The TaoBao platform leads the Chinese market, selling products through livestream, although there is still a long way to go until the same kind of success is achieved in the US.
At-home shopping is combined with social media for livestream shopping. Hosts, who might include influencers, use their streams to review products, and customers may interact with them live.
Taobao Live, which was founded in 2016 by Alibaba, has emerged as one of the major livestream merchants in China. Gross merchandise volume (GMPV) is estimated to have totaled $61 billion for the 12-month period ending on Dec. 31, 2020.
Also competing with these Chinese clones of TikTok are Taobao, Pinduoduo, Kuaishou, and Douyin.
“An explosive increase in demand for this to work in the United States.”
The concept of e-commerce livestreaming is straightforward.
On their phones, users tune into a stream, which is frequently hosted by a key opinion leader. That individual will demonstrate a variety of products. Consumers can add items and check out within the app at the same time.
Hosts can answer viewers’ questions, which is an important part of the engagement factor. Some refer to it as QVC or HSN on steroids. It’s a frictionless experience all within the app in the best offerings, such as Taobao Live.
Consumers in the United States must deal with payment companies, social media platforms, and advertisers, but what is lacking is a unified experience that incorporates all of these players.
American businesses are still attempting, and for good reason. According to Coresight, the livestreaming market could be worth $25 billion by 2023.
According to Coresight, livestreaming in China is expected to generate $125 billion in sales in 2020, up from $63 billion in 2019.
The market in the United States is expected to expand. According to a Jan. 19 MKM note, “livestream shopping events in the United States are expected to generate $25 billion by 2023.” The company cited Amazon and Facebook’s experiments with live sales platforms.
“There is an explosive surge in demand for this to work in the United States, which is why so many tech companies and even smaller players are attempting to develop and work it out,” said Mark Yuan, CEO of New York-based consulting firm And Luxe. “You will see very strong players in the next 12 to 18 months.”
In 2019, the e-commerce behemoth launched Amazon Live, which features hosts discussing and demonstrating products sold on the platform.
However, the company has revealed little about its success in e-commerce livestreaming and does not appear to have made significant investments in the space.
“It’s still very early, and there’s still so much we’re going to learn from both creators and customers,” Amazon Live director Munira Rahemtulla said last July in a company Q&A.
“I’ve been awed by the creativity I’ve seen in these livestreams, and I expect to see a lot more of it,” she said. “How that evolves will inspire and inform how we continue to innovate in this space for brands, influencers, and shoppers.”
According to Mike George, CEO of Qurate Retail Inc. and chairman of the National Retail Federation, one of the reasons Amazon Live has been slow to take off is that people go to the retailer for specific purchases, not for entertainment.
Qurate Retail’s brands include the home-shopping channels HSN and QVC.
Amazon, which is already the third largest company in the United States by market capitalization, has the funds and resources to make livestreaming a viable option in the United States. Due to the increase in e-commerce demand caused by the coronavirus pandemic, it has also been one of the big winners. The stock of the company increased by 76% in 2020 and is up just under 1% year to date.
“I just assume they have so many other things going on that this is just one of many priorities,” Coresight CEO Deborah Weinswig told CNBC. “I’m sure Amazon could easily take the lead in the streaming platform if they wanted to.”
Facebook is a social networking site.
Users click on the social media giant’s app for entertainment, and they’ve demonstrated a willingness to shop.
According to Facebook, 130 million users tap on shopping posts each month to learn more about the products displayed, and 70 percent of “shopping enthusiasts” use the app for product discovery.
With Instagram Shopping and IGTV, the company has increased the prominence of shopping on Instagram. It is also experimenting with shopping via Instagram Reels, a competitor to TikTok.
The issue is that, while being social on the apps is simple, shopping and checking out are not.
Facebook is collaborating with e-commerce company Shopify to address this issue. Shopify introduced Shop Pay, its quick payments platform, to Facebook and Instagram earlier this year.
Yuan of And Luxe sees Facebook and Instagram as having potential in the space, particularly because brands, influencers, and audiences all congregate on the apps.
That change, however, will not be simple.
This is because Facebook would have to switch between being a social media company with ad revenue and a marketplace with seamless e-commerce capabilities, according to Yuan.
“What is their ancestry? “What do their users associate with Facebook/Instagram?” he asked. “Can it assist brands and influencers in reaching their full potential and converting sales?”
“I say that while they have one of the best chances to make it work, they still have a long way to go and it will take time,” Yuan said. “In the meantime, I believe the United States is due for a couple, if not several, strong livestream-focused e-commerce marketplace/platforms to emerge and thrive.”
TikTok and other players emerge
Experts are surprised that a technology that has taken over China in just a few years has yet to emerge in the United States.
“I’m truly surprised the market here is still so small,” said Coresight’s Weinswig. “I mean, there aren’t even horses in the race right now.”
That could imply that smaller players still have a good chance of dominating the livestream shopping space in the United States.
TikTok, for example, began testing new social commerce features in 2019 by allowing some users to add links to their profiles and videos. Levi’s was one of the first retail brands to use TikTok’s new “Shop Now” feature to direct users to merchandise.
It has since hosted two livestream shopping events with Walmart. The retailer was in talks to buy a stake in TikTok at one point, but those talks have since been canceled.
Qurate Retail Group, whose HSN and QVC shaped television shopping, could reemerge as a major retail player. The company has streamed on Facebook Live and YouTube TV, and it has its own livestream page on its website.
Weinswig believes that “buy now, pay later” companies such as Klarna, which is planning a public listing in Europe, could enter the space.
Meanwhile, Brandon Kruse, founder of retail tech platform CommentSold, previously told CNBC that the United States’ retail sales growth rates from live broadcasts are four to five years behind China’s.
It will take a massive push from American brands to be willing to invest in the necessary technology and for customers to begin shopping via stream.
“At the end of the day, it costs a lot of money to get meaningful traffic to your video experience. “I believe that as people experiment, they are being cautious,” Qurate’s George added.