Livestream shopping and augmented reality: benefits for brands
Livestream shopping is the latest social commerce trend that every retailer needs to keep an eye on.
In China, where the phenomenon first emerged, it is already a major sales channel, accounting for more than 10% of total retail ecommerce sales and generating $300 billion of revenue for retailers in 2021.
Still a fairly new concept elsewhere in the world, livestream shopping revenue was just $11 billion by the end of 2021 in the US. However, if early developments in this space are anything to go by, we can expect its popularity to explode in the near future.
According to McKinsey & Company predictions, by 2026, livestream shopping could be responsible for up to 20% of all ecommerce sales.
What is livestream shopping?
Livestream shopping, also known as live commerce, live shopping, and live video shopping, refers to the practice of brands promoting and selling products through live videos online (ecommerce platforms, social media channels, or their own websites or apps). More often than not, branded livestreams are led by influencers or celebrities.
In this way, livestream shopping is similar to home shopping TV shows. Both livestream and home shopping networks like QVC take advantage of the fact that people are much more likely to buy products from someone they trust.
However, unlike the traditional at-home shopping experience, which is usually edited and doesn’t allow for much interaction, live shopping happens in real-time. This means that customers can:
- Chat with one another and the livestream host through comments.
- Leave likes.
- Take part in polls.
- Buy products directly.
For instance, a viewer can ask a livestream host to show a product from a different angle, discuss the item with other viewers, and buy it immediately by tapping a product link.
Another advantage of livestream shopping over home shopping TV shows is that customers don’t need to sit in front of their TVs. As long as they have a smartphone, they can watch livestreams from literally anywhere, be it their home, a café, or even an airport.
Many live shopping events are recorded. This means that users who miss them can watch them later.
A brief history of livestream shopping
Before livestream shopping became a trend in the US, UK, and the rest of the world, it was already huge in China. In a survey from 2020, as many as two-thirds of Chinese customers said that they had purchased something via a livestream in the last year.
In fact, the origins of livestream shopping can be traced back to 2016 when, in an attempt to replicate an in-store experience online, Chinese multinational technology company Alibaba created a livestream shopping channel called Taobao Live.
The livestream shopping channel, which lets customers tune into livestreams by influencers or brands, learn about products, ask questions, and buy items without leaving the livestream, proved incredibly successful.
In 2020 alone, four years after it was launched, Taobao Live grew the number of its daily active users and livestreamers threefold. Not only that, but the channel also generated $61.7 billion in gross merchandise volume.
While the growth of livestream shopping elsewhere in the world has been relatively slow, aspects of it—such as influencers showcasing products in real-time during live YouTube makeup tutorials, or hosting live unboxing videos on Instagram—have been around for years.
It was only a matter of time before Western brands started to pay attention to the livestream shopping phenomenon. For example, in 2019, H&M’s sub-brand Monki was among the first fast-fashion retailers to incorporate live streaming as part of its ecommerce site experience.
And in 2020, the French high-end luxury house Louis Vuitton held its first livestream shopping session on China’s most popular social ecommerce platform, Little Red Book. As part of the livestream, viewers could get a better look at the host’s outfit and ask a celebrity guest questions about how they should style their Louis Vuitton bag.
Although still niche, livestream shopping is becoming more and more interesting to brands and retailers, with dedicated platforms specifically for livestream shopping raising hundreds of millions in funding.
Benefits of livestream shopping for brands
1. A seamless social shopping experience
Livestream shopping creates a seamless shopping experience for customers.
In traditional social media advertising, users see an ad on social media and click through to go to the brand’s ecommerce store. Additionally, they typically carry out additional research, by reading customer reviews, to verify the quality or fit of the item. In contrast, with live shopping, customers can transition smoothly through the different buyer stages, from awareness to consideration to decision, all from one place.
This removes friction and speeds up the selling process. According to McKinsey & Company, companies that partake in livestream shopping experience conversion rates that are close to 30% — almost 10 times what they are in traditional ecommerce.
