Why livestream retail is set to grow well beyond China

For a barely five-year-old channel, livestream commerce has grown exponentially. Originating in China in 2017 on platforms such as Taobao, Weibo and WeChat, it grew there at a compound annual growth rate of more than 280 per cent through to 2020. Livestream sales in China are expected to reach US$423 billion ($623.3 billion) by the end of 2022, and to represent US$600 billion in 2023 – around 20 per cent of total Chinese e-commerce sales. On just one Singles Day, in November 2021, top livestream key opinion leader (KOL) Austin sold US$1.7 billion worth of goods.

But what of the outlook for markets beyond China?

In South-east Asia, across six countries Ipsos surveyed in mid-2021, between 71 and 92 per cent of shoppers were aware of livestreaming, and 21-70 per cent had bought something from a livestreaming show. 

In the US, livestream commerce is forecast to achieve US$11 billion during 2022, and to more than double this in 2023.

What is livestream commerce?

Livestream is, in effect, an online interactive TV shopping channel. Livestream shows are typically one to two hours long and showcase a number of products. (KOLs) and influencers usually host the shows, presenting various goods and services. Shoppers are able to purchase instantly. They can also react to other shoppers and the host, and chat with them about the products showcased. Mini sales and discounts may be run during the course of a livestream show to further encourage instant purchases.

A number of formats have evolved for shows, including tutorials and demonstrations involving other products for cross-sell, interviews with celebrities and influencers, and ‘behind the scenes’ videos with inside stories of the product or company. Many shows and livestream events also feature interactive games, quizzes and giveaways to retain viewer engagement.

Livestream commerce host platforms include those by large digital players such as Amazon Live. Google has live shopping on YouTube, Pinterest has PinterestTV. Companies and brands around the world, ranging from Sephora to Walmart to KitKat, have used social media platforms such as Facebook, Instagram and TikTok to host livestream selling events. Other brands, such as Bloomingdale’s, are using Zoom. Dedicated livestream retail platforms such as TalkShopLive and BuyWith are emerging. Department store Nordstrom went so far as to build its own livestream platform. Earlier this year, Australian start-up Brauz partnered with Zoom to offer virtual shopping appointments.

In July this year, Shopify announced an integration with YouTube Shopping that allows viewers to see and purchase items when a host references them in a video whilst still watching the feed, or add a list of products to a ‘shelf’ underneath a video. This is more shopping-from-video than livestream commerce, though. 

Multiple roles beyond sales

From a consumer standpoint, livestream commerce is an entertaining source of product discovery and inspiration, as well as impulse purchases. Consumers may be drawn to a show based on a charismatic host, without knowing in advance what they’re going to be seeing. Or it may be a brand’s own live event. They may come for the host or the brand, but stay for the fun and engaging content, games and quizzes. Purchases are seamless, often one-click, from any device.

From a brand’s perspective, livestream commerce can be as much about branding and consumer time and attention as transactions. However, livestream conversion rates can be nearly 30 per cent and may often well outperform traditional e-commerce during some events, McKinsey states. Products launched via livestream offer the possibility to reach a large, even global, audience that is ready to buy then and there. And they’ll often purchase directly from the brand, without the need for retailers.

Meanwhile, livestream also provides links between social, entertainment and commerce. It creates a new means of delivering customer experiences and transactions to both new and current consumer audiences. Retailers offering livestream have another means of providing brand suppliers with customer data and analytics.

Theoretically, the increased engagement with the retailer drives not only conversion but loyalty, although the loyalty may be more to the KOL than the brand. For instance, Walmart Live launched in March 2022 with a string of KOLs and it remains to be seen how it will fare in the loyalty stakes. 

Whilst accelerating conversion through one-click see-and-buy customer journeys – often helped by mini sales and coupons to create a sense of urgency – livestream commerce can improve brand appeal and differentiation, and drive traffic.

Different objectives may determine the choice of platform for a brand. Coffee and tea brand Quivr experimented with livestream events on Instagram and TikTok, before settling on AmazonLive due to its viewers being more in a ‘buying mood’, where the other platforms were more about entertainment. 

