Live shopping in the West is like an airplane on the ground that never manages to take off.
The concept, where influencers and brands pitch products to viewers watching on their phones, is poised to become a nearly $500 billion business in China this year, according to Coresight Research. Many fashion insiders have long assumed it was only a matter of time before it became a similar phenomenon in the US and Europe. Yet despite the best efforts of some of the biggest companies in tech and retail — and a checkered history for the format on television, where QVC and HSN still have strong followings in America — live sales in online in the United States is expected to reach just $20 billion in 2022, according to Coresight.
Some of the channel’s biggest boosters have their doubts. On August 3, Facebook announced that it would shut down Live Shopping on October 1. In July, The Financial Times reported that TikTok was suspending US and European expansion of its QVC-like e-commerce initiative, “TikTok Shop”, after disappointing testing in the UK. A TikTok spokesperson told BoF that it has not halted or delayed the rollout of TikTok Shop in Europe, but remains focused on the UK.
“About a year and a half ago, I was having many conversations with brands that were interested and…accelerating time to market,” said Matt Moorut, director and analyst at Gartner. “It just didn’t live up to the hype.”
Experts say the problem may not be the central idea, but the fashion industry’s exorbitant expectations and unimaginative execution. Many brands and investors assumed that what worked in China could be transferred to the West, with similar results. Several start-ups are experimenting with different formats for live shopping and claim sales are growing rapidly. One, community live-selling marketplace WhatNot, raised $260 million in July, valuing it at nearly $4 billion. Endeavor recently announced plans to host a New York Fashion Week with live shopping in partnership with interactive shopping platform AiBUY.
“What we really need to see is just someone to get it right, and then I think all of these big guys will be back in action,” said Katie Thomas, head of the Kearney Consumer Institute.
In Asia, live streaming is a key channel to drive sales. In the West, where other forms of e-commerce were more established by the time streaming video took off, it is viewed more as a marketing tool. Western streaming e-commerce sites have also struggled to integrate with the brands they sell. Consumers often have to click away from a feed to make a purchase, and payment information is not stored on all platforms. Some retailers don’t have the technology at all to support live streaming.
Chinese consumers are also more inclined to embrace new forms of online shopping, including digital wallets that make it easier to purchase items across multiple platforms. Influencers, known as key opinion leaders, or KOLs, lead conversations about products for users seeking deals across all channels. For Western consumers, commerce is more transactional and their relationship with influencers is less likely to be built around the act of purchase.
“The expectation for behavioral change from Western consumers was really high,” Thomas said. “There are different reasons why it works in China.”
The Chinese retail market is also much more concentrated around big players like Alibaba, which operates a popular live-streaming platform, Taobao Live. No Western retailer has put a comparable investment into the format, and brands tend to jump into livestreaming for the occasional marketing push, rather than put in the sustained effort needed to get customers used to shopping from this way.
“We’ve had some incredibly successful livestreams that we’ve done for companies and they’ll be like, ‘Oh yeah, we’ll do another one next month,’ and I’m like, ‘No, you can’t do that next month. , you must do so by next week. said Deborah Weinswig, CEO and Founder of Coresight Research.
Today’s perilous economic climate also acts as a deterrent to brands adopting unproven technology as a source of revenue, Moorut said. The projected sales for live shopping in the West pale in comparison to the ad sales that Facebook can generate.
“Even those who have tested and learned … will likely try to focus their resources on the channels they know will ultimately generate revenue, because that’s what keeps the lights on,” Moorut said.
Direct shopping could still take off in the West. Young consumers love video and have growing buying power, said Adam Pressman, managing director of the retail practice at consulting firm AlixPartners. They find, buy and share products on TikTok and take advice from creators on YouTube.
The platforms are still investing in the media. Even after Facebook shuts down, brands can still hold events on Instagram, owned by Meta. TikTok is hiring e-commerce talent, releasing ad tools, and continuing to promote going live on the app. YouTube and Amazon continue to roll out live shopping features and invest in the space. Livestreaming startup Bambuser has just signed a three-year renewal of its partnership with LVMH and says it has seen an increase in both livestreams and viewership. Commentsold, a live-selling company that allows consumers to shop in the comments, has seen gross merchandise value increase by 35% between 2020 and 2021.
Direct purchases may look different in the West. On the one hand, this may mean focusing on breakout sessions, where live streamers speak to a few select clients rather than a large audience. It can also be more fractured: not dominated by a few platforms, like Facebook or TikTok, or so exclusively tied to blockbuster events like Singles Day.
“Retailers know it’s a way to supercharge or step up their e-commerce game…I see it as how retailers mature,” said Sophie Abrahamsson, president of Bambuser for the Americas.
And while KOLs who have built organic audiences drive sales in China, in the West influencers don’t always make the best live streamers, Wenisberg said. Sales associates, she said, may be a better fit because they often know the products better. She also sees livestreaming as particularly useful for beauty brands, where livestreamers can provide tutorials and tips, and influencers already have a strong tradition of community building through video, or luxury brands. , where consumers want personal interaction before a big purchase (or even to check out the condition of second-hand luxury items like handbags).
Some first live shopping experiences are promising. In 2020, Walmart’s live fashion event with TikTok increased its follower count by 25%, and German beauty retailer Douglas saw a 40% increase in conversion rates linked to its fashion experiences. live stream, according to McKinsey. Taking inspiration from Alibaba’s playbook, Amazon used influencer livestreaming to lure consumers to deals on Prime Day. Hill House Home uses livestreaming ahead of its drops for its viral “nap dresses,” where founder and chief executive Nell Diamond answers questions about the product that consumers submit via a chat box.
“There’s a market for it, we just haven’t found the Western version yet,” Thomas said.