Nine months into the COVID-19 pandemic, its effects continue to influence consumer behavior and inspire brands and retailers to develop new sales strategies in response. After years chasing a consumer whose preferences skewed towards the experiential, these businesses are experimenting with digital activations that can replicate some of the sensory excitement lost when shopping online.
Among these technologies is live commerce, seen both in new, real-time shopping platforms like Spin Live, NTWRKand Now//With, as well as shoppable live content from major retail players like Amazon and Instagram.
“COVID-19 really forced retailers out of their comfort zone and to think out of the box,” Saisangeeth Daswani, head of advisory for fashion, beauty and APAC at trends intelligence firm Stylus, told CO—. “With stores shut, retailers had to find new ways to connect, not just with existing e-commerce consumers, which they already had, but to convert and meaningfully engage those consumers who were used to shopping in-store.”
It’s not the first time social media platforms have rolled out shoppable video, or that disruptor apps have tried to deliver a “QVC for millennials” experience. It is, however, an unprecedented moment in consumer culture, when people are spending less time discovering new products in stores and malls, and more time using e-commerce and social media.
“Consumers are no longer limiting their shopping experiences to in-store and online,” Daswani added. “Their shopping journeys are increasingly being blurred with their discovery journeys.”
How China’s livestream phenomenon is influencing a new era of e-commerce
In pursuing live commerce, many brands and retailers are hoping to generate some of the same excitement found in China, where the live commerce market is expected to be worth some $170 billion by the end of 2020.
Though China already had a robust livestream culture, the pandemic drove even higher numbers of users and inspired some new engagement strategies. For example, livestreams were a lifeline for many brands throughout lockdown, as shop assistants from labels including Burberry used live broadcasts and video conference calls to give homebound consumers a more sensorial virtual browsing experience.
Consumers are no longer limiting their shopping experiences to in-store and online. Their shopping journeys are increasingly being blurred with their discovery journeys.
Saisangeeth Daswani, head of advisory for fashion, beauty and APAC, Stylus
Pre-pandemic, U.S. consumer culture had been less conducive to the same livestreaming trends that had taken hold in China. “At the root of this, we believe, is the different smartphone users behaviors between people in the U.S. and those in China,” said Deborah Weinswig, CEO and founder of Coresight Research, a global advisory and research firm specializing in retail and technology. "Fewer people in the U.S. use smartphones to watch short videos.”
But the pandemic has created a new set of circumstances driving consumers to spend more time on their phones and shop more online overall, creating a moment of opportunity for live commerce. The rise of TikTok, as well, with an estimated 100 million monthly active users in the U.S., is shifting how many people consume short video content. In October, TikTok even announced a partnership with e-commerce platform Shopify that will help brands and influencers better monetize content.
Driving engagement with entertainment and experiences
Based on one-on-one live initiatives, many brands in the U.S. saw promising key metrics with live commerce early on, Daswani said, citing the post-pandemic success of Credo Live, a virtual consultation tool from U.S. beauty brand Credo. The tool is now responsible for 10% to 15% of all its sales, with the average order size 30% to 40% higher than its e-commerce site, according to Credo data. [For more on Credo, read more here.]
Gamification is a key driver of consumer interest, as is the ability to interact with brand representatives in real time to ask questions and add comments before making a purchase.
“Beyond providing a more intimate and personalized form of engagement, livestream allows brands to give the feel that you are chatting with someone in-store,” Daswani said, citing luxury trunk show site Moda Operandi and New York direct-to-consumer experiential shopping space Showfields, as among the brand-backed virtual initiatives she’s found most notable.
And as homebound consumers spend more time on screens, “we also see the principles of game design influencing brand-consumer interaction and creating a greater demand for interactivity,” she said.
Though the entertainment factor is at play, Scott Lachut, president of research and strategy at PSFK, believes it’s important to also frame live commerce as a way for brands and retailers to reach consumers on their own terms. “The biggest thing companies can do is make consumers feel empowered, which means giving them options for how they want to shop for and receive their products.”
Lachut includes offering shopping appointments, buy online pickup in store (BOPIS) or curbside pickup services, as well as supplemental shopping tools for inventory transparency and contactless payment, as further options that are quickly becoming table stakes.
Coresight’s Weinswig agreed, reinforcing the importance of user-friendliness, interactivity and a seamless video-to-checkout experience in addition to the excitement of interactivity and gamification.
Catering to a niche market
There’s no shortage of new platforms and smartphone apps dedicated to shoppable entertainment. What’s more, recognizing the potential of live content to reach customers in lockdown, many brands and retailers quickly pivoted to launch new live initiatives on their own social media pages. Thus far, live commerce seems best suited for reaching niche audiences and marketing targeted promotions, sources said.
“It's a pretty fractured marketplace, with a number of players hosting on a variety of platforms that all have a slightly different offering and interface. The lack of a clear winner makes it difficult to create an established and consistent 'product' and build awareness from a mass audience,” Lachut said. I think live shopping is always going to be better suited to specific use cases, [such as] new product launches, limited edition drops, special shopping occasions like Singles Day in China or Black Friday in the U.S. and targeted audiences like sneakerheads,” Lachut adds.
Daswani echoed the growing importance of speaking to a niche consumer group. "We've also seen consumers move away from the big social media platforms, preferring more private and intimate micro communities, which live commerce is primed for.”
While the major social media platforms and well-established new entrants like Amazon thus far dominate social shopping in the U.S. market, some new trends are emerging, Weinswig said. For one, “The group-buying trend is taking hold through platforms such as MassGenie,” she said. “These promote the social element of shopping by requiring consumers to form purchasing groups with their contacts in order to access low-priced products."
The importance of engaging with the future consumer
As Gen Z ages into spending power, engaging with them becomes more important than ever. According to Coresight’s Weinswig, 44% of Gen Z’s purchase decisions were based on social influencers’ recommendations, compared with 26% of the general population. The generation is a live commerce sweet spot. In turn, brands and apps “could look to leverage high consumer traffic and increasing popularity of social commerce to promote themselves and their products during COVID-19 recovery and beyond,” Weinswig said.
The Lobby,a small online retailer for mostly independent brands aimed at younger female consumers, leverages both influencer reach and one-to-one connection to enhance the virtual shopping experience and reach Gen Z. Each item page features video reviews from at least one influencer, adding the dynamism of a YouTube vlog [video log] or an Instagram post to what would have otherwise been a flat e-commerce experience.
NTWRK, which launched in 2018 as an appointment shopping app for streetwear and sneaker fans, now boasts over a million registered users. Since the pandemic, it has hosted shopping events and giveaways for a range of events from Singles’ Day to the Anime NYC convention. The platform is planning a virtual festival, Transfer,designed to replicate the consumer frenzy of ComplexCononline.
Winning this digital native cohort will be key as the live commerce concept evolves in the U.S., particularly as it looks poised to stay long-term. “Considering the success that live commerce has seen, it will most likely be here to stay and offer an alternative channel for revenue,” Daswani said.
“It is crucial for brands to ensure that they have the right technology and know-how that allows them to continually and successfully thrive in this new landscape.”
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