The spread of Livestreaming Commerce interacting with consumers
This article is about Livestreaming Commerce.
I was researching the changes under and after the COVID-19 outbreak in China, and I heard a number of success stories about the accelerating digital shift in Livestreaming Commerce.
Originally, livestreaming has existed since the dawn of the Internet service. However, in recent years, it has attracted a great deal of attention due to the explosion in popularity of Tiktok and others.
Also, livestreaming is being utilized not only in the entertainment domain, such as music and dance, but also in other fields such as eSports. Livestreaming in eSports is a rational way to add new revenue stream. And a livestreaming platform like Twitch have more than 2 million subscribers and help them generate revenue through advertising, subscriptions, in-app transactions and more. Livestreaming can be seen as one of the key business channels going forward, and that is going to bring innovation in the commerce space as well.
the origin of livestreaming in EC
Livestreaming commerce got its start in China, where the retail market has been growing rapidly. In 2018, while US retail market had $5.5 trillion in sales and a 3.3% growth rate, China surpassed that with sales of $5.6 trillion and a growth rate of 7.5%. Such a retail market in China is being driven by ecommerce, with more than 35% of all sales generated online.
Livestreaming in ecommerce was first experimented by Chinese fashion social media and ecommerce platform Mogujie in 2014. Even in the early stages of the experiment, it turned out that customers who viewed the products in real time were more likely to purchase than those on a regular e-commerce site, and in addition to that, the conversion rate was higher. Soon after, Alibaba’s C2C commerce platform Taobao, the world’s largest ecommerce platform, which has fought with Mogujie, followed them.
One of the key points in livestreaming commerce is interaction. With live commerce, hosts can show how they look by putting on different types of clothes and viewers can interact with them via live chat. Viewers can ask questions about what the fabric looks and feels like in real life, or directly ask the host to try on items with different sets of accessories. Through such interactions, livestreaming goes beyond just providing entertainment and helps customers to better understand your products, as well as build relationships with them and improve conversions, much like a brick-and-mortar experience. In short, it’s a method that adds value to commerce.
The Rise of Livestreaming Commerce in China
In 2018 and 2019, livestreaming commerce increased its momentum. In the face of the harsh competition and the high cost of acquiring traffic in ecommerce, well-known brands and merchants are embarking on a new direction. Taobao generated over $1.4 billion in sales on Taobao Live in 2018. And Taobao’s 81 top livestreaming commerce influencers earned a total of over $15 million, which means livestreaming commerce is also seen as influencer marketing.
On the 2019 Bachelor’s Day (November 11), the famous day for online shopping in China, more than 100,000 brands and merchants, including well-known brands like Burberry, M・A・C, Levi’s, Ralph Lauren, used livestreaming commerce to promote their products, generating a total of $2.8 billion in sales. Other examples of its growing popularity include livestreaming commerce hosts gaining millions of fans and joining the ranks of celebrities.
And with the 2020 COVID-19 outbreak of city lockdowns and people being forced to quarantine themselves at home, livestreaming commerce will further open up its potential as the vanguard of the digital shift. In Q1 2020, more than 4 million livestreaming commerce events were held across China. During the lockdown, February’s Taobao Live saw more than an eight-fold increase in hosts and record sales.
For example, on February 17, during Shanghai Fashion Week at the COVID-19 rampage Adidas held a limited edition superstar sneaker release event on Taobao Live. The event, which allowed consumers to interact with the hosts in real time and buy sneakers on Tmall, attracted 2.23 million viewers and generated more than $28 million in just 10 hours.
This trend is not to be overlooked, and the digital shift of well-known brands is accelerating. Below is an article about Louis Vuitton’s Livestreaming Commerce debut in China at the end of March.
In mid-April, Vogue hosted a roundtable webinar with global fashion leaders. The webinar also focused on China’s digital transformation dynamism in the midst of the COVID-19 pandemic.
Cheung said that in China, brands and influencers have found new ways to shop, such as FaceTiming through WeChat or hosting livestreams where shoppers can buy product directly from celebrities or public figures. A recent livestream, she explained, had 38 million viewers and generated over $100 million (£80 million) in sales – including the sale of a $6 million (£4.8 million) rocket.
Xiaohongshu, another livestreaming commerce platform, saw a 35% increase in active users and a more than 45% increase in viewing time during the COVID-19 outbreak. Taking advantage of this momentum, famous brands such as Louis Vuitton, Dior, Fendi, Chloe, Loewe, Givenchy, Yves Saint Laurent! Jimmy Choo, Salvatore Ferragamo, Omega, Harry Winston, Qeelin, De Beers and Vacheron Constantin have also made their debuts at Xiaohongshu.
Livestreaming commerce success stories aren’t just about the apparel and branded products mentioned above. Gree Electric Appliance, a Chinese appliance giant, hosted President Dong Mingzhu for multiple events of livestreaming commerce and offline. As a result, they generated $880 million in sales in May alone. And, Trip.com, China’s largest online travel company, hosted a livestreaming commerce event in May, hosted by the group’s chairman, James Liang. It has achieved 80,000 room bookings through the event.
