Live shopping is expected to rake in $423B in China in 2022. When compared to China, the US is only doing $11B this year.
$11B is nothing to sneeze at. But it's a small fraction of what's happening in China. So why hasn't livestream shopping taken off in the States yet?
Well the social media platforms in the US have been rolling out their own solutions to try to cash in on this trend in China:
- Facebook Shops. Facebook knows that commerce is already happening through private groups and live videos. FB Shops is providing basic inventory management and in-app checkout functionality.
Since Facebook's main goal is to drive ad revenue, conversions and transactions are not their top priority. And that's what we're seeing so far. Most big brands are using Facebook Shops as a showroom with minimal focus on conversion
- Instagram Live Shopping has been in beta since June 2020. Similar to Facebook Shops, there's light inventory management and Instagram's own click-to-buy checkout button. This article explains how beauty brands are experimenting with it.
- Youtube is testing video-shopping features, letting some of its creators track the products featured in their videos which link back to Google Shopping. Youtube also released a shoppable ad unit in Jun '20, which makes video ads more “shoppable” by adding browsable product images underneath the ad to drive traffic directly to brands’ product pages.
But these efforts from the social media giants haven't really moved the needle much in terms of e-commerce GMV. There's been a lot of experimentation from Big Tech in the US, but not a lot of sales.
TikTok has been experimenting with TikTok Shop as well, but recently abandoned its efforts to expand to the US. “The market just isn’t there yet,” a TikTok employee said. “General consumer awareness and adoption are still low and nascent.”
Amazon has also played around with Amazon Live (after cancelling its QVC-like show Style Code Live in 2017). They also relaunched a live selling program dedicated to live sales from its influencer affiliate network but it's largely quiet.
There are several reasons why the Western world has been slow to adopting live shopping. Here are the main ones:
(1) Super apps and marketplaces from the start. Taobao Live from Alibaba takes the majority of lives shopping market share:
Whereas FB/IG started out as social platforms, and Amazon started as e-commerce, Taobao started off with both. They offered messaging and a marketplace early on into a combined experience. Their context and usage patterns made the evolution to live selling very natural for the Chinese consumer.
Livestream shopping was simply an extension of the existing model, whereas FB/IG is trying to bolt on e-commerce and marketplaces 15+ years after their start. This video explains the evolution of Taobao Live and it's easy to see how differently it evolved from Facebook or Instagram.
(2) Leveraging Influencers. Influencers, or "key opinion leaders" (aka "KOL's") as they are known in China, drive the majority of livestream shopping sales.
These influencers can sell directly to their own audiences on their own Taobao live channel. They generally take a 20-30% cut of the sales they make.
When a US influencer hosts a livestream, they either have to tell their audience to go to an external website or app to buy. Or they tell their audience to go watch the livestream that's hosted on an external website or app. It's never directly on the influencer's own FB or IG.
This is a big hurdle and context switch for their audience. They can't stay on the Influencer's social channel and make the purchase right then and there.
Whereas the majority of sales in China's live shopping happens with influencers behind the camera and on their own channel, the majority of live shopping sales in the US have the merchant behind the camera and on the merchant's channel (whether it's their social media or website)
In China, the influencer is the sales person that hosts the live sale. In the US, the store owner is the sales person that hosts the live sale. But if Kim Kardashian can be equipped to easily host live sales on her own IG or Tiktok for any brand, the live shopping game will change in the US.
(3) Experienced hosts. Taobao Live launched in 2016. And Chinese livestream sellers and influencers have several years of experience now or can easily watch others successfully sell on a livestream.
Being able to improvise, interact with comments, adapt to purchases, etc is a skill that goes beyond just being good on camera. Chinese livestreamers are just better at this. KOL's host live sales for a living, whereas American livestreamers are usually merchants who run boutiques for a living.
Even if American merchants hired influencers as hosts, they have limited on-camera sales experience. The livestream hosting talent in the west just isn't developed yet.
(4) Nascent ecosystem. The reason above is why agencies that do influencer marketing have yet to present live shopping experiences for their e-commerce brand clients. Not only do hiring agencies have to procure talent with limited livestream experience, they have to train talent on new tooling/apps, create new revshare agreements, etc.
And the tooling/apps for livestream selling are not catering to agencies. They cater to the creators and merchants to sell directly.