What is Live Shopping and how big is it? 2020 facts and stats.

Live stream shopping makes every other retail trend in the past 30 years seem small. See what is it, how big is it and what you can expect from it.

Live Shopping is a relatively new commerce technology that uses live video streaming to connect shoppers and merchants.

At the core it’s kinda like Zoom but less conference-like. On one hand you have a sales representative who can be either a store associate or an influencer. On the other hand you have people that want to buy what they’re selling. Or just watch a live product demo.

Think of it this way – you know how Apple announces their products each year, they invite a bunch of people in the room but also broadcast the presentation globally? Take just the broadcasting part, add shopping buttons in the stream and there you have it – live shopping.

When did live stream shopping start?

There is no clear date of when “live shopping” started but it definitely took off quickly in 2019. With the introduction of live media streaming and with a sprinkle of social media influencer marketing, people started watching their idols live, showcasing products.

The live shopping revolution started in China, where mobile penetration and mobile usage habits have made it easier for ecommerce companies to adapt to switch to live shopping. The leader in the domain is Taobao, with 60% of Chinese shoppers having watched at least one live shopping stream on the platform.

Live shopping share in China by ecommerce platform
Source: https://www.statista.com/statistics/1130366/china-most-shopped-live-commerce-platforms/

Soon enough the trend started inching into the western world with leading online retailer opening Amazon Live in February 2019. The move was amazingly timed as in just a few weeks the Covid-19 pandemic stroke. Other ecommerce players are slowly adapting to change.

However, Walmart did think make a bid for TikTok and its obvious angle is targeting younger generations through live video shopping. While a great idea, Walmart is not know for its great execution of amazing ideas.

China reaches 900 million internet users and increases online spending with live shopping

One of the key factors in adopting new technologies such as live video shopping for the Chinese Market was its shear size. The lockdowns have increased internet consumption and adoption, with leading areas being Education (almost doubling to 420 milion users in just 10 months) and Live Shopping.

A report by Qin An, head of the Beijing-based Institute of China Cyberspace Strategy, mentions that 265 million Chinese internet users buy goods via live streams starting 2020. What’s most interesting is that this figure amounts to 47% of total stream-viewing audience.

So one in two video streaming watchers are potential video shopping buyers, with this probably increasing in the future. If the same proportion holds in the US, which has 232 million online video viewers, this means there is a potential market for roughly 115 million new customers that are in need for a better experience.

Covid killed the Retail Star. Will Live Video Shopping revive it?

The Covid-19 pandemic has caused many stores to close temporarily or permanently. The trend is consistent across Europe and US. While the US retailers have been hit first and hardest, with over 14 000 stores closed and almost 2 million retailer workers being laid off, this wave of store closures will reach the EU soon. Initially store chains and SMB retail companies have been partly protected by government intervention and job supporting measures but this is unlikely to continue indefinitely.

The retail market at large has been transformed by ecommerce retailers in the past 20 years. With the recent Covid-19 pandemic, this trend has increased. Brick and mortar retailers are seeing their unit economics being displaced by challenger brands, mostly focused on online shopping and fast fulfilment. Traditional retailers are forced to carefully consider store space, employees headcount and their online operations.

First it took the brick and mortar stores

The Covid-19 pandemic has caused many stores to close temporarily or permanently. The trend is consistent across Europe and US.  While the US retailers have been hit first and hardest, with over 14 000 stores closed and almost 2 million retailer workers being laid off, this wave of store closures will reach the EU soon. Initially store chains and SMB retail companies have been partly protected by government intervention and job supporting measures but this is unlikely to continue indefinitely. 

Retail chains such as H&M are starting closing operations as they saw their operations already in the read with 50% decreases in sales.

While ecommerce stores have saw initial surges in sales due to consumers ordering online this will probably see a backlash in the future. The increase in online sales was caused primarily by existing online purchasing trends and partly by consumers’ fear of Covid-19 infections. These increases in sales have been limited to products with repeated purchase habits. 

But online retail won’t be too good for too long

Many customers are unable to experience products like they did before and this in time will surely affect online retailers. After surge in sales many of them are able to return to the slow and steady rate of increase. However, this rate has not passed 20% in Europe historically .

This means that without a way to bridge the gap between online and in-store experiences, total retail sales are likely to decrease, stores will close and many retail workers will eventually be laid off. In this scenario a paradox of increased retail demand and decreased retail offering will result in an increase in prices, inflation and job losses.

Unless…

The store of the future is live

Quick question: what makes Instagram, Snapchat and Tik-Tok a good choice for Gen-Z? Is it the social networking features? Nope, many apps have that. Is it the video and rich media? Closer but not quite there. It’s the live interaction, one on one and one to many. In some cases, such as Fortnite – it’s many to many.

And retailers are tapping into this.

We noticed that both online and in-store retailers consider live stream shopping a viable model for existing operations.

Brick and mortar retailers see live stream shopping a way for them to decrease costs with retail spaces while at the same time retaining their strengths. They see live streaming as a way to quickly and seamlessly connect digital-savvy consumers to their in-store experiences.

Online retailers see live streaming as a way for them to quickly solve problems in terms of their customers experiencing products. In the past they have experienced with experience-only stores, open-on-delivery processes and return logistics. All of these have improved conversion rates but at the same time have increased unit economics and operational costs.

So what is next? Probably – live shopping operations. Taobao has been promoting this for quite some time with high success. Amazon has jumped on board and even Google has launched ShopLoop, a video shopping app. Live shopping software will probably continue to gain traction as the retailers need a way to reach their customers in an immersive way and consumers need better experiences than two-dimensional ecommerce stores or closed stores might offer.