Live commerce is a significant emerging channel across many markets with huge potential, and, if the same metrics as China follow, where around 25% of ecommerce is delivered from live commerce, the numbers globally, even at half (or even a quarter!) of that penetration, are worth understanding.
Firstly, a distinction. Live commerce (in this article) is classed as a live-streamed video with built-in commerce capability that allows a consumer to transact while they watch, as distinct from Live streams with links to merchants or carts; to "buy later ."Trust me; the metrics are entirely different.
The question I have been running through with many brands, investors, and agencies is, "Are we going to learn from the last 25 years of digital and digital marketing, or are we going to make the SAME mistakes we make every time a new and significant channel emerges?"
A quick catch up on the market
For the uninitiated, live commerce is the high-growth ecommerce channel that has reinvented TV home shopping for the mobile-first generation (it's a lazy explanation, but it works). A trend that started to gain an unfair advantage on Singles Day (11.11) in 2016 on Tmall has expanded into a $500 billion retail channel with (literally) millions of sellers, over two-thirds of the country's ecommerce consumers having bought via live and over 500,000 hours of content being created a day. To put that in perspective, YouTube has 720,000 hours of daily content uploaded globally.
Outside of China, the channel is, at best nascent, and in many markets, it is at the experimental stage. However, more forward-thinking brands are launching, testing, setting up their infrastructure, and building their teams for the expansion of a channel.
In China, there is a natural home for live commerce, the ecommerce marketplace. These walled gardens provide a brand and a consumer a home where live commerce is contained, where the video runs, consumers can watch, click and buy and they can interact with the host with questions and comments, enter draws/promotions and share to their network.
In the RoW (Rest of World—the catch-all term I will use for this piece to indicate everywhere not in China), those environments don't tend to exist with the same penetration, dominance, and market control as those in China (some of the China platforms market penetration and power would make Amazon blush). There is no natural home for live commerce, with the big commerce players trying to push sideways into more social functionality and create a comparable product. Those on the social side are on their journey to add commerce seamlessly. It's a platform race with Amazon, Meta, Facebook/Instagram, Twitter, Pinterest, LinkedIn, and other market-specific players in a race to address the opportunity and get their functionality launched as a cohesive product.
In the RoW, Amazon, with their live product, is probably furthest ahead in terms of functionality; they just haven't given it a huge push. On the other hand, Meta has all of the components with both live and commerce, and they just haven't launched a cohesive product that combines them all.
As an aside, the other market force for live in RoW will be D2C—brands that don't want to work through marketplaces and have loyal and engaged customers who will come directly to their live streams. Some great platforms push this functionality as a channel, such as Firework, Bambuser, and CommentSold.
Back to the big players; The sleeping giant is TikTok. Douyin, their Chinese sibling, has a full suite of tools and a massive live commerce business. TikTok lives commerce (distinct from their live product that may contain commerce or their commerce/shops product) has launched in a few countries, and the rollout internationally, at scale, will follow in the next 12 months.
TikTok's users are used to short videos. It is what they consume. In China, live commerce tends to be a similar format; it can be pretty disposable; you scroll through to find what you are interested in – sound familiar? Well, it will apply to those billion++ users! If TikTok switched on ecommerce correctly in Europe, they wouldd drop straight into position behind Amazon and ahead of eBay for daily active users. Sleeping, Giant? Dozing at best.
The app has been slowly educating consumers, bringing them on a journey. The evolution from music videos to content, from content to live content, and soon, to live commerce is being watched closely by those who know the platform in China. When the world's biggest app, and consumer attention owner, starts pushing a significant new channel that their core business in China is built around, expect the market to move very quickly.
Lessons being ignored
When I speak to clients, partners and investors, I get to do so with a bit of hindsight. I have the grey hair to show that I was around and involved for the first coming of ecommerce (the OG dotcom boom where I was an unrealized paper millionaire and everything!) through to the beginnings of digital marketing, performance marketing, search, social media, programmatic, and somewhere in there, the second coming of ecommerce (the one with a lot more utility and ubiquity) and on and on and on.
Now and then, I try to take a step back and look at the lessons learned and see what's holding back the natural progression of what I am working on, and here is what I see.
The most significant single thing holding the adoption of live commerce back is the RoW treating live commerce like an event.
Whenever I talk to clients in RoW, they speak about live commerce like a streaming event; they need a celebrity or Key Opinion Leader (KOL) to host the stream, it must have significant production and excellent production values (meaning costs), and it is a "set the date, be there, we're going live" event.
A great example is Twitter's foray into live commerce, where they streamed their holiday event for Walmart, hosted by the singer Jason Derulo "and friends" - I mean, what? Am I there for the music or the deals? Does Twitter have my payment and delivery details stored? Is this one click and add on the Twitter platform, or do I leave the show to go to Walmart's Store to transact? Do I add to my basket and check out later? WHAT?
This does several things, but most importantly, it murders your economics. A celebrity in front of the camera and 20 (or 50) people behind it make the project unwieldy and uneconomic. It may work as an advertising event with the proper support, and it may hit your short-term KPIs, but as an ongoing, ROI-positive channel, it's likely to fail.
This is the realisation, just like digital marketing, just like search marketing, just like social—live commerce is a channel and not a campaign.
Our clients in China have evolved to this, some of them with hundreds of streamers on their books as employees. Many with live commerce channels that broadcast 15-18 hours a day for multiple brands and on various platforms. For this amount of coverage, you have to have the unit economics right; not every broadcast can be an event production. For example, if you have 10 brands that require a presence on three channels for a three hour show every day, then all of a sudden, you are producing 90 hours of live commerce per day; when you start multiplying this across countries and multiple/longer shows, the numbers scale like crazy.
Brands interested in live commerce would do well to stop thinking about producing an event, and they need to start thinking about building a sustainable channel that delivers long-term ROI.
We have lots of other learnings from our clients using the channel over thousands of hours;
- For many products, scripts work better than free-wheeling
- It's not all about price (a common misconception of both Live Commerce and China) - build the content with features and audience interactivity in mind.
- Ditch the "celeb", or at least consider alternatives. KOLs tend to be expensive; it tends to be all about them and less about your product often, they don't follow the script, and it tends to be about the promotion/event and not the ongoing business/customer.
- Use your existing talent. Often, businesses have product heroes, be they the staff doing the make-up demo's from a department store or the talent in the marketing agency who live and breathe the product; these experts perform, talking about a product they love
- Interactivity is critical. Build-in tools to call out repeat shoppers, interact with promotions and give-aways, ask questions and give live answers.
- We track every word a streamer says and map that against live performance, so we know what words, product features, and promotions resonate with consumers. Use this data and then optimize for growth.
- Prepare for scale. As with any digital channel, building the proper foundation and scale is easily achievable with a lot less effort than if you treat every broadcast as an event.
- Don't be afraid. The other benefit of not treating every broadcast like Ben-Hur is that you are more able to roll with the punches and accept that things may go wrong. Don't be afraid to try the channel on a small scale; dip a sustainable toe in the water; this is much easier to do when a few team members are experimenting with a camera rather than a 20-person team in a studio with a celebrity on screen!
Fionn Hyndman is the Chief Commercial Officer at Kaibo.ai, a live commerce management platform.