If you have paid any attention to retail trends in China in recent years, you’d know that live video has become an integral part of online shopping. According to a new survey conducted by AlixPartners, two-thirds of Chinese consumers said they have purchased products via live video in the past 12 months, and 81% of them planned to shop via live video during Single’s Day, the Chinese equivalent to Black Friday. This year, Alibaba reported it has pulled in 498.2 billion Chinese yuan, or about $75 billion, in Single’s Day sales so far. In comparison, last year’s Thanksgiving weekend and Black Friday sales in the U.S. across all major retailers came in just under $70 billion.
Like “QVC on steroids,” live video provides a powerful sales channel that allows brands to leverage influencers and celebrities to showcase their products, tell compelling brand stories, and interact with potential buyers in real time. According to Coresight Research, live video in China will bring in about $125 billion in sales this year, up from $63 billion in 2019, indicating a huge increase likely driven by Chinese consumers who turned to live video for entertainment and shopping during pandemic lockdowns earlier this year. That is hardly the case for the U.S. market, where that same evaluation is at about $5 billion for 2020, according to Coresight.
It’s not that U.S. consumers don’t watch live content on digital channels. On the contrary, live video content saw significant growth in usage and viewership this year. Instagram, for instance, reported in mid-April that its live video viewership was up over 70% in the U.S. since the pandemic broke out.
And it’s not for the lack of shopping opportunities, either. Amazon, for example, has been trying to replicate Alibaba’s success with live video for a few years now — remember Style Code Live? It launched Amazon Live for influencers in July, and prominently featured multiple simultaneous live streams on its Prime Day event pages this year. Still, shoppable live video has yet to become the type of growth driver for U.S. retailers and brands as it has in China.
Why It Hasn’t Taken Off In The U.S.
The reason why shoppable live video hasn’t taken off in the U.S. is multifaceted. Technologically speaking, low mobile payment adoption stalled the development of social commerce, which shoppable live videos often piggyback off. In addition, differences in the influencer ecosystems and shopping habits should also be taken into account when examining the U.S. market readiness for shoppable live video.
1. The Mobile Payment Gap
Given that smartphones are the most popular device to live stream video content, per an IAB study, it is safe to say that mobile payment adoption is an important prerequisite for shoppable live video to work at scale, as it removes friction at checkout and facilitates a smooth, app-agnostic mobile shopping experience. Whereas shoppable live video covers the full purchase funnel in China, it has so far remained an upper-funnel experience for most U.S. shoppers (outside Amazon) due to the lack of integrated payment solutions to complete transactions.
Granted, shoppable live video can work without integrated mobile payment solutions, as long as there is a payment solution on file to enable a frictionless checkout. Amazon, for instance, doesn’t need people watching its livestreams to adopt Apple Pay or Google Pay, since they have their credit cards already saved on their Amazon accounts. However, as previously mentioned, shoppable live videos often piggyback off social commerce for audience reach and scale, and social commerce is inherently a mobile-first domain. Lack of mobile payment adoption hinders consumers from forming the habit of making purchases off shoppable content, live or not, that they encounter on social media and elsewhere.
Adoption of mobile payments happens to be one of the most pronounced distinctions between U.S. and Chinese consumers. China leads the world in mobile payment adoption, thanks to a large number of consumers who leapfrogged from cash directly to digital payments, whereas U.S. consumers are content with the deeply embedded bank card legacy system and store rewards cards, and, up until this year, had not seen much incentives in switching to mobile payment options.
However, this mobile payment gap between Chinese and U.S. consumers has started to shrink this year. Thanks to the pandemic, U.S. consumers started to adopt contactless mobile payments primarily out of concern for public hygiene at checkout. Given time, this newfound appreciation for mobile payments will lay the groundwork for shoppable live video and social commerce to finally take off in the U.S.
