Is Live-Streaming Commerce Living Up To Its Hype In The US?
Livestreaming commerce has been touted as the next big thing in US retail, with proponents claiming that it will revolutionize the way we shop. However, recent data suggests that this may not be the case in the US, at least not yet. In fact, compared to its success in China, livestreaming commerce in the US is almost certainly overrated.
In China, the trend has been embraced by consumers and retailers alike, with the sector growing rapidly over the past few years. eMarketer reports that livestreaming commerce in China sold over $514 billion in 2022 and is growing at 19%. This is more than 17% of all e-commerce sales in China. This includes livestreaming on social platforms such as Douyin (owned by TikTok parent ByteDance) as well as retail sites such as Taobao Live, operated by Alibaba. A key component of most livestreaming commerce in China is a time-sensitive discount, such as a coupon code that is only valid for 30 seconds. In the US, however, the story is very different with eMarketer estimating $17 billion in total sales, representing less than 2% of US e-commerce sales.
It’s important not to conflate “livestreaming commerce” with “video commerce” or even “social commerce.” If social commerce is all commerce that involves product discovery on a social platform, video commerce is all commerce that involves product discovery in a video stream (think QVC
This “live only” nature of livestreaming is one of the main reasons for this slow adoption in the US. There are generally three use-cases that justify the audience being live:
1. Product Scarcity. If the product for sale is unique or in limited quantity, then the audience may want to see it and buy it before it is gone. Auction sites such as Whatnot, collectables such as Fanatics Collectables, and product drops such as NTWRK are all great examples here.
2. Deal Scarcity. As in China, a primary reason for audiences to watch a product livestream is to get a special deal, such as the case with Amazon Live. While discounts can effectively drive consumer interest, they make profitability a challenge. It is for this reason that Flash Sales have largely fallen out of favor in the US.
3. One-To-One. Many retailers, such as Jared Jewelers, now offer one-on-one video appointments with sales associates for customers that choose not to visit a physical store.
While these use cases can be effective, they are not enough to drive widespread adoption. Another important difference between the US and China, is that there are fewer places to shop online in China. In the US, many manufacturers sell direct on their own websites on the open web. In China, this form of commerce is almost non-existent with the bulk of commerce happening in walled garden super-apps. Livestreaming programs in China also tend to be longer form video than most US audiences are interested in, where it is very difficult to get the TikTok generation to spend an hour on one piece of content.
This is likely the reason we’ve seen TikTok and Meta pull back on their livestream commerce investments in the US. These platforms are major players in the global livestreaming commerce space but may not see the same potential for growth in this market as they do in other markets.
In the long run, it may be that one-to-one livestreaming ends up being the most broadly adopted flavor of US livestreaming as retailers turn their in-store sales associates into omnichannel product specialists and micro-influencers.
So, while “Livestreaming Commerce” in the US is limited to a niche at the moment, it would be a mistake to assume that “Social Commerce” and “Shoppable Video” aren’t an important part of the future of US retail. In 2022, the US surpassed $1 trillion dollars in e-commerce sales for the first time. It’s often said that “e-commerce has solved buying but broke shopping.” Meaning that the traditional “discovery” experience of brick and mortar shopping are often missing from e-commerce. Social commerce is emerging as the discovery experience for digital shopping. “I saw it on TikTok” is the new “I saw it in the store.”