Live Streaming Shopping: New Retail Format, Seize the Opportunity

March 8, 2022 Staff

By: Heekyeong Jo & B. Ellie Jin

The continuation of the aftermath of the COVID-19 pandemic and the prolonged quarantine have forced consumers to rely on online shopping. What should specifically be noted in the future retail environment is the potential of social media. Brands and investors should gauge an opportunity: live streaming shopping, a new shopping venue available at social media platforms.

Live streaming shopping is the instant purchase of a featured product during a live stream and audience participation through a chat function or reaction buttons. Live streaming shopping is primarily conducted using the live streaming functions and capabilities of social media platforms. It is immersive and entertaining, allowing viewers to watch for long periods of time. For live streaming shopping, a key opinion leader (KOL) or key opinion consumer (KOC) is typically engaged to host the show, showcase the product, and interact with the audience to drive sales. It opens cross-selling opportunities by not only showing the audience how to apply or using a particular product but also by suggesting how to coordinate with other products in the case of fashion products. This innovative format increases the appeal and distinctiveness of brands and attracts additional web traffic with time-limited tactics.

Live streaming shopping is similar to home shopping networks like QVC but has key different aspects. Live streaming shopping is geared towards younger consumers, compared to the majority of U.S. home shopping network viewers aged 55 and over. Additionally, traditional home shopping allows viewers to make phone calls for ordering items, while live streaming shopping is based on social media platforms, allowing viewers to respond and interact directly through comments, likes, and polls. For example, anyone watching a live stream shopping broadcast can ask a question about products or require the host to show them from different directions and angles. Moreover, home shopping is carried out in a broadcasting station studio, whereas live streaming shopping is not limited to places, such as a host visiting a boutique shop in New York to broadcast inside the store.

China is at the frontier of live streaming sale transactions utilizing social media platforms. It is already booming in China as the Chinese retail giants, WeChat, Taobao, Douyin, and Xiaohongshu, have pioneered a powerful new approach by connecting online livestream broadcasts to e-commerce platforms, allowing viewers to watch and shop at the same time. According to a survey of McKinsey Digital, two-thirds of Chinese consumers had experiences of purchasing products via livestream in 2020.

Live streaming shopping is not as popular in the US, compared to China, but is slowly gaining ground. Social media giants including Facebook, Instagram, YouTube and TikTok are making a huge investment in order to take advantage of the new shopping features and functionalities. Live shopping is in its infant stage, but it’s worth noting that there’s plenty of market potential. Because it’s very new, there’s not a lot of competition right now, so early adopters can get a chance to participate and be rewarded heavily. The market value is also worthy of note. An article in Business of Fashion commented that, looking forward, the US annual sales from social commerce are projected to surge from approximately $37 billion in 2021 to $56 billion in 2023. Furthermore, global social commerce sales are expected to reach $600 billion by 2027. Cases where live streaming channels were successfully used are as follows.

Tommy Hilfiger

Tommy Hilfiger hosted a live stream show in China on (its live shopping website), which drew 14 million viewers and sold 1,300 hoodies just in two minutes. This encouraged the brand to later expand its live streaming program into Europe and North America.

Walmart

In the US, Walmart held the first shoppable livestream fashion event with TikTok in December 2020. It obtained more than seven times the views that they anticipated and grew its TikTok followers by 25 percent. Walmart celebrated its one year of live streaming shopping shows on Twitter in November 2021 (Click here for Walmart’s live streaming events).

Nordstrom

One of the biggest US department store retailers, Nordstrom (livestreaming tab at Nordstrom website) created its own live stream shopping in 2021. During this event, Nordstrom hosted shoppable live streaming events at which consumers could chat and purchase items from featured brands such as Burberry with the Virtual Styling Event and Charlotte Tilbury with the Personal Appearance show (Click here for the Nordstrom’s livestream events).

Social media has always been close to consumers, encouraging their behavior and influencing their shopping habits. With the impact of the pandemic situation and growing functionality, live streaming shopping is experiencing a surge in brands, consumers, and investor participation. Brands need to keep an eye on this new shopping channel to see how it works. At the very least, it has an entertainment component simplifying the consumer’s purchase journey and improving their comfortable shopping experience.

Reference

BOF TEAM, MCKINSEY & COMPANY. (2021, December 6). The Year Ahead: Unlocking Next-Generation Social Shopping. The Business of Fashion. Retrieved from https://www.businessoffashion.com/articles/technology/the-state-of-fashion-2022-bof-mckinsey-social-media-app-ecommerce-marketing/

McKinsey Digital. (2021, July 21). It’s showtime! How live commerce is transforming the shopping experience. McKinsey & Company. Retrieved from https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/its-showtime-how-live-commerce-is-transforming-the-shopping-experience

WARC. (2020, October 13). US brands adopt e-commerce livestreaming to boost sales. WARC An Ascential Company. Retrieved from https://www.warc.com/newsandopinion/news/us-brands-adopt-e-commerce-livestreaming-to-boost-sales/en-gb/44218