The other major players, JD.com and Kaola, have also announced their visions of expanding their own livestreaming ecosystems, and each has plans to invest considerably. Taobao now sells more than 600,000 items on live every day and expects to generate $68 billion in sales by 2021 (nearly 15% of total sales). The new ecommerce march in China continues.
The Spread of Livestreaming Commerce Around the World
Livestreaming commerce is becoming common not just in China, but also to South Korea and the United States. South Korea started it early, following China. LF Corp, an apparel producer and distributor, introduced a seamless shopping experience in 2015 that combined livestreaming, real-time chat and one-click purchasing. Since then, livestreaming commerce sales have been growing at a high rate of about 30% annually.
And this year, the trend of livestreaming commerce has begun in earnest in South Korea, following the success in China.
Naver and Kakao launched their platform businesses in March and May, respectively. Naver plans to bring livestreaming commerce to 320,000 sellers who use its Naver Shopping service.
Not only IT companies like them, traditional retailers like Hyundai Department Store and Lotte Department Store are starting to take on new challenges. Hyundai Department Store announced that it sold 30% of the monthly sales of women’s fashion brand G-Cut’s products in one hour through livestreaming in March this year. Lotte Department Store also offers daily livestreaming commerce feeds on Lotte On, an ecommerce app released in April. Currently, the products sold are mainly women’s apparel and cosmetics, but the company plans to increase the number of product categories and expand the number of affiliates using Lotte’s platform in the future.
The wave of livestreaming commerce is slowly gaining traction in the United States.
While the platform players have emerged in China and South Korea, Amazon is attempting to take the helm in the United States. In 2019, Amazon released its livestreaming commerce service named Amazon Live, offering merchants the function to advertise and sell products via interactive livestreaming. Wayfair, a furniture ecommerce platform, has introduced a similar feature. And shopping app Dote has released a feature that incorporates influencers and livestreaming. Many other apps have entered the market, such as the influencer flea market app Depop, the video shopping apps Yeay and MikMak, Google’s Shoploop, and so on, and the interest in livestreaming commerce is steadily growing.
In this context, Estee Lauder brands such as BOBBI BROWN, Clinique and DE LA MER have each launched livestreaming commerce on the Swedish video platform Bambuser. BOBBI BROWN started it on May 20 this year and announced that its livestreaming commerce conversion rate was 5% and average order value was $99, compared to a typical conversion rate of 2% and average order value of $87.
Clinique hosted a livestreaming event on June 24 with Emilia Clarke of “Game of Thrones” as a special program. Emilia explained the actress’ skincare and makeup ways there. Viewers enjoyed her demonstrations and bought directly by clicking on each product as it popped up on the screen. Compared to EC, it turns out that livestreaming commerce has a higher engagement rate and secures a more stable audience for special events. Brands are positioning it as a long-term strategy rather than a passing fad.
The following article explains livestreaming commerce in US, with quotes from Clinique’s senior Vice President.
And this month (July 16, 2020), Amazon is opening up Amazon Live’s functions. to influencers, which were previously only available to merchants and brands. The company is looking to combine it with influencer marketing to accelerate business.
New Generation with Live Commerce
Livestreaming commerce is spreading this new style of commerce around the world. I mentioned the key is “interaction.” It’s not just video product descriptions, nor is it an entertaining video feed, nor is it a mobile version of one-sided TV shopping.
That interactivity is what makes viewers feel familiar with the host, and sometimes like a friend. Viewers see the host wearing the goods and so on, and accepts them as his or her own agent. That’s why livestreaming commerce achieves high conversions, engagement, and longer time of users on site. These may be, for example, the kind of fruitful communication that cannot be replaced by mere AI automation of services, which is unique to the digital age. And in the strong connection between host and consumer, we also see the birth of a new community.
Livestreaming commerce is especially popular with the 25 to 34 year old age group. This age group is a transitional group between the digital natives born from 1986 to 1995, and a generation whose information processing capabilities have been amplified by advances in digital technology, and who have been learning how to think and behave to take full advantage of new tools and methods since being a child. They have been living in an era of rapid development of the internet, where services that have never existed before have been created in a row and are constantly changing. In order to get them interested in your business as a customer, it is important that you take on the challenge of progressive initiatives. One of them attracting these customers is livestreaming commerce, and COVID-19 makes it even more significant.
Livestreaming commerce is a potential source of innovation for businesses. It should not be dismissed as a mere temporary boom. I hope that many companies will also evolve their commerce and business, following these current trends and keeping with the nature of the digital generation.
Appendix
Below is an article on headless ecommerce. A headless ecommerce platform allows you to offer new commerce services, including live commerce, on a wide variety of devices, through API calls and in conjunction with the various systems you already have in place. If you’re interested in learning more, please check it out.
