For several years now, we can observe the development of an exciting new trend in the eCommerce ecosystem — live commerce. This is a relatively young form of online shopping, which, as the name implies, combines two components: livestreaming and simultaneous sales of goods or services on the Internet aka eCommerce.
Even before the COVID-19 pandemic, live commerce was already viral in Asia, especially among Gen Z and α users. The shutdown of many brick-and-mortar stores around the world in 2020 has greatly strengthened the position of this new form of shopping, and now it continues to gain new fans in other regions and age groups, gradually approaching the U.S. and Europe.
This article begins a series of short pieces exploring this undeniably interesting phenomenon. In particular, it will cover what live commerce is, where and how it originated, and what benefits it brings to the retail industry
What live commerce is, and how it originated
Buying something has always been a sensory experience — one way or another, we use almost all of our senses when evaluating a future purchase. Some of us witnessed the redefinition of this experience in a remote interactive sales format popular in the 1980s-90s — TV shopping aka infomercials. Infomercials made it possible for the viewers to see the products in detail from the comfort of their couches, listen to the opinion of experts, and finally make a purchase with one phone call. Nowadays, this format has been modernized and given a new life online in live commerce. As consumers worldwide tend to choose and buy an increasing variety of products and services on the Internet, retailers are trying to thoroughly replicate the sensory and emotional aspects of in-store shopping online — to provide not only convenience and speed, but also a more personalized, engaging, and entertaining experiences for their customers.
By combining the sensuality of video broadcasting with the efficiency of eCommerce, live commerce invites viewers to shop on a specific online platform while watching a live product presentation on any desktop or mobile device.
Although various companies have been using livestreaming for commercial purposes since 2015, the Chinese Internet giant Alibaba was the one to truly popularize it in retail. It kick-started the future trend on Single's Day, November 11, 2017, in China with its 'See Now, Buy Now' broadcast. During the stream on Tmall, one of Alibaba's online shopping platforms, more than 80 brands, including Adidas, Burberry, and Gap offered their products to the viewers. Now, massive live sales on Single's Day are as popular as Black Friday, attracting more than 300 million users on Taobao (another Alibaba’s platform) alone.
Live commerce has made a significant contribution to this. KPMG estimates the size of the Chinese market for live online sales in 2020 at more than ¥1 trillion (ca. $157 billion) and predicts it could double in 2021
Salespeople, company or brand representatives, celebrities, or various key opinion leaders (KOLs) typically anchor a shoppable livestream. They offer viewers a certain pre-selected set of products from an online store. Quizzes, mini-games, polls, limited-time offers, and other interactive elements such as augmented reality and 3D animations are used to engage the audience before, during, and after the broadcast. Viewers can chat with anchors, ask questions, see product demonstrations, make inquiries about certain characteristics or similar items. As such streams are integrated into the online store, customers can easily add the desired products to their cart during the broadcast and quickly complete the order.
Shoppable livestreams sell absolutely everything — from clothes, shoes, accessories, and cosmetics to consumer goods, electronics, cars, real estate, and art. The airings last about an hour on average and together often form a daytime schedule much like on TV — e.g. fresh breakfast products sold in the morning, computers or air conditioners in the afternoon, and fashionable outfits in the evening. Goods are usually offered at discount prices, and shoppers may use a wide range of provided coupons and vouchers. This is why live commerce is not only highly interactive, but also often more beneficial for customers than the usual online shopping.
Types of live commerce
According to format and sources, we can distinguish the following main types of live commerce:
Large multi-brand and multi-product department store platforms like Chinese Taobao and Tmall or Korean Naver and TMON are the most active in live commerce. The online shopping format is slowly losing its conceptual appeal and novelty, which requires new tools to support user engagement. By encouraging immediate action and offering a new convenient form of shopping, communication, and real-time interactivity, live commerce acts as an effective tool for boosting customer interest and adds entertaining elements to the shopping process.
Having started in social commerce, influencers now create their own online stores or support other well-known sales platforms. KOLs are able to use their strong personal branding in combination with livestreaming to interactively promote products or services among their loyal audience. In addition, the format of live commerce itself is actively creating new influencers — like Austin Li, the Chinese 'Lipstick King.' Through live sales, he managed to grow from an assistant in a beauty care store with a salary of $930/mo to a national celebrity with monthly revenues of over $2.5 million and a 35 million army of TikTok fans in just four years.
- Live auctions
Conducting live auctions — from the purely online format of eBay to the most well-known offline venues like Sotheby's — attracts a wider audience, which in its turn increases the pool of bids and their competitiveness.
- Live events
Product launches, fashion shows, limited drops, holiday sales, and private events widely overlap with the above categories and are also often held live. For example, the Chinese showroom DFO was able to attract twice as many local buyers to a live commerce broadcast of Paris Fashion Week than usually go to Europe for the event. According to Meimei Ding, the co-founder of DFO, the clients' interest in the event rose by 105%.
Benefits of live commerce
Some of the main benefits of live commerce for business include:
- Broad reach
Since there is virtually no scalability limit for online broadcasts, the interactive video format helps attract the audience regardless of its location, efficiently reach new customers, and increase sales. In addition, the format resonates with the consumer segments that closely follow trends and have high purchasing power, as well as Gen Z and α customers that begin to dominate the overall client pool. For example, Ipsos estimates that 69% of Korean consumers in their 20s and 30s have experience in viewing live commerce broadcasts, while 30% have experience in purchasing products from the respective channels.
- Improved customer relationships
Personalized and immersive user experiences, informative live interactions with real people, the ability to see products in action and provide instant feedback — all this significantly increases customer loyalty and retention.
- Enhanced customer awareness
Live commerce provides new PR tools and effective marketing channels for stores and brands. Real-time interactions with sellers better promote products and services, while special broadcast formats or charismatic anchors help companies increase visits to their online platforms and stand out among competitors.
- Additional monetization
Large numbers of viewers during a shoppable stream create a sense of urgency for purchases and respectively boost sales, whereas advertising integrations or paid interaction tools, such as donations, gifts, personalized styles and reactions for live chats, also help generate extra revenue.
Livestream sales are basically suitable for any products and services, and each industry may add relevant functionality and specific features to further enhance customer appeal.
Live commerce managed to resonate in the hearts of both sellers and buyers in the Asia-Pacific region introducing interactive and sensory shopping experiences to widespread and convenient online formats. No more waiting for delivery to find out if a product fits or not — as technology puts shopping closer to the consumer, everything happens here and now. There is no doubt that soon we will see many more striking examples of live commerce usage all over the world.
Read more on the development of live commerce in Asia in our next article!