2. Decrease reliance on physical stores
Whether because they want to experience a product in real-life or get expert advice, many customers still prefer to shop in person at physical stores.
However, visiting a brick-and-mortar shop may not always be a realistic option. Some consumers may live far away from a store, whereas others may be wary of entering crowded spaces, especially in times of health crises. Similarly, some brands may not even have a physical store.
Livestream shopping removes some of this friction. While customers may still not be able to touch items themselves, they can ask a livestream host to give them product close-ups and demonstrate how the items work.
3. Increased discoverability
Even though some brands use their own sites or apps for livestream shopping, most of them tend to host these events on social media. Doing so can help them increase their follower numbers and raise brand awareness.
For example, after launching a livestream shopping pilot in the spring of 2021, the shoe retailer Aldo saw 17,000 page views in the five days after the event, with the average viewing time exceeding 12 minutes.
Similarly, a livestream shopping event on TikTok helped Walmart grow its follower numbers by 25%.
4. A differentiating factor
Livestream shopping is still a novel concept in the US and Europe. Therefore, any brand that decides to adopt this strategy is bound to stand out, especially among younger consumers who are more likely to give innovative concepts a go.
Brands that have tried this strategy have seen a 20% increase in the share of their younger audiences, says McKinsey & Company.
5. Decreased returns
Livestream shopping is all about familiarising potential customers with specific products. The more information a shopper has about a particular item, the more likely they are to know whether it will work for them or not.
Consequently, most live shoppers that convert know that the product will suit them. Research confirms this: live shoppers are up to 40% less likely to send a product back than traditional ecommerce buyers.
AR will be the next biggest thing in livestream shopping
Live shopping allows customers to see how a product looks from all sides and angles, or on the body or face of an influencer promoting it. Even so, it can still be difficult for shoppers to determine whether the item will suit them specifically.
This is where augmented reality (AR) comes in. Still in an experimental phase, AR livestream shopping would allow customers to virtually “try on” items, or to visualise featured products in their own environments, while watching livestreams.
On YouTube, creators already have the option of using the “Beauty Try-On” ad format in their videos. When watching videos that have this format enabled, viewers can try on different makeup products alongside the influencer in front of them.
Last year, the beauty brand Ulta Beauty demonstrated how this could work as part of a livestream. Its first “Beauty School” livestream on its app and website included virtual try-ons.
Beyond just helping customers decide whether a particular product would suit them, AR can also be used as a sales support tool.
Take the Peloton bike as an example. It is already possible to use AR to visualise a Peloton bike in your own home to see if it would fit a specific space.
But that’s all that you can currently do. If you want to learn more about the bike’s features, you have to go online to read about them. For customers, this creates a disjointed shopping experience. The bike may fit their home, but if they feel like they still need more information about the product, they won’t be ready to buy it just yet.
One way that brands can overcome this obstacle is by combining AR shopping with livestreams.
So, to continue with the Peloton bike example, an AR livestream experience would not only allow customers to “place” a bike into their home but, through hotspots in a customer’s home, a salesperson could explain, in real-time, the various different features that the bike has and answer questions, virtually replicating an in-store sales experience.
The future of livestream shopping
From mainstream social networks like Facebook, TikTok, and Instagram investing in livestream shopping features, to popular brands like Estée Lauder, Cartier, Lancôme, Samsung, Macy’s, Nordstrom, and Walmart vying for dominance in this space, it is obvious that livestream shopping is gaining ground in the US and Europe.
Although there are no hard and fast rules about which brands can partake in livestream shopping and which can’t, the most common product categories seen there today are apparel, beauty, food, electronics, furnishings, and home decor.
However, as livestream shopping continues to grow, we will see it trickle down into other sectors, including healthcare, finance, engineering, and even B2B, predicts McKinsey. AR will become increasingly important, too, according to the global management consulting firm, and a factor that will further distinguish one brand from another.