Livestream commerce has taken China by storm over the past five years, delivering billions of dollars' worth of sales and turning livestream shopping anchors into mega stars. A potential goldmine for brands looking to make millions in minutes, livestream commerce is a mix of infotainment, variety show and social media chat. If you like a product showcased by an on-screen presenter on a livestream, simply click on the "buy now" button and the product will start winging its way to your address.
China's "Lipstick king", presenter Li Jiaqi, who has tens of millions of social media followers, sold and incredible $1.9bn worth of products during Singles Day last year on livestream platform Taobao Live. This is an Asian craze that is heading west. But livestream shopping is making slow progress in Europe and the US as QVC-style shop-as-you-watch social media struggles to take off. Some brands are making forays into the area, with Walmart in the US launching a live shopping channel and running a livestream through Twitter hosted by singer Jason Derulo last Christmas. In the UK, Tesco staged a livestream event at Easter featuring an easter egg hunt. Tommy Hilfiger and L'Oreal have tried repeating their success with livestream shopping in China over in Europe. But many brands are reticent to get involved.
Not brave enough
"Livestream shopping hasn't really gained momentum here in the West," says Jacob Lovewell, senior experience strategist at ad agency RAPP UK. "I don't think many brands are brave enough to really do it properly here, with the exception of Walmart over in the States which has seen significant benefits." Just last week, it was reported that TikTok was abandoning European and US expansion of its livestream operation on TikTok Shop after a poor response and difficulties with influencers, brands and staff. TikTok disputes the story. International expansion for TikTok Shop this year has focused on launches in Thailand, Malaysia, Singapore, the Philippines, and Vietnam. A spokesman says: "Brands on TikTok have found a creative outlet to authentically connect with audiences, and we're excited to experiment with new commerce opportunities that enable our community to discover and engage with what they love."
In truth, TikTok is not the ideal platform for livestream shopping, given that its videos typically last under 34 seconds, far from the for the immersive, long-form style of a livestream format. Meanwhile, the channel's main audience tend to be Gen-Z who have less ready cash than older consumers. How different in China. TikTok's Chinese owner Bytedance has a version there called Douyin which tripled sales last year through live ecommerce, shifting some 10 billion products. The livestream commerce craze kicked off through Alibaba's Toabao Live brand in 2016 and sales across China nearly tripled between 2017 and 2020, reaching $171bn, according to McKinsey. The Covid-19 pandemic spurred even greater growth and the consultancy estimates the market in China will be worth $423bn in 2022.
Waiting for others
By comparison, sales in the US are tiny by comparison. In the UK, few brands are getting involved, with many waiting for others to go first so they can gauge the response before committing their own resources. Social platforms are pushing livestream commerce to make up for slowing advertising growth and are eyeing the commissions they take on sales. But brands are already nervous about their presence on social media as an environment where they are in the public eye and lack control over their messages. A major difference with QVC is that the public can talk back. Livestream shopping usually has some form of feedback, with comments from social media followers and questions to the presenter.
As Lovewell says: "Perhaps some brands are hesitant to do this because you are literally opening up the floor and giving a public voice to your consumers." Some viewers may publicly criticise a brand, as all too often happens on social media. He says this is where community managers, who manage social media interactions, are needed to effectively deal with complaints and negative opinions before they escalate. However, Lovewell says brands which take part report strong conversion rates – Swedish cosmetics brand CAIA which ran a livestream commerce event got conversion rates of 5%, much higher than the website, he says. Meanwhile, return rates for goods are often far lower than direct website sales - with one brand reporting 40% lower returns as consumers have a chance to see the products in action before buying them. Once a livestream is finished it can feature on a brand's website and trigger further sales as people watch it back.
Social platforms see livestream shopping as a vital revenue generator and are encouraging brands to take part. Facebook has been offering live shopping for years and Instagram and Pinterest are also stepping up their involvement. Twitter launched livestream commerce last November with its tie-up with Walmart while eBay has just launched the eBay Live service.Amazon is making significant investments in Amazon Live. YouTube, which is the most popular livestream commerce channel in the US according to Statista, is adding new features. One allows two creators to co-host a single shopping livestream, with each creator bringing their own followers thus doubling the impact. Another allows creators to direct their audience to watch the stream directly on a brand's channel.
So what kind of brands would benefit from the craze? Fashion and beauty products followed by technology and household goods tend to be the most successful categories in livestream commerce. "A reason why beauty works so well is because the content that consumers already use is makeup tutorials that don't feel pushy with products," says Ellie Garden, a social strategist at RAPP UK, pointing out that audiences are already primed for livestream commerce through influencer videos on YouTube and other channels. And she adds: "You have to really listen to your target audience and make sure that you're giving them the content that they want with a big enough hook." That means finding the right celebrity or influencer to present the brand's livestream, creating a strong message, and giving the event a powerful hook such as Christmas, Easter or Valentine's Day.
Livestream commerce is another watching brief for brands in western markets as it could one day rival other forms of ecommerce and scale the dizzy heights achieved in China. The stakes are even higher for social media platforms. Their future profits might depend on making a success of livestream selling.