1 Trillion Yuan!
No, we are not talking about the GDP of Shanghai or Beijing here. That’s the market value of live commerce in China! Live commerce has indeed taken the world by storm. China, in particular, has been the eye of this storm.
The bias is not just confined to geography.
If there is one industry that has reaped the boundless benefits of live commerce, it has to be the online retail sector. Historically, it is one industry that has always been in a state of conventional disruption and vital transformation. And one that is currently being threatened by the manipulation of privacy settings and push notifications. Mobile apps, AI, Big Data, Augmented Reality are just a few names in the long list of technologies that have bolstered the growth of online retail in recent years.
Live commerce is wedged right at the top of that list, propelling the growth of online retail even further. In 2020, retail e-commerce sales worldwide amounted to $4.28 trillion and is projected to hit 5.4 trillion US dollars in 2022.
But how did live commerce experience such a massive amount of growth? And, more importantly, how is it aligned to disrupt online retail in the coming years? But before we dive deeper into live selling, let us first address the elephant in the room.
Isn’t e-commerce sufficient for modern consumers?
The stellar growth of e-commerce is nothing short of a fairy tale. All of us love the concept of buying a product and having it delivered to our doorstep without sparing more than a few clicks. The problem, however, is knowing what to buy and where to buy it.
A static webpage with random product shots on a white background might not be enough for most consumers to buy a product. Consumers do not want to get swayed away by the alluring imagery and mellifluous product descriptions of a typical e-commerce website. Many users, for instance, are hesitant to commit to certain online product purchases due to the lack of physical evaluation and comparison.
How did live commerce become a ‘superstar’ in the online retail space?
Though live commerce cannot promise that same type of physical connection with a product, it offers a compelling virtual alternative. Leveraging the power of live stream entertainment, users can witness a product being used by an individual in a three-dimensional space. Even better, the presenter has the flexibility to explain the benefits of the products in a myriad of ways, which is not always possible on a website. Retail audiences enjoy the fact that they can virtually experience a product without actually visiting the store in person. Similarly, consumers can also interact with the presenter, sending their queries directly via live chat.
All these make a live commerce session dynamic, engaging, and informative, thereby allowing the audience to connect better with the product as well as the brand. This results in faster sales as the customer decision journey is greatly shortened when compared to those of traditional e-commerce.
Pandemic: An unexpected ‘turbo boost’ for live commerce
Covid-19 completely disrupted the retail market, particularly brick and mortar stores that were at the epicenter of the turmoil. Even the firmest of retailers who despised e-commerce ended up adopting online retail channels to sell their products. As a result of this influx of online retailers, live commerce became a differentiating medium and competitive advantage for firms looking to intercept the typical customer journey. Moreover, it helped them blend live store experiences with online shopping to widen their target audience and strengthen their media engagement.
During this time, existing e-commerce players also found live commerce to be a boon as more and more traditional shoppers turned to digital retail platforms. By the end of this year, live streaming is expected to constitute 82% of all internet traffic. Demonstrating that live streaming’s momentum is not limited to pandemic-related consumer behaviour.
A rapidly growing channel among Gen-Z audience
Live commerce has also amassed an impressive fan following among Gen Z consumers. 63% of people aged 18-34 watch live streaming content regularly. Dubbed as ‘Digital Natives’, these modern-day consumers are completely immersed in the digital atmosphere that surrounds live commerce; regularly consuming the channels that support live streaming and selling.
Another reason why live commerce is a hit with the Gen-Z audiences is the growth of the influencer. In a country like China, influencers play a major role in the success of live commerce. Gen-Z audiences, in particular, are particularly susceptible to the words and opinions of their favourite online personalities. 44% of Gen Z’s purchase decisions, for example, are based on social influencers’ suggestions, as compared to 26% of the general population.
The Future is bright for live commerce
Live commerce is destined to become a mainstream media channel in the United States in the coming years. Though currently disorganized, and not as massive as the Chinese market, the American live selling market is on course to experience significant change. Some Shopify platforms are already helping retail players by offering an opportunity to build authentic interactions and meaningful connections with their customers through seamless in-app live commerce integration.
A new generation of buyers is approaching. Will companies be able to achieve the engagement and convenience balance that live commerce offers? Or will they too fall victim to the ever-changing digital landscape?