streaming runway shows during the 2015 New York fashion Week and offering viewers the option to purchase any garments seen on the catwalk via a dedicated portal. San Francisco-based mobile shopping start-up, Dote, has released a feature which incorporates influencers and live streaming into a mobile app. 

But the focus continues to lean towards Asia. In 2019, Kim Kardashian partnered with TMall and Chinese live-streamer Viya to sell her new KKW Beauty perfume. The session drew over 13 million viewers and sold 15,000 bottles in minutes. Chinese eCommerce powerhouses JD.comKaola, and Xiaohongshu are all building out their own live-streaming ecosystems, investing tens of millions of dollars. 

Naixue teamed up with eCommerce live-streamer Zhang Dayi and her BigEve beauty brand | Photo source VCG; Pixabay

What is the future of live commerce? 

As the COVID-19 pandemic kept shoppers at home, live streaming has found a new momentum, including among high-end brands. The lockdowns have also created opportunities for more innovative live-streaming events, such as a 72-hour launch event for a new mobile phone, or a collaboration with a beauty-focused live-streamer to launch a new line of themed bubble teas.

We can no doubt look forward to more innovations in the design and delivery of live commerce events. During the lockdown, companies have been forced to innovate; restaurant chains are using live streaming with celebrity guests to keep customers excited, and other companies have live-streamed fashion shows and beauty advice.

Virtual and augmented reality also holds out the promise of immersive 3D-shopping experiences, which allow viewers to study items from every angle and experience the excitement of being in the mall. 

However, in order to match the tremendous growth of the Chinese platforms, Western live commerce sites will need to pay attention to what users have found most appealing in these sites — audience interaction, relationships between the customers and the live-streamers and consistency (the top-grossing streamers on Taobao go live more than 300 times a year and the average stream time per session is 8 hours.)

At the moment, western live streaming is focused on gaming and social media, with sites like Twitch — a live streaming video platform that allows gamers to stream their games for others to watch while they play. Demographics may also work against some western live-streaming. While in China, 83 per cent of live streaming users are under 30, in the US, the largest group of online shoppers are GenXers (those aged 41-55 years old).

So, will live-streamed eCommerce eventually become the mainstream method of shopping among consumers? Or will consumers become overwhelmed and turned off by the incessant din of the live streaming ecosystem? While live commerce cannot completely replicate the in-store shopping experience, its appeal is undeniable, especially its ability to grow brand awareness and reach shoppers on their own terms.

Written By: Lisa Magloff