Live shopping isn’t coming — it’s already here

Singles Day, the annual Chinese shopping festival that happens on November 11th, kicked off this year on October 21st. It might sound strange for a one day festival to start 3 weeks early, but Singles Day has grown into a nearly month long shopping season with multiple presales events that are celebrated throughout China and even in Southeast Asia and parts of Europe.

And in regions where it’s not celebrated, Singles Day is still closely watched because of the record setting sales volumes it generates. For example in 2019, Singles Day resulted in more parcels shipped (1.66 billion) than there are people in China. Alibaba alone sold over $38 billion worth of merchandise on Singles Day. That was more than 4 times the volume that every company in the US generated on Cyber Monday combined, which added up to a comparatively meager $9.4 billion in sales.

2020 will be no exception with Singles Day sure to post all sorts of eye popping numbers. In fact, Singles Day has already produced one remarkable stat from October 21st: Alibaba sold a staggering $1.1 billion in merchandise in 30 minutes through its Taobao Live video service. That’s $36.7 million in sales happening every minute through live video shopping streams from internet celebrity influencers. To put that number in perspective, Qurate (owners of QVC and HSN who originated the live shopping format in the US) generated $3.4 billion in revenue in its most recent quarter. Alibaba did almost a third of that entire 3 month haul in only half an hour.

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Star live shopping influencers Viya Huang and Li Jiaqi have generated a combined $150 million in sales for Singles Day already

Last year’s Singles Day event was already a coming out party for live shopping in China as Alibaba disclosed impressive stats from Taobao Live for the first time, which included:

  • $2.8 billion in total live shopping sales
  • 17,000 brands who live streamed during the event to more than a 500 million viewers
  • And even one live shopping stream that sold 55 cars in 1 second

But somehow, 2020 is poised to be an even bigger moment for video ecommerce. Covid-19 has boosted live shopping to even new heights in 2020 as Alibaba reported a 7x increase in new merchants live streaming on their platform this year, and 126 million more viewers of those live shopping streams. The overall live shopping industry is forecasted to grow more than 100% YoY to reach $129 billion this year. And coming back to Singles Day, Alibaba Vice President Liu Bo expects live shopping to “take center stage” on November 11th. At the current growth rate, we may see live shopping account for a full 25% of all Singles Day sales this year, up from zero just a few years ago.

So as live shopping is poised to breakout again during China’s biggest ecommerce event of the year, what’s the outlook for online live shopping in the US? When will we see the format have a similarly significant, multibillion dollar impact in this country. After all, we are responsible for the offline combination of video and commerce when HSN first began broadcasting in 1982. Given our nearly 40 year head start, why hasn’t online live shopping broken out yet in the US?

Maybe it already has.

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Storytelling, Intimacy, and Authenticity

So what is it that makes live shopping special in the first place? The format, which combines video and commerce, has three important benefits:

  1. Storytelling. Video itself, the combination of sight + sound + motion, has no peer in its ability to tell rich stories. This applies to live shopping as well, where products can be shown off in engaging, attention grabbing ways that often involve debuts or “first looks”.
  2. Intimacy. At QVC, the goal for the host is to create an “over the backyard fence” feeling to their broadcasts that draws viewers in as if they are listening to a conversation with an enthusiastic and knowledgeable friend. This same type of personal feel is even more pronounced online as hosts can interact with viewers to create an even more intimate relationship.
  3. Authenticity. It’s harder to fake things in video, compared to text and images. When a host shows a specific product doing a specific task in a live shopping stream, they most likely are in possession of that product and it is indeed doing that task. Video is simply more authentic than other media formats.

And these 3 benefits match exactly to a traditional purchasing funnel that maps out the steps a customer goes through when conducting commerce:

  1. Awareness: the customer becomes aware that a product or service exists. Compelling video storytelling allows new products to stand out and be noticed by customers.
  2. Consideration: the customer learns more about the product or service to inform their decision. Intimacy with the shopping host who is explaining and endorsing a product gives the customer conviction around their purchase decision.
  3. Transaction: the customer decides to buy the product or service. Seeing the host they trust use the product in a video creates authenticity that the product is safe and legitimate to buy.
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As commerce consultant Rick Watson eloquently says, online live shopping represents “the entire purchase funnel in one place”. It certainly does in China, where Alibaba will drive billions of dollars in online live shopping sales next week. But what about in the US, where the digital successor to QVC has yet to fully emerge?

Sure you can argue that online live shopping hasn’t had a defining moment yet stateside. But if you break down online live shopping into its individual benefits of storytelling, intimacy, and authenticity, there are actually clear examples of breakout momentum already happening in the US.