2. Limitations of U.S. Influencer Economy
Just closing the mobile payment gap alone won’t be enough to guarantee that U.S. consumers would embrace shoppable live video. The perceived value of live video heavily depends on who is going live, and it should come as no surprise that a significant driver in China’s live retail economy is its robust influencer sector, which spans across every conceivable product category, from farmers hawking their own fresh produce to moms demonstrating home appliances. In fact, in Chinese marketing parlance, influencers are commonly referred to as Key Opinion Leaders (KOLs), which emphasizes their expert product knowledge in a particular field, and the trust their audiences place on their authentic, expert opinions. After all, going live to promote products in an engaging manner requires a particular skill set that not every influencer has mastered.
In contrast, the U.S. influencers, as far as popularity is concerned, tend to concentrate in key lifestyle categories such as fashion, beauty, and wellness, for these are the vectors that have fully embraced influencer marketing and provided ample opportunities for monetization. Naturally, the limited scope of the U.S. influencer economy hinders the audience appeal of shoppable live video, which is exacerbated by the eroding trust that U.S. consumers have in influencers.
Interestingly, a potential solution to this hindrance may have revealed itself this year. Over the course of the pandemic lockdowns, a new crop of influencers started to emerge. From barbers to pastors to fitness instructors, people of all professions that used to make money via in-person services, are now turning to online platforms to showcase and, hopefully, monetize their expertise, often through live video. While it’s perhaps too early to tell whether these newly minted, expertise-oriented influencers will be able to sustain their digital presence in the long run, this new trend could help broaden the appeal of shoppable live videos to U.S. audiences by expanding influencers beyond the typical vectors.
3. Cultural Differences in Shopping Habits
If the two previous potential roadblocks seem fairly solvable given the recent developments, ingrained cultural differences in how Chinese and American consumers shop may hint at a deeper reason why live video hasn’t taken off as a sales channel in the U.S.
Chinese shoppers are, more often than not, social shoppers, meaning that their shopping decisions are heavily influenced by peer recommendations and interactions with the sales staff. Before they complete an online purchase, it is typical for a Chinese shopper to chat with a salesperson via direct messaging tools natively embedded in all major ecommerce platforms, whether it’s to haggle for discount, to confirm inventory availability and delivery options, or simply to build mutual trust. Shoppable live video provides a familiar kind of social interactivity, with added entertainment value, that perfectly fits the typical shopper journey for many Chinese consumers.
In contrast, the U.S. shoppers are much more likely to make an online purchase without any direct interaction with the vendors. In fact, having to chat with a sales representative before making a purchase would be considered a major nuisance. For U.S. shoppers, trust is placed upon the ecommerce platforms and credit card companies to resolve any potential disputes, thus removing the need for direct social interactions between buyers and vendors.
Moreover, the productivity-driven U.S. culture has resulted in a rather pragmatic view of online shopping that prioritizes convenience and speed over its social and entertainment value as a leisure activity. It’s not that Chinese shoppers don’t value convenience and speed; they absolutely do. It’s just that their cultural expectations and priorities around how shopping should be conducted are quite different than those of the U.S. shoppers.
That being said, culture is a constantly evolving social construct, and shopper behaviors are mutable as emerging sales channels and younger generations of shoppers rise to prominence. This is especially true in a year where the pandemic has accelerated the ongoing shift from brick-and-mortar to ecommerce in the U.S. by 5 years. Looking closely, there are some promising early signs indicating that U.S. shoppers may be on the cusp of embracing social commerce and re-evaluating live video’s role in the online shopping experience.
Make America Watch & Shop Again
It’d be unfair to say that shoppable live content has never been a trend in the U.S. During its heydays in the 80s and 90s, TV shopping was a popular pastime for suburban households. In 1999, the top three TV shopping channels — HSN, QVC, and ValueVision — generated a combined total of over $4.28 billion in sales. With the rise of ecommerce, however, the gravity of home shopping gradually shifted from TV to PCs and smartphones.
Facing increasingly fierce competition, QVC merged with HSN in 2017 and, to its credit, has been actively adapting to the mobile era by embracing live streaming and investing in digital payment capabilities. While the merged company is still among the top 5 ecommerce players in the U.S., its cultural relevance continues to dwindle, especially among the tech-savvy younger generations. This leaves the door open for digital-native platforms, especially the social networks, to make America watch and shop again.
