Livestream shopping in the West is like a taxiing plane that never manages to take off.
The concept, where influencers and brands pitch products to viewers watching on their phones, is poised to become a nearly $500 billion business in China this year, according to Coresight Research. Many fashion insiders have long assumed it’s only a matter of time before it becomes a similar phenomenon in the US and Europe. Yet despite the best efforts of some of the biggest companies in tech and retail — and a storied history for the format on television, where QVC and HSN still have big followings in America — US online livestream sales are expected to reach just $20 billion in 2022, according to Coresight.
Some of the channel’s biggest boosters are having second thoughts. On Aug. 3, Facebook announced it was going to shut down live shopping on Oct. 1. In July, The Financial Times reported that TikTok was pausing the US and European expansion of its QVC-like e-commerce initiative, “TikTok Shop” after underwhelming tests in the UK. A spokesperson for TikTok told BoF it has not paused or delayed the TikTok Shop rollout in Europe, but remains focussed on the UK.
“About a year and a half ago, I was having a lot of conversations with brands who were interested and … accelerating the route to market,” said Matt Moorut, director and analyst at Gartner. “It just hasn’t lived up to the hype.”
The problem may not be with the core idea, but with the fashion industry’s sky-high expectations and unimaginative execution, experts say. Many brands and investors assumed what worked in China could be ported over to the West, with similar results. Several start-ups are experimenting with different formats for livestream shopping and say sales are growing fast. One, live selling community marketplace WhatNot, raised $260 million in July, valuing it at almost $4 billion. Recently, Endeavor announced plans for a live-shopping enabled New York Fashion Week in partnership with interactive shopping platform AiBUY.
“What we really need to see is just somebody to get it right, and then I think all of these big guys will be back in action,” said Katie Thomas, Kearney Consumer Institute lead.
In Asia, livestreaming is a core channel for driving sales. In the West, where other forms of e-commerce were better-established by the time streaming video took off, it’s viewed as more of a marketing tool. Western streaming e-commerce sites have also struggled to integrate with the brands they’re selling. Consumers often have to click out of a stream to make a purchase, and payment information isn’t stored across platforms. Some retailers don’t have the technology to support livestreaming at all.
Chinese consumers are also more apt to adopt new forms of online shopping, including digital wallets that make it easier to buy items across multiple platforms. Influencers, known as key opinion leaders, or KOLs, lead conversations around products for users hunting for deals across channels. For Western consumers, commerce is more transactional, and their relationship with influencers is less likely to be built around the act of shopping.
“The expectation of behaviour change on behalf of Western consumers was really high,” Thomas said. “There’s different reasons why it works in China.”
China’s retail market is also much more concentrated around big players like Alibaba, which operates a popular livestreaming platform, Taobao Live. No Western retailer has put a comparable investment into the format, and brands tend to dabble with livestreaming for the occasional marketing push, rather than putting in the sustained effort needed to get customers used to shopping this way.
“We’ve had incredibly successful livestreams we’ve done for companies and they’ll be like ‘Oh yeah, we’ll do another one next month,’ and I’m like ‘No you can’t do it next month, you have to do it at the latest next week.’” said Deborah Weinswig, chief executive and founder of Coresight Research.
Today’s perilous economic climate also acts as a deterrent for brands to embrace technology that hasn’t proven its worth as a revenue driver, said Moorut. Projected sales for livestream shopping in the West pale in comparison to the ad sales Facebook can generate.
“Even those who have been testing and learning … will probably try to focus their resources on the channels that they know will generate revenue ultimately, because that’s what keeps the lights on,” said Moorut.
Livestream shopping may yet take off in the West. Young consumers love video and have growing spending power, said Adam Pressman, managing director in the retail practice at consultancy AlixPartners. They find, buy and share products on TikTok and take advice from creators on YouTube.
Platforms are still investing in the medium. Even after Facebook shuts down live shopping, brands can still host events on Meta-owned Instagram. TikTok is hiring e-commerce talent, releasing advertising tools and still promotes going live on the app. YouTube and Amazon continue to roll out live shopping features, and make investments in the space. Livestream start-up Bambuser just signed a three-year renewal of its LVMH partnership and said it has seen an increase both in the number of livestreams and viewers tuning in. Commentsold, a live selling company that allows consumers to make purchases in comments, saw gross merchandise value rise 35 percent between 2020 and 2021.
Livestream shopping may look different in the West. For one, it may mean a focus on smaller group sessions, where livestreamers speak to a few select customers rather than a huge audience. It also may be more fractured: not dominated by a few platforms, like Facebook or TikTok, or so exclusively tied to blockbuster events like Singles Day.
“Retailers know this is a way of supercharging or stepping up their e-commerce game … I see it as how retailers mature,” said Sophie Abrahamsson, Bambuser’s president of Americas.
And though KOLs who have built organic audiences drive sales in China, in the West, influencers don’t always make the best livestreamers, said Wenisberg. Sales associates, she said, can be a better fit as they’re often more knowledgeable about products. She also sees livestreaming as especially useful for beauty brands, where livestreamers can provide tutorials and tricks, and influencers already has a strong tradition of building community via video, or luxury brands, where consumers want a personal interaction before a big purchase (or even to look at the condition of pre-owned luxury items like handbags).
Some early experiments with livestream shopping do show promise. In 2020, Walmart’s livestream fashion event with TikTok grew its follower count by 25 percent, and German beauty retailer Douglas saw a 40 percent hike in conversion rates tied to its livestreaming experiments, according to McKinsey. Taking a play from the Alibaba playbook, Amazon has used influencer livestreaming to draw consumers to deals on Prime Day. Hill House Home uses livestreaming ahead of its drops for its viral “nap dresses,” where founder and chief executive Nell Diamond answers questions about the product that consumers submit via a chat box.
“There’s a market for it, we just haven’t figured out the Western version of it yet,” said Thomas.
