The launch of Alibaba's Taobao Live in May 2016 marked the beginning of a new chapter in sales. China's giant retailer pioneered a powerful new approach — linking online live stream broadcasting with ecommerce stores to allow viewers to watch and shop at the same time. In 2020, Alibaba recorded a stunning $7.5 billion in transactions in the first 30 minutes of its Singles' Day pre-sale campaign at Taobao Live.
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Although live shopping in its current, digital form is a recent trend, it’s often likened to teleshopping. Teleshopping has been around since the 1980s, but the core idea is effectively identical.
Customers tune in to a live stream where influencers and brands show off products. The customers can buy directly from the stream using buttons and other features in the app.
Live shopping offers consumers a number of benefits over standard ecommerce. They can view items in 3D as they’re presented by live stream hosts, and they can ask questions about the products in real time.
This figure is unsurprising when you consider the fact that there were an estimated 500 million live shopping users in China at the end of 2020.
Following in Taobao Live’s footsteps, competitor live shopping platforms have popped up across Asia. This includes offerings from Chinese companies like PinDuoDuo, as well as brands from other countries in the region, like Lazada and Shopee.
Unsurprisingly, the pandemic has also boosted live shopping’s popularity. Between March and June 2020, the number of live shoppers in China increased by 44 million.
The stellar success of live shopping has not gone unnoticed outside of Asia. Western brands are turning to live commerce to offer their customers something new and capitalize on the format’s huge potential for sales.
"The conversion rate of live shopping is reported to be as much as 10 times that of standard ecommerce." - McKinsey
In 2019 Kim Kardashian famously made an appearance on stream with one of China’s biggest streamers, Viya, to promote her KKW fragrance range. The entire 15,000 bottle stock sold out within minutes.
Meanwhile, Tommy Hilfiger sold 1,400 hoodies to an audience of 14 million during a live stream event last summer. The brand has had such success with live shopping that it’s rolled out its events to Europe and North America too. Vogue Scandinavia has also just launched its own live shopping initiative which showcases the magazine's latest issue and allows viewers to buy various products on stream.
Unsurprisingly, Facebook has taken a big interest in live commerce. It recently hosted a series of live shopping events throughout May, June and July to showcase its new live shopping feature.
These events featured products from many well known fashion and cosmetics brands, including Abercrombie & Fitch, Clinique and Sephora.
Ultimately it’s been fashion and cosmetics that have become the prime focus of live shopping events. This is partially down to the fact that these products can be shown off in a much more relatable way via live stream.
But it’s also due to the average age of live shoppers. As of March 2020, 59% of streaming ecommerce users in China were 30 years and under.
Promotions have emerged as an important part of the live shopping process. Big brands have used a variety of promotional techniques to increase the attractiveness of their products on stream.
Live shopping as a format is inherently interactive. One of the big draws for shoppers is the fact that it offers a much more exciting experience than normal ecommerce.
Estée Lauder, for example, sold $300 million worth of products on Singles’ Day 2020 using a 2-for-1 promotion.
Another technique that has proved successful is the addition of time-sensitive promotional deals on stream.
“Time-limited tactics such as one-off coupons can be used to generate a sense of urgency.” - McKinsey
Knowing that a particular item of clothing is only available at a special price for the duration of the live stream, or as long as the stock lasts, pushes customers to the purchase phase of the buying journey much more quickly.
In this way, promotions can help businesses get much more out of live shopping for a few different reasons:
Because live shopping needs someone to present the products to the audience, brands usually need to work in collaboration with an influencer/live shopping personality.
This helps add a personal touch to the shopping experience and helps increase exposure to a wider audience of live shopping customers.
In China, a large portion of live shopping takes place via social platforms. Of the $300 billion live commerce sales forecast for China this year, around 44% will take place on social platforms.
With built-in functionality for promotions (dedicated on-screen buttons etc.) not included on many live streaming platforms, sellers can benefit from a level of manual control over their promotions.
Coupon codes are one of the easiest ways to do this. They can be used in a number of ways outside of their ‘conventional’ use cases.
For example, sellers can control the sale price of their products by displaying coupon codes on-screen. Customers can then redeem these codes on the seller’s own ecommerce shop.
In this way, coupon codes could be used to offer shoppers the following:
Being able to implement promotional techniques in a ‘manual’ fashion like this reduces reliance on pre-made promotion functionality offered by live commerce apps.
Live shopping is now taking off outside Asia, as brands and consumers come round to the benefits of the format.
Promotions have emerged as an important part of the live shopping experience. While some live shopping platforms do currently support basic promotions, these features will likely become much more popular as live shopping matures.
Live shopping offers us a glimpse at the future of ecommerce over the next few years. Where live commerce goes, normal ecommerce will likely follow. So expect to see live commerce features, like gamification, live customer interaction, and various other promotion formats making their way into standard ecommerce too.
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