Facebook has long had an ambition of conquering social commerce and shoppable content. This year, the social media giant ramped up its efforts by rolling out “Shops” across Facebook and Instagram in May, making in-app checkout available to all U.S. businesses and allowing users to browse and buy products directly from a business’ Facebook Page or Instagram profile. Then in October, Instagram added shopping tools to IGTV and Reels, but Live Stories still remains free of commerce features. This week, Instagram also started rolling out a redesigned layout of its home screen to emphasize its shopping tab. Although there’s no live video feature on WhatsApp, Facebook has rolled out some shopping features to the U.S.-based businesses on WhatsApp for a seamless live chat and shop experience. It’s too early to tell whether Instagram users will embrace the new shopping features, but at least the basic infrastructure is in place for brands and influencers to get to work.
Ironically, another potential contender at cracking the code of shoppable video in the U.S. comes from China. TikTok, whose prospect of avoiding a total U.S. ban is looking better by the day, has already rolled out some social commerce features in April, and recently secured a partnership with Shopify that allows merchants to create native, shareable content that turns their products into In-Feed video ads on TikTok. In terms of live video, however, TikTok has yet to replicate the shopping features its Chinese counterpart Douyin has successfully deployed primarily via top influencers. Live video usage on TikTok is not quite as high as Instagram so far, so getting U.S. users to stop scrolling through the endless “For You” feed and join a live stream would be a first step.
Besides Instagram and TikTok, there are several U.S. platforms that commend a sizable live audience but have yet to fully explore their commerce capabilities, mostly due to lack of product fit or incentives.
- YouTube has a great live video product as well as a robust set of shoppable ad units. However, few influencers or brands have utilized YouTube Live as a sales channel, partly due to YouTube monetization focus being fixed on traditional pre-roll and mid-roll ads so far. Notably, unboxing videos, cooking videos, and makeup tutorials abound on YouTube, and they are as persuasive as any content format in influencing purchasing decisions. But not all of them are directly shoppable, so they remain upper-funnel content marketing that fails to capture the sales.
- Similarly, Twitch is a live streaming platform owned by Amazon and watched by nearly 40 million U.S. viewers every month, but its heavy focus on gaming content, as well as its ability to generate revenues via subscriptions and selling digital goods like “bits”, have deprioritized its foray into more ecommerce-friendly domains. That being said, there is Amazon Blacksmith, which provides the tools for Twitch influencers to plug products and earn through Amazon Associates on Twitch.
- Epic Games-owned video chat app Houseparty is another contender that made a strong push into live video this year, but overall brand opportunities on Houseparty remain underdeveloped so far, as the app reportedly favors a business model that relies more on in-app purchases than ad sales.
Already, some innovation-forward brands have been leveraging live video to engage with fans and drive sales. For example, Rihanna’s Savage Fenty has worked with Amazon to host live shows to launch new products to great results, although Amazon still remains rather clueless in their approach towards their own fashion labels. L’Oreal-owned cosmetics brands have been working with shopping platform Livescale to create shoppable live-streams where customers can interact with hosts, ask questions, and shop directly from the platform. However, these early experiments tend to live on brand’s own sites, and therefore tend to fall short of the scale that a major social network or ecommerce platform can provide. After all, most established consumer brands didn’t build their business to sell directly to consumers, and therefore must rely on retail partners to reach consumers at scale. The rules of ecommerce are being reset following this tumultuous year, and shoppable live content, as the Chinese brands can attest, is a powerful tool that every brand should keep in their arsenal in the face of rapid retail transformation.
It will take a couple of years for platform owners and brands to catch up with shifting shopper behavior. Once social commerce and live video start to take off in earnest in the U.S., all these aforementioned platforms could change course and roll out their own shoppable live video products. But until then, it falls on Instagram and Amazon, with TikTok being a dark horse contender, to prove that shoppable live video is a viable concept that U.S. shoppers would embrace. Brand marketers need to closely watch this space so as to get in at the gourd level when the shift in U.S. shopper behaviors start to materialize over the next few years.