The Maturing Live Commerce Infrastructure
Is your brand ready to put on a good show?
Social commerce is poised to take off in the U.S. after years of anticipation and laying the groundwork, thanks in part to the pandemic-driven boom in ecommerce and increased social media consumption. As the mall-ification of Facebook and Instagram continues apace, independent social commerce platforms are also emerging to help brands sell directly to consumers. Meanwhile, new features from other popular platforms are set to give social shopping another boost, which should prompt more brands to re-evaluate their social strategy.
When we talk about social commerce in the U.S., there tends to be a conflation of concepts. Is it “an online shopping experience that is socially interactive,” or should it include all sales that originated on social platforms, regardless of where the purchase is made? There’s no clear consensus. Depending on how strict one wants to define “social commerce,” it could include anything from “D2C brands using social media to drive purchases on their own websites” to “an independent merchant making sales on Facebook or Instagram via the integrated Shopify Pay.” Then there is live commerce, which refers to brands and merchants utilizing live streaming to engage shoppers and drive sales. Arguably the most interactive type of online shopping, live commerce holds great potential for brands looking to up their social game to drive direct sales.
There are clearly varying degrees of “social-ness” in these distinctly different shopping experiences — impulse buying a cool shirt off a sponsored Instagram post is certainly not as social as buying a new smart home gadget after watching a live demo session and participating in a Q&A. Live commerce provides an inherently social experience for shoppers, but it doesn’t have to take place on social platforms, which further complicates the definition of “social commerce.” Nevertheless, generally speaking, the more social interactions an online shopping experience entails, the closer it is to the regular, in-store shopping experience.
Correspondingly, live shopping has become a priority for the world’s biggest tech companies, as well as for VC investors seeking out hot new start-ups in live commerce. As a result, the live commerce infrastructure is also maturing for more brands to explore the power of real-time engagement.
Facebook and Amazon Loom Large
When talking about social commerce in the U.S., there’s simply no getting around the tech giants. Facebook and Amazon, with their dominating market share in social media and ecommerce, respectively, are theoretically well-positioned to make live commerce happen in the U.S., yet neither has really been able to crack the code.
Live streaming features on Facebook and Instagram have been available for businesses for a few years, but the integration of ecommerce features only came recently. Instagram started testing a Live Shopping feature early last year before rolling it out to all businesses in late August. Similar tools are also available on Facebook, allowing brands and merchants to showcase their tagged shoppable products through live video sessions for instant tap-to-purchase, straight from the app, during a live broadcast. In addition, Facebook also recently launched a “Live Shopping Fridays” event series, in which brands such as Abercrombie & Fitch, Clinique, Sephora, and Zox go live on a weekly basis to hawk their wares via Facebook Shop.
Amazon has been exploring live commerce for several years, dating back to the “Style Code Live” debut in 2016. That early exploration of live shopping was ahead of its time, and Amazon abruptly canceled it after a year of lackluster results. In February 2019, sensing the market conditions had developed, the company launched Amazon Live, a dedicated section in the Amazon app and website, to entice shoppers with a roster of multiple live streams at any given time. Unlike “Style Code Live,” which focused solely on fashion and beauty products, Amazon Live covers all sorts of products, ranging from smart home and toys to kitchen items and electronics. During Prime Day this year, Amazon reportedly hosted over 1,200 livestreams to drive interests.
In addition, Amazon has also created an app, Amazon Live Creator, to make it easier for their own team of influencers and brands to broadcast their live sessions from mobile devices. Depending on the type of product, Amazon will pay commissions to creators of 1% to 10% of goods sold during the livestream through its affiliate program. As a result, a cottage industry of influencers and minor celebrities has taken form, streaming straight from their bedrooms and dining room tables in hopes of earning commissions.
Despite the efforts from both tech giants in recent months, live commerce remains low on consumer uptake in the U.S. A recent Washington Post article reports that “analysts say many livestreams entice fewer than 1% of the viewers to buy. The most successful of streams can capture sales from 10 to 20% of the audience.” Part of this is due to the fact that we are still in the early days of social commerce and brands are still experimenting to figure out the best practices for it.
Another reason that Facebook and Amazon have not been able to push live commerce into mainstream behavior may be the lack of so-called “multi-channel networks,” or MCNs, which provide live streaming services for businesses. Compared to markets like China, where MCNs have been more common and help brands amass sizeable live audiences, most U.S brands have yet to tap into the live commerce infrastructure.
That said, as retailers and brands grow wary of overly relying on Facebook and Amazon for customer acquisition, some of them are starting to leverage third-party providers of live commerce solutions to host shoppable live streams on their own websites. Nordstrom recently created its own live stream channel, where the lineup of virtual events includes makeup lessons, wine tastings and dance classes. Beauty brands like Estee Lauder and L’Oreal have also tapped into live commerce by leveraging tools provided by the likes of Livescale and Shopify. After all, despite often being deemed as a subset of social commerce, live commerce doesn’t have to happen on social platforms.