For storytelling, take Apple’s annual WWDC conference, which drew an online audience of 22 million this past June. That’s 22 million people (almost twice the number who tuned into the championship clinching Game 6 of the MLB World Series) that watched what was effectively a live commercial promoting Apple products through news and narrative. Every year, Apple brilliantly uses live video at WWDC to drive awareness of their products and services (as does Google with I/O, Facebook with Connect, Amazon with Alexa Live, and more).

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Apple CEO Tim Cook at WWDC 2020

For intimacy, take the unboxing video category on YouTube and other video platforms, which is arguably the closest online reimagination of QVC with charismatic social media influencers expertly playing the role of shopping host as they open, use, review, and opine on products. While the unboxing happen both through live streams and ondemand videos, the effect is the same: users can listen and participate in conversations about products in an intimate setting that helps them develop conviction to buy or not. This has led to 68% of YouTube users reporting that they watch YouTube videos to help them make a purchase decision.

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Recent live streams from YouTube tech unboxing star Linus Tech Tips

And that brings us to authenticity and the key difference currently between the China market and the US market for online live shopping: authenticity doesn’t solve an acute problem in the US. In both China and the US, live shopping provides tremendous user value with its storytelling and intimacy benefits. But only in China has the the authenticity benefit proven invaluable because of the greater prevalence of counterfeit and fraud with online transactions. This has led customers in China to purchase billions of dollars worth of products directly from live shopping videos, which offer a higher degree of authenticity. However in the US, where we have buyer protection programs, credit card disputes, and other ways to safeguard the purchaser, we don’t need live shopping’s authenticity to provide another solution. US shoppers are therefore perfectly comfortable completing the transaction and buying the product elsewhere, even though they may have discovered and developed conviction for that product from live shopping.

While online live shopping spans the full purchase funnel in China (awareness, consideration, and transaction steps), it’s an upper funnel experience in the US. Again that doesn’t mean that live shopping hasn’t seen big success in this country. It just means that success has been mostly within the awareness and consideration steps, instead of generating the kind of big sales numbers that China can tout which happen lower funnel.

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The lower funnel is there, just indirect

As the world has been sheltering in place, video games have seen a spike in popularity as a way to both keep ourselves entertained and interact with others. Two games have enjoyed particularly noteworthy popularity during Covid-19: Fall Guys and Among Us.

Fall Guys became the number one game on Steam selling 7 million copies, and also became the most downloaded game of all time on PlayStation Plus — and that was all in its first month of release. Since September 1st, Among Us has been the number one overall iPhone app in the App Store for 52 days (and the past 42 consecutive days), making it more popular than Zoom, TikTok, Instagram, and YouTube over that period. The app had over 84 million phone downloads in September alone. Combined, the two games have generated more than $200 million in revenue this fall.

In addition to both being created by independent game studios, Fall Guys and Among Us also shared another common characteristic: they both owe their breakout success to live shopping. Immediately upon its debut, Fall Guys became the most streamed party game with viewers watching as much as 6 million hours per day. Not to be outdone, Among Us took over the top position in September hitting a peak of 9 million hours watched per day. That’s hundreds of millions of hours watching live video streams of gamers playing and talking about Fall Guys and Among Us. Hundreds of millions of hours watching a host use and discuss a product over live video. Sound familiar?

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Still don’t see the connection? Then take the hit game Fortnite, which earned nearly $1.8 billion in revenue last year, mostly from selling in-game virtual goods like character outfits (or skins). Early this year, Fortnite partnered with popular streamer Tyler “Ninja” Blevins on a custom skin, which Ninja promoted to his fans during his game streams. Ninja was literally selling a $15 product via a live video stream just like a live shopping host might.

For Among Us and Fall Guys, the live streams also functioned just like live shopping videos. The game streams are packed with engaging storytelling, creating tremendous awareness of those games. The streamers connect with their viewers through close, intimate conversations, which informs consideration on whether the games are worth owning and playing. And then those viewers, after watching those video streams, went off and purchased Fall Guys and Among Us in record numbers. Even though that transaction occurred on Steam instead of Twitch, it still occurred because of the live stream on Twitch.

This is just one of countless examples of awareness and consideration from online live shopping driving transactions. Apple generates huge sales in the weeks following WWDC and their other product events. Purchases. Toy company Zuru recently shared that unboxing videos that they posted on TikTok led to significant increases in their toy sales. More purchases. The lower funnel transactions do end up eventually happening even in the US market from online live shopping. They just end up happening later, indirectly, and mostly outside of the video experience.

But this will change. Although analog live shopping on TV is mature in the US, remember that online live shopping and the blending of video and ecommerce in general is still in its infancy. And with more time, there will sure to be more innovations that grow live shopping and video ecommerce to cover the entire purchase funnel.

Live shopping is here, but it’s also coming.

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Written by

Leading Commerce Incubations at $FB. Was co-founder at Packagd (acq.), GP at Kleiner Perkins, and writing messy code at Hulu, Flipboard, Erly (acq.), and $MSFT.

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