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Livestream shopping is the latest social commerce trend that every retailer needs to keep an eye on.
In China, where the phenomenon first emerged, it is already a major sales channel, accounting for more than 10% of total retail ecommerce sales and generating $300 billion of revenue for retailers in 2021.
Still a fairly new concept elsewhere in the world, livestream shopping revenue was just $11 billion by the end of 2021 in the US. However, if early developments in this space are anything to go by, we can expect its popularity to explode in the near future.
According to McKinsey & Company predictions, by 2026, livestream shopping could be responsible for up to 20% of all ecommerce sales.
What is livestream shopping?
Livestream shopping, also known as live commerce, live shopping, and live video shopping, refers to the practice of brands promoting and selling products through live videos online (ecommerce platforms, social media channels, or their own websites or apps). More often than not, branded livestreams are led by influencers or celebrities. In this way, livestream shopping is similar to home shopping TV shows.
A brief history of livestream shopping
Before livestream shopping became a trend in the US, UK, and the rest of the world, it was already huge in China. In a survey from 2020, as many as two-thirds of Chinese customers said that they had purchased something via a livestream in the last year.
In fact, the origins of livestream shopping can be traced back to 2016 when, in an attempt to replicate an in-store experience online, Chinese multinational technology company Alibaba created a livestream shopping channel called Taobao Live.
The livestream shopping channel, which lets customers tune into livestreams by influencers or brands, learn about products, ask questions, and buy items without leaving the livestream, proved incredibly successful.
In 2020 alone, four years after it was launched, Taobao Live grew the number of its daily active users and livestreamers threefold. Not only that, but the channel also generated $61.7 billion in gross merchandise volume.
Benefits of livestream shopping for brands
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A seamless social shopping experience
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Decrease reliance on physical stores
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Increased discoverability
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A differentiating factor
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Decreased returns
WebAR will be the next biggest thing in livestream shopping
Live shopping allows customers to see how a product looks from all sides and angles, or on the body or face of an influencer promoting it. Even so, it can still be difficult for shoppers to determine whether the item will suit them specifically.
This is where augmented reality (AR) comes in. Still in an experimental phase, AR livestream shopping would allow customers to virtually “try on” items, or to visualise featured products in their own environments, while watching livestreams.
On YouTube, creators already have the option of using the “Beauty Try-On” ad format in their videos. When watching videos that have this format enabled, viewers can try on different makeup products alongside the influencer in front of them.
For other retail products like furniture or gym equipments, virtual try-on can make a bigger impact than just reading through the product descriptions.
The future of livestream shopping
From mainstream social networks like Facebook, TikTok, and Instagram investing in livestream shopping features, to popular brands like Estée Lauder, Cartier, Lancôme, Samsung, Macy’s, Nordstrom, and Walmart vying for dominance in this space, it is obvious that livestream shopping is gaining ground in the US and Europe.
Although there are no hard and fast rules about which brands can partake in livestream shopping and which can’t, the most common product categories seen there today are apparel, beauty, food, electronics, furnishings, and home decor.
However, as livestream shopping continues to grow, we will see it trickle down into other sectors, including healthcare, finance, engineering, and even B2B, predicts McKinsey. AR will become increasingly important, too, according to the global management consulting firm, and a factor that will further distinguish one brand from another.