The Emergence of Live Commerce Platforms
The mounting interest in exploring live commerce from brands and marketers has led to a boom in startups that specialize in providing brands with the tools they need to go live. Companies like NTWRK, Talkshoplive, and Popshop have all seen significant growth over the past year and half, as more brands start to explore shoppable live streams off social platforms.
The spate of startups touting live shopping features has become legion, each with their own emphasis on different product categories and how they incentivize and compensate influencers on their platform. The following table, courtesy of a recent newsletter by The Information, offers a great overview of the leading startups in this space (plus Amazon Live) and their distinct features:
Having a varied focus on product categories means that brands looking to explore live commerce should lean into the platforms where their products are already popular. In contrast to Amazon, these startups tend to give the majority of sales to influencers or hosts. Most of them also offer embeddable players to allow retailers and merchants to add a shopping livestream to their own websites, rather than locking the live stream on their own platforms. All these characteristics provide brands and retailers with more flexibility and control over the experience, allowing them to explore live commerce on their own terms.
Furthermore, it is not hard to see the strategic position that Shopify is in, as a lynchpin service powering a growing number of online purchases. And it is quickly extending that position into live commerce as well. Last week, Talkshoplive launched its own Shopify app, which allows Shopify merchants to sell their products on livestreams and more easily manage orders. Bambuser also launched a similar Shopify app in June to extend its reach and facilitate a smooth checkout experience. As I recently noted in my piece about ecommerce solution providers:
If Shopify can continue to stick to its playbook and appeal to both merchants’ and shoppers’ demands for a more user-friendly online shopping experience, it will certainly continue to grow in prominence, not as an Amazon alternative but as a first choice for small business owners, and play an integral role in the larger ecommerce infrastructure.
The fragmented landscape of live commerce is emblematic of the exploding market interest. As the sector continues to mature, we could see some acquisitions or mergers, possibly led by big tech companies, to consolidate the landscape over the next few years and integrate the live commerce infrastructure into their respective platforms.
Other Tech Players in the Wings
With the digital platforms on a path of convergence, it is no surprise that nearly all the major tech players have shown interest in expanding their existing shopping features to support live commerce.
Last week, Google announced YouTube will begin testing a new feature that enables viewers to shop for products directly from live streams. The feature will launch with just a handful of creators and brands, and is an expansion of the integrated shopping experience YouTube began beta testing earlier this year. Like Facebook, Google also recently integrated Shop Pay, Shopify’s one-click payment solution, into Google Shopping to allow customers to have an easier checkout experience. It is safe to assume that this feature will be made available for the shoppable ads on YouTube live videos as well, sooner or later.
Pinterest, known for its higher-than-average sales conversion rate among social platforms, recently launched new shopping and ad features, including shoppable Idea Pins, which are Pinterest’s take on the story format, that creators can monetize, as well as, you guessed it, a Shopify integration to extend the global reach of its shopping features. Although Pinterest is not typically associated with live video, it has nevertheless been dipping its toes into live streaming, most recently with a three-day event in May. One could see a future where the platform could embed shoppable pins into its live events, but Pinterest’s current priority in developing commerce features appears to be on its visual search tool Lens rather than live video.
Similarly taking a creator-first approach, Twitter, a social platform that is no stranger to live streams, recently announced that it has started testing a shopping feature that lets users browse items for sale at the top of a brand’s profile page. Nevertheless, the bulk of the blue bird app’s recent moves suggest its focus is on creating new monetization tools to support creators, and live shopping is just part of the arsenal it could tap into.
Perhaps more interestingly is the approach that Snapchat is taking to enable social shopping on its platform. Rather than embedding shoppable tags in live streams, Snapchat is making shopping a live experience by connecting users with their friends via video calls. It recently partnered with Poshmark, which curiously hasn’t launched a live shopping feature on its own app, and created a Snap Mini that allows Snapchat users to browse the entire catalog of products on Poshmark and interact with other shoppers during real-time “Posh Parties.” With the upcoming SharePlay feature in iOS 15, we could see more platforms tapping into video chats and screen-sharing as a new way to add live interactivity to the mobile. shopping experience.
In conclusion, the live commerce space is one to watch for marketers, as more brands and platform owners start to leverage a maturing infrastructure to test live shopping initiatives, on both social media and owned channels. Blending entertainment with instant purchasing, live commerce offers retailers, brands, and digital platforms a new channel to create value and capture consumer attention. For brands, the curtains have been raised, and it is time to put on a good show.
