By TP Sharafudheen, CEO, TECHx Media
With the arrival of Alibaba’s Taobao Live in May, 2016 online shoppers began to experience a new chapter in Internet-based shopping.
Live streaming commerce has already created a crazy, novel habit among the youngsters. A mix of entertainment with instant purchasing, this interesting idea of live commerce offers retailers, brands, and digital platforms a new channel with enormous scope for creating value. It also indicates and predicts customer decision journeys from awareness to purchase.
Live commerce combines the presenter’s knowledge sharing, expert opinion, instant purchasing of a featured product and audience participation through a chat function or reaction buttons.
In a country like China, live commerce has already transformed the retail industry, attracted a big chunk of customers and established itself as a major sales channel in less than five years. According to a survey by AlixPartners this year, two-thirds of Chinese consumers said they had purchased mostly via livestream in the past year. While retailers overall in Western countries are yet to step into the pursuit of live commerce, early movers are also starting to rack up significant sales as brands, retailers, and marketplaces are establishing their own live-commerce ventures and events to promote their products, especially in beauty and fashion
Reports say that the value of China’s live-commerce market grew at a compound annual growth rate (CAGR) of more than 280 percent between 2017 and 2020, to reach an estimated $171 billion in 2020.
For the online-addicted buyers live commerce is super entertaining and immersive, holding viewers longer. The past five-plus years’ performance data explains that the conversion rates in live streaming commerce are approaching 30 percent, and it is up to ten times higher than in conventional e-commerce.
It is obvious in terms of demographics, Generation Z and millennials dominate, although live commerce is starting to attract middle-aged and more-senior consumers also. The pandemic has attracted many to online and mobile experiences. Forecasts based the past performances indicate that live-commerce-initiated sales could account for as much as 10 to 20 per cent of all e-commerce by 2026. The companies which rely on the digital shopping revenue will be compelled to move towards this trend.
Creativity plays a key role here. Regardless of format, many successful events feature interactive elements such as play-and-win games, interactive questions, quizzes, RJ-type talks and giveaways to keep viewers engaged and entertained. They maintain high production values in photography, location, lighting, and sound. They ensure that scripts are not overly focused on the product but also on expert opinion and customer feedbacks.
Live streaming commerce has given a fillip to the aspirations of the youngsters who wish to become social media influencers. Big-name influencers and celebrities with millions of followers are unaffordable for small companies and products. They may not be necessarily good hosts as well. According to a survey by Shane Barker in 2020, the engagement rates for nano-influencers on Instagram are ten times those for mega and macro influencers.
Live streaming e-commerce is a promising trend for a generation of new customers. Let us gear up for this latest charm of shopping experience.