- Live commerce is new kind of shopping, where brands and influencers stream videos to consumers.
- From apparel to produce, live streaming has taken off in China on platforms like Alibaba’s Taobao Live and Douyin, China’s version of TikTok.
- Live commerce offers a more streamlined experience than home shopping TV networks like QVC with check-outs embedded in the platforms and payment details stored.
- In the US, platforms like Facebook and Instagram are making a push into e-commerce.
- Live commerce could soon arrive in the US, where influencers are already monetizing their social media followings.
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It’s no secret Gen Z loves video. From YouTube to Instagram, and, most recently, TikTok, social media platforms have amassed huge user bases. The more popular the app, the more brands and influencers will look for ways to monetize through advertising.
In China, a new wave of social media monetization is underway: live commerce.
Influencers and merchants alike are using interactive short-form video (both live-streamed and pre-recorded) to sell products to users on social media and e-commerce platforms. In China, leading live commerce platforms include e-commerce giant Alibaba’s Taobao Live and Douyin, China’s version of TikTok.
From apparel to cosmetics to tech, these live commerce videos give users an interactive and entertaining way to shop from their phones. Mimicking the experience of window shopping at a mall, live commerce videos often feature influencers trying on several outfits in a video stream, where users could interact with the hosts and ultimately purchase the clothes.
Even farmers have taken to live streaming to sell produce.
“It’s entertainment plus shopping,” Connie Chan, general partner at Andreessen Horowitz, told Business Insider.
And while it might sound like a new twist on QVC or HSN, live commerce offers a more streamlined experience, with check-outs embedded in the platforms and payment details stored. In some cases, users can check out in-app while the video keeps playing.
And in China, live commerce has grown amid the coronavirus pandemic.
“COVID brought it even more to the forefront now that the average person in China is shopping with live streaming,” said Chan. “I think in the US, it will roll out and eventually have a lot of features that are largely inspired by Asia.”
Live commerce presents an opportunity to further monetize social media
Before the coronavirus pandemic, live streaming was already growing in China.
During e-commerce giant Alibaba’s Singles Day in 2019, Taobao Live recorded $2.85 billion in sales generated from live commerce — about 7% of its total $38.3 billion in sales.
A key selling point of live commerce is that it’s easy to track the effectiveness of the videos in driving sales because users can make purchases directly from the stream.
“Rather than have the influencer hashtag #ad, you can credit to see which influencers are actually converting sales,” said Chan.
The influencer marketing industry is on track to be worth up to $15 billion by 2022, with brands continuing to spend more year-over-year, according to Business Insider Intelligence.
Players like Facebook and Instagram are well-positioned to host live commerce
The US, like China, is awash with influencers who already have loyal social media followings. And Chan expects that the US will see live commerce start to roll out.
“It allows someone who already has an audience to now monetize that outside of traditional brand sponsorships or ads,” Chan said.
Facebook and Instagram are already eyeing e-commerce, with recent announcements around Facebook and Instagram Shops. Instagram also announced in May that influencers will be able to monetize their video content through IGTV, pursuing a similar advertising revenue-share model to YouTube.
And when it comes to live commerce, social media players have a strong advantage because they’re already luring in users through entertainment, Chan said. Adding shopping could be a natural next step, as seen in China.
But the key will be ensuring frictionless checkouts and payments — something Facebook and Instagram are already building by storing users’ payment information in-app.
“The key is that live streaming shopping is a blend of e-commerce and entertainment, and that’s why the entertainment social companies already have a lot of the DNA required to do it,” Chan said.
E-commerce platforms could tap into the market, but it’ll require some reinvention
E-commerce platforms, too, could be well-positioned to host live commerce. Players like Amazon have already solved for the seamless, one-click checkout experience. However, they’ll have to reinvent their place in the market.
“It’s not to say that someone like Amazon can’t recreate it, but it’s a completely different mindset of how to create a product and how to create engagement,” Chan said.
In fact, Amazon launched a live streaming platform in February last year. The Amazon Live website features scheduled live content in categories like beauty, fitness, and food. Amazon declined to provide details on consumer and merchant adoption of the platform.
Live commerce is not meant to replace consumers’ shopping habits for everyday essentials. And it’s not about searching for specific products — it’s about entertainment and impulse buying.
“It’s really product discovery and impulse purchases,” said Chan.
And platforms like Taobao Live and Douyin are designed for just that. While users do have the ability to search, the user experience is designed to keep a never-ending stream of content flowing (similar to TikTok and Instagram). And the purchasing all happens seamlessly within the apps.
“Even as you’re checking out, that stream is still minimized and overlaid on your screen, so you never stop watching it, even as you complete the purchase,” Chan said.
And while there are search functions, the videos themselves are the primary way that consumers discover products. It’s like Amazon and Pinterest in one, Chan said.
Beyond seamless purchasing within the live streams, the experience has also been gamified in China. There may be coupons that fly across the screen, and users can grab them to gain points or a discount. And there are leaderboards tied to fan bases, where engaging with certain influencers can earn users points and badges.
China’s mobile-first market was primed to adopt live commerce
China is a mobile-centric market, meaning much of consumers’ shopping and payment behavior happens on their smartphones. Over 80% of smartphone users in China use mobile payments, largely concentrated with leaders like WeChat Pay and Alipay.
Almost 50% of consumers in China use mobile payments, and that number increases to 81% among smartphone users, according to a 2019 eMarketer report. And the mobile payment space is largely dominated by players like Alipay (owned by Taobao Live parent company Alibaba), and Tencent’s WeChat Pay.
In the US, only 30% of consumers use their smartphones to pay.
“In the US, we often say we use the phone all day long, but we still are very much PC-centric,” said Chan.
To be sure, those norms could shift. 50% of Gen Z consumers (born between 1996 and 2010) use a mobile wallet on a monthly basis, according to Business Insider Intelligence. And as this social media-savvy generation comes of age, making purchases on their phones may come more naturally.
“Gen Z is video-native,” said Chan. “They grew up with YouTube and are used to turning to video for all kinds of things outside of entertainment — education, product reviews, chat and so forth.”
And live commerce isn’t constrained to mobile, Chan said. There could be opportunities to integrate commerce into live events streamed on computers, too.
While timelines for adoption in the US are unknown, live commerce presents an opportunity for brands and influencers alike to further monetize their followings and reach consumers in new ways.
Read more:
- SARS created the perfect storm that changed how China shopped forever. The coronavirus could do the same for the US.
- 2 investors at legendary VC firm Andreessen Horowitz predict the new ways we’ll shop and pay, from livestreaming e-commerce to contactless transactions
- Retail will need to be reinvented after the pandemic. PayPal cofounder Max Levchin lays out the future of brick-and-mortar, and the ‘software fight’ that will go on behind the scenes
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