The Future of E-Commerce: Live Shopping Phenomena
Ever since live shopping started in China in about 2015, this way of shopping has gradually gained in influence in the E-commerce market and become a huge success. Data also have shown that live shopping’s gross merchandise value (GMV) accounted for 4.5% of E-commerce’s GMV in China in 2019, and is expected to grow to 20.3% in 2022. Most importantly, the trend is believed to have the potential to take over the E-Commerce industry in the West as well.
But what is live shopping exactly?
Simply put, live shopping is a term to describe a new E-commerce business model where influencers, celebrities, and retailers demonstrate and sell products, as they are livestreamed on social media, websites, and mobile apps. To put it into perspective, the concept is rather similar to traditional television-based home shopping but with the twist of social media, which makes it highly social and interactive, creating a different consumer experience.
One way to understand it is to imagine that people see an influencer’s outfit on Instagram Live and think it would be nice to buy. There is now an interface and a system built in the social media platform on which people can ask questions, make requests, and directly place an order to buy the things they just saw.
Most importantly, with the boom of mobile phones, the advancement of network technology, and the maturity of online payment, live shopping has the potential of creating a seamless consumer experience and becoming the future of E-commerce.
Live shopping is on the rise
COVID 19 has given a strong push to the E-commerce industry, but more importantly, it has brought in some possibilities and new dynamics for live shopping.
During a time when people had no chance to see and touch a product physically in a shop, the need for enhanced shopping experiences really grew. On a larger scope, the numbers have shown that total worldwide retail sales decreased by 3% in 2020, but in the meantime, the worldwide sales of E-commerce hit 4.28 trillion USD with a growth rate of 27.6%, and are expected to grow steadily in the coming years.
Additionally, when people are advised to stay at home as much as possible, they seem to have nothing else to do than spend more time on their electronic devices and social media. This is when E-commerce businesses and social media apps see opportunities to find new ways to engage with consumers.
For example, Facebook tried to take this chance to jump into E-commerce. With Instagram’s Shop section and more integrated checkout feature in its menu, people can check merchandise on influencers and purchase directly.
In December 2020, TikTok, which is a Chinese social media app widely used by Gen Z, collaborated with Walmart to present the first live shopping event in the US, during which influencers promoted products by trying them on and people could place orders within TikTok during the event.
Seeing social media apps like TikTok and Facebook jump into the E-commerce industry, E-commerce giant, Amazon, certainly wouldn’t let itself lag behind, so Amazon Live was created. In fact, Amazon started investing in preparing for live shopping earlier, from the Influencer Program in 2017 to a more integrated section of live shopping on its website in 2020.
Why is this important?
In addition to social media and E-commerce giants who have tried to seize this opportunity to engage with consumers, there are more and more new companies, like Spin Live, NTWRK, and TalkShopLive starting to embrace live shopping and trying to deliver more interactive and seamless shopping experiences. Especially due to COVID 19, brands and retailers have been forced to find new strategies to cope with the situation to stay connected with consumers. It is important for them to understand how consumers react to live shopping to prevent themselves from lagging behind.
At ADK Insights, we continue to monitor trends in the retail and E-commerce industry to forecast how their impact will influence consumer behaviour, advertising models and media consumption in general.