FMCG looms larger than expected

Whilst the product categories most often showcased in livestream commerce are apparel and fashion (36 per cent), beauty products and food are equal second at, 7 per cent each, and outrun consumer electronics at 5 per cent, and furnishing/home decor at 4 per cent.

On the food front, a local early example (December 2020) of successful livestream shows was “Live from the KitKat Chocolatory”. The show was designed to drive both immediate online sales and visits to physical KitKat stores in Melbourne and Sydney. Its branded content, product demonstrations, special guests, limited-time offers and viewer polls encouraged shoppers to buy. Simultaneously a Facebook livestream urged shoppers to purchase via comment-to-messenger #keywords. This campaign generated a substantial portion of KitKat Chocolatory Australia’s annual sales, along with an uplift of more than 20 points in brand awareness among 35- to 44-year-olds.

Unsurprisingly, beauty categories do well with livestream commerce.

Since launching its custom-built live shopping channel in March 2021, department store Nordstrom has hosted dozens of shoppable video events, with themes ranging from ‘magic skincare secrets’ to ‘holiday glam-ups’. In 2021 Kiehl’s generated an 8X return on ad spend by running an Instagram Live shopping event supported by ads in-feed and in Stories, as well as interactive games and quizzes on the Kiehl’s website and free skin consultations for those signing up for the live shopping event. More than half of the brand’s new customers came from the Live campaign. German beauty retailer Douglas streams multiple shows per week, consisting of workshops with experiences and talks with influencers – resulting in conversion rates of up to 40 per cent.

An evolving format

The livestream commerce format is already evolving and driving a veritable cottage industry of suppliers. In China, ‘KOL Training’ schools have mushroomed, to capitalise on the need to build expertise in the next generation of livestream hosts.

On the other hand, brands and retailers are morphing their content into less ‘polished’ forms to cater to consumer preferences for authenticity. (The popularity of the new BeReal app is further evidence of this trend.) Conversely, immersion and engagement is being ramped up through use of AR and VR try-ons. 

Brands are further mining audience trends. Cosmetics brand NYX, owned by L’Oréal, realised its primarily Gen Z and Millennial audience felt affinity with the 1990s and 2000s, so it hosts throwback events on Triller, featuring early noughties pop stars re-creating their own noughties looks, with a ‘buy now’ button directing viewers to the relevant page on the NYX website.

Further targeting may bring a move to micro and nano influencers to cater to specific audiences, as using influencers with a few thousand dedicated followers can generate a more intimate, trusted connection with audiences than hiring expensive macro influencers, at lower cost. Again, it comes back to objectives. 

Events are moving from being heavily product oriented into themed entertainment forums with shoppable content. Retailer JCPenney uses its themes to define the choice of influencer collaborations for its JCP Live sessions, ranging from holiday shopping to healthy meal planning.

And brands are creating anticipation and engagement for livestream events by rewarding those who sign up. Bloomingdale’s, which has hosted more than 50 livestream commerce sessions, sends macaroons and cocktails to early registrants, for them to enjoy whilst watching the stream. All attendees are entered into special giveaways, such as personalised fashion sketches for the first 50 customers to buy a pair of Jimmy Choo shoes (Jimmy Choo presents the sessions).

The outlook – from novelty factor to core channel

The future of livestreaming is bright, even if in many Western countries it is in its relative infancy. Some retailers may prefer to experiment with shoppable video before moving into fully fledged livestream shows.

But while some retailers may dither, global brands are experimenting with livestreaming as a means to drive mindshare, loyalty and customer experiences that facilitate accelerated sales that can be fulfilled directly, bypassing the retailer.

Whilst it’s not surprising that livestream commerce really took off during the pandemic, when consumers couldn’t go to a physical store and were looking for both distraction and social connection, its growth hasn’t backed off. Some estimates put livestream commerce at about 10 to 20 per cent of all e-commerce by 2026.

Livestream commerce is fast becoming table stakes for brands in many Asian countries and is rapidly spreading to Europe and the US. It is maturing from novelty experiment to core commerce channel.

This story first appeared in the October issue of Inside FMCG magazine.

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