Tuesday, June 25, 2024

Could Livestream Shopping Provide Next-Generation Entertainment For Those Stuck At Home?

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E-commerce has kicked into high gear as shelter-in-place policies force many people to shift their shopping habits online. New data emerging from the COVID-19 Commerce Insight tracker shows that pure play e-commerce revenue growth in Europe is up 40-80% compared to the same time last year. Additionally, online orders are up 80% in North America since January.

While grocery and essential goods have been the primary driver of current online sales, a recent Kantar study commissioned by Detail Online indicates that many other e-commerce categories such as clothing, home and furniture, and consumer electronics will bounce back to even higher levels once the epidemic passes. The same study also reveals that six out of ten European consumers will continue purchasing online as they do today.

However, as COVID-19 continues to wreak havoc on physical retail, brands will be looking for new ways to reach their customers online and increasingly look farther afield to find state-of-the-art solutions.

Enter live commerce: the convergence of livestreaming and e-commerce that has become China’s favorite way to shop. For the uninitiated, live commerce is best described as the “infomercial reboot.”

Influencers, known as key opinion leaders (KOLs) drive live commerce in China. KOLs broadcast live on streaming platforms to showcase products, try them on, and describe them to the viewer.

As with America’s QVC shopping channel, viewers are able to ask real-time questions, while discounts and limited quantity statistics flash across the bottom of the screen to get audience appetites engaged in the sale. However, instead of picking up the telephone, viewers can buy products with just one click.  

The formula seems to work. It has been reported that Chinese consumers find the livestream shopping experience more social and interactive, and market growth numbers reflect their engagement. Taobao Live, the dominant live commerce platform in China reported that their gross merchandise volume has grown by 150% per year over the past three years.   

Increasingly, global celebrities are taking note of the trend’s success to sell their own brands: Kim Kardashian sold 15,000 bottles of her perfume in a few minutes with Viya, China’s top livestreamer last November.

Despite the boom in China, livestream commerce is still in its infancy in Europe and North America. Amazon launched its livestreaming shopping platform, Amazon Live, last year and Facebook and Instagram are reportedly piloting their own versions of the service as well. But for livestream commerce to gain traction, there seem to be two success factors that all retailers need to nail.

First, injecting a good dose of entertainment into the livestream is important. Recent research from IMD business school on Chinese e-commerce trends describes how cleverly using digital tools and services to make online shopping fun and exciting has helped to fuel China’s booming e-commerce sector.

Fashion shows, teaching audiences how to use new products, and giving them backstage access to glamorous industry events are commonly used formats.

For example, L’Oréal invited Chinese celebrities to livestream behind-the-scenes segments at the Cannes Film Festival. During the livestreams, the celebrities introduced L’Oréal products and recommended those they had used during the festival to great success. The featured products sold out after the livestream.

Jialu Shan, Research Fellow at IMD, elaborates, “what is interesting to me is that the conversion rate for live commerce is usually higher than traditional content driven platforms. And it’s expanding from promotion of regular products like skincare and cosmetics to more sophisticated products, such as  automobiles.”

Second, an influencer that inspires trust is a key factor. Trust is a time-tested sales competency, regardless of the media used. As QVC lifestyle influencer Jill Martin, who reportedly generated $60 million in revenue for the Today Show in 2018, told Fast Company “People want to buy something from someone they trust. I have established that trust with the viewer.”

To ensure their audience traction, Chinese KOLs invest time and energy towards building high levels of trust in their viewers. Viya, one of China’s top livestreamers reportedly does not feature a product unless she and her 200-strong team have tested it. Only those personally approved by her make it onto the show.

Live commerce in China experienced a significant boost during the COVID-19 lockdown restrictions. There is a good chance it will leave its Asian shores and go global in the months to come.

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