Livestream shopping: what’s new in the West while it’s successful booming in China

At the last days in October, Youtube steps up livestream shopping for the holidays while live shopping gained a giant success in the Double 11 festival in China.

Booming livestream shopping in China

On October 20, the opening day of the Double 11 Festival, two anchors, Viya and Austin Li, who are at the top of the leaderboards, earned RMB 8.07 billion and RMB 12.13 billion in GMV respectively. It is estimated that the scale of live broadcast e-commerce in China will exceed 4.9 trillion yuan in 2023 in a report by iResearch. Why has livestream shopping become so popular in China?

From the standpoint of customers, one of the most critical elements of livestream shopping is the trust and interaction between viewers and anchors, as opposed to vendor participation, and it is like traditional TV purchasing in certain ways. The traffic is the actual issue behind the anchors. To carry the monetization strain, Douyin (Chinese Tiktok), as an example, which has a large quantity of traffic but lacks suitable monetization channels, requires substantial and independent payment, logistics, and supply chain assistance. Otherwise, it's just giving other e-commerce platforms like Taobao a leg up.

In 2018, Douyin launched its "Douyin Store", which is a step in its development of independent e-commerce business. In 2020, Douyin livestream shopping's annual GMV exceeded RMB 500 billion, 100 billion over Taobao. However, of the 500 billion GMV, only more than 100 billion yuan was completed through Douyin stores, and the remaining more than 300 billion yuan was jumped from livestream shopping to third-party platforms such as JD and Taobao.

On the day of the 618 e-commerce festival in 2020, ByteDance established the first-level e-commerce business department, and Douyin is the core platform for the implementation of this strategic business. There were reports in September that according to people familiar with the matter, the independent app of Douyin e-commerce will be officially launched in October.

We can see that the entire e-commerce ecosystem also involves the coordination and support of supply chain, logistics and other links. Livestream shopping is more of a technique of bringing things to consumers, effectively minimizing the distance between items and consumers. It can truly move forward when the advantages of the sinking market and decentralization of social e-commerce continue to strengthen, and it is supplied with high-quality items and suppliers.

Development in western livestream shopping

Initially, platforms partnered with a selected group of retailers or influencers to create an in-app shopping function. Platforms can gain more traffic with creators led, because of which their first pick was always fashion and beauty.

Amazon Live

In 2018, Amazon launched Amazon Live which features live-streamed video shows from Amazon talent as well as those from brands that broadcast their own live streams through an app, Amazon Live Creator, or a website. It also launched the Amazon Influencer Program.

Amazon Live and the Amazon Influencer Program offer a network of trusted influencers and consumers for brands. When a follower engages with an influencer’s content and visits their storefront, the likelihood of that customer converting is high as influencers maintain a high level of authenticity and trust with their followers.

It’s worth mentioning that in 2016 Amazon has launched Style Code Live, which also featured hosts with TV and broadcast backgrounds and brought in experts to talk about beauty and style tips. But Amazon canceled the show on May 26th,2017. Style Code Live might be viewed as a test to see if Amazon can replicate the same kind of influence that YouTube stars and others on social media have in driving sales across the retailer's website.

Facebook Shop's live

The company launched Facebook Shop's live in 2020. Sellers will be able to host Live Shopping events during which they live stream and show off products that customers can buy directly through the stream on either Facebook or Instagram. Facebook emphasizes the interaction aspect of live shopping in its best practices guide. Replying to everyone who DMs or comments can help “turn them into new customers,” the guide says.

Tiktok

On September 28th, TikTok announced further plans to capitalize on the engagement with TikTok Shopping. In the past year and a half, the company explored shopping through individual partnerships with Levi Strauss & Co. and Walmart Inc., and pilot programs with select merchants in Europe and elsewhere via Shopify. With TikTok, retailer or e-commerce platform possesses a strategic advantage, as it involves in physical retail, online retail and now social media. It’s reasonable to think that this form will be a threaten to existing e-commerce like Amazon.

YouTube

Earlier this year YouTube began beta testing the integrated shopping experience. Now YouTube will begin pilot testing a new feature that will allow viewers to shop for products directly from livestream videos will initially launch with just a handful of creators and brands. The “YouTube Holiday Stream and Shop” is set to kick off on Nov. 15 and feature shoppable livestreams, beginning with influencer duo the Merrell Twins, who will cover their picks from Walmart, Samsung and Verizon.

In comparison to livestream shopping in China, livestream shopping in the West appears to be more of a promotional activity than a sales activity since most platform put their effort on the influencers. Though promotion is an important initial step, revenue is the real challenge. Why would brands and retailers use livestream shopping if the sales conversion rate is generally lower than any other means of promotion? A lack of technical integration could be the cause of low sales conversion rates. Social media platforms with a huge user base, such as Facebook and YouTube, have a natural advantage in attracting more people to livestream purchasing. However, the transaction settlement of Facebook Shop's live is based on the direct use of bank account transfers between consumers and merchants via private messaging in the background, with the highest conversion rate of transaction fees being around 10%. Interconnection between social and e-commerce platforms could be a useful optimization strategy in this case. Western livestream shopping still has a long way to go.