Exiting Livestream Shopping: Is Meta (& Instagram) Making a Mistake?
Same drill as last week, close your eyes, but this time, let me take you back about 3 years. (I know, the COVID times isn’t something you’d like to relive but please, bear with me). You’re home, bored, scrolling through Instagram, and see your favorite influencer livestreaming, recommending a riveting new product — a portable blender, for example. Are you prompted to purchase?
Back in the heights of the pandemic, with people essentially trapped in their homes, e-commerce and shoppable ads (live and not) thrived. Once the dust settled and the world started to heal, U.S. social commerce faced a tough realization — not only did it represent just a small share (4.4% in 2022) of total U.S. online retail sales, year-to-year growth is slowing and is projected to continuously get more sluggish going forward.
Seeing this potential future plateau, Meta has announced, as part of its “year of efficiency,” that it’s sunsetting Instagram’s live shopping business as of March 16, 2023.
Before diving deeper, (you know the drill) let’s start with formal definition(s):
- Livestream Shopping: When brands put on live shopping events online where viewers can see and learn about products from a live host, ask questions or interact with the host, then purchase right on the stream.
The Debate on Livestream Shopping…
As with any media platform, livestream shopping has its pros and cons. On the one hand, it allows for higher engagement, larger audiences, and community building. On the other, it comes with potential technological glitches that may be detrimental to UX (see last week’s blog to learn about UX), content inconsistencies that may cause viewer frustration, and over-engagement that may cause viewer isolation.
With that said, in the debate of yes or no to livestream shopping, I side with yes. Here’s why:
- Higher Engagement, Higher Satisfaction
Livestream shopping not only allows for companies to showcase product usage, it also utilizes real-time audience interaction to help build customer satisfaction. It allows firms to bring in-store experiences to e-commerce, allowing shoppers to feel more heard than they do when simply shopping online. Even if there’s an over-engagement issue, brands can request hosts apologize for any unanswered questions and mention the option of sending direct messages/ emails to get answer(s) to them. - Community Built, Scarcity Enforced
Livestream shopping is a communal activity. As shoppers enter the stream, they see other consumers who share similar interests, giving them a sense of belonging. As they then see that many others are also interested in the firm’s offerings, it creates a sense of scarcity, urging viewers to purchase immediately, while stocks last. - Convenience is Key
In today’s busy world, consumers want convenience. By providing another means through which consumers can seamlessly learn about and purchase what they desire, livestream shopping offers firms an opportunity to strengthen their omnichannel marketing. - All It Takes is Preparation
As with any campaign, as long as brands prepare well, they should be able to tackle any issues that may arise. For example, with tech glitches, firms can invest in internet backup services to protect against connection failure and in high-quality routers to handle network traffic. With content inconsistencies, such as panel images not matching what the host is showing, firms can prepare by ensuring that there is always an experienced IT team on-site that can edit the panels in real-time.
The Implications for Instagram (and Meta)…
So, what does it mean for Instagram?
To be honest, I think that sunsetting livestream shopping is a bad idea.
Firstly, it might entice firms and consumers who heavily rely on it to spend more time on competitor platforms. Not only is Instagram’s feature already a well-known platform, as stated above, livestream shopping offers both firms and customers an abundance of benefits. Completely removing the option would lower user switching costs, giving them a reason to abandon Instagram. If enough leave the platform, the brand could then lose its meaning as it’s is known for its social value.
Next, it means voluntarily letting go of a potentially high revenue generator. While social commerce did represent only a relatively small number of total online sales in the U.S., 4.4% of $904.9 billion still translates into over $39.8 billion. There is still a lot of potential revenue to be had via such forms of shopping.
In addition, there is already a model that the U.S. market can emulate to get things right. In 2021, the Chinese livestream market reached a whopping $327 billion, with a year-to-year growth of 108%. Should U.S. companies learn from and follow the pattern of China, a livestream shopping explosion is sure to follow suit.
Lastly, predictions may show slowing growth but consumer preferences quickly evolve. The fact that competitors such as TikTok, Amazon, and YouTube are ramping up investments in their livestream shopping technology shows that there is validity in taking the risk. As the only firm currently exiting this business, Meta may end up regretting their decision.
The Conclusion…
Overall, as livestream shopping offers users (firms and consumers) a plethora of benefits, social media platforms should invest in enhancing such technology. Being the only firm exiting, Meta might end up having to play catch up in the future.
Let me know what you think! Do you agree?
