written by
SevenVentures
SevenVentures
Global Trends
2021-02-11

Live Shopping – Should We Believe the Hype?

Live Shopping – Should We Believe the Hype?

With around $60 billion in global sales in 2019, live shopping is the latest commerce craze to hit Europe. Boosted by COVID-19 and already a huge trend in China, live shopping offers an exciting new direct-to-consumer sales channel, particularly – but not exclusively – for fashion and beauty brands and many German companies are jumping on board. But how does it measure up in reality?

What is it exactly?

David Jacobs and flaconi Live Shopping Cyber Week
Source: David Jacobs and flaconi Live Shopping Cyber Week
Kim Kardashian sells KKW Perfume with Viya Huang
Source: Kim Kardashian sells KKW Perfume with Viya Huang

Live shopping is traditional home shopping we know from channels like QVC and HSN reimagined for the digital age. Brands are using Instagram Live, Facebook Watch and specialist live shopping platforms to demonstrate their products, share recommendations and reviews and offer discounts. Live shopping is a way for brands to monetise on the popularity of the real-time streaming trend most evident in recent times by the huge growth in new streaming platforms like Twitch and Clubhouse.  

Live shopping on digital channels is unique because it combines entertainment and information with commerce. Customers switch on because it is pleasurable to watch an entertaining and informative presenter (generally either an influencer or brand representative) explain their favourite fashion and beauty products, some might say much more pleasurable than shopping at a busy high street store or scrolling through an online shop. Some brands even use live shopping to provide expert advice and information to viewers – for example, live shopping events from UK skincare brand SkinCeuticals feature consultations from dermatologists and doctors. With constant two-way comments between viewers and the presenter, it’s an interactive experience and because it is live, it reduces possibility of manipulation of imagery and settings, allowing the audience to trust confidently in the brand.  

China is light years ahead of Europe and the US when it comes to live shopping. Largely fronted by influencers, Chinese events experiment with flash sales, gamification and augmented reality elements in their broadcasts. The concept is insanely popular: ten per cent of all online purchases in China are already made via live videos and on Chinese Singles Day, the equivalent of Black Friday in the West, the largest Chinese online retailer Alibaba made about 25 per cent of its sales via live shopping. With the pandemic shutting down high street retailers, brands in Germany have turned to China for inspiration where ecommerce generally is much more highly developed. Brands like Orsay, L'Oréal, flaconi, Douglas und Tchibo have been among the first to adopt this concept in Germany.

Benjamin Ludigs, CRO of flaconi, reports: "The trend format live shopping show is an exciting opportunity for us to present a seasonally curated range to flaconi customers directly and authentically and to inspire them with trends, personality and beauty expertise. We see the new format as an edutainment channel and also as a consistent continuation of our brand strategy 'Find your beauty. Everyday.'"

Who is tuning in?

Age distribution of live streaming e-commerce users in China as of March 2020
Source: Statista

Figures from China suggest that the target audience here is undoubtedly younger millennials and Generation Z. But older millennials (31 to 40 years) should not be discounted. This is a powerful consumer base, and with 33 per cent live shopping viewers in China falling into this age group, this is undoubtedly an attractive feature for higher end brands.  

Which brands suit live shopping?

Live shopping is particularly suited to products which benefit from being seen on screen and from demonstration and explanation. It is therefore no mystery why fashion and beauty brands have been among the first to adopt this concept in Germany. In the case of fashion, presenters demonstrate the clothes, how to wear them and what to wear them with. In the case of beauty, experts explain to viewers how to apply the products and benefits they offer. Electronics retailers have also shown an interest in live shopping; reports from China suggest food producers are trying it out too.

How to get started

If companies wish to dip their toe into the world of live shopping, it pays to start as leanly as possible. There is no need to invest in any expensive production equipment; it is more important that companies establish regular broadcasts and start to build a following, and this is easier with everyday equipment. As followings and turnover grows, and if a customer base expects it, then this might be the time to consider investing in higher quality production equipment.  

When it comes to who should present a live shopping event, companies should consider their objectives. An influencer is the logical choice if brands want to make a big splash and accumulate traffic from the outset. The audience already trusts them and through their followers companies can also expect to accumulate new customers. However, a live shopping event with an in-house expert gives brands the chance to build their own opinion leaders and community. Brands sometimes opt for influencer and brand expert co-presenting a live shopping event which is the best of both worlds. The most important thing is that your presenters are practiced at working with a live stream and live audience – note there is a big difference between an influencer who can do stories and pictures on Instagram and one that can work a live stream and drive sales.

When it comes to the choice of platform, the easiest choice at the start is through the live stream on a strong social channel. While they don’t offer live shopping features yet, Instagram Live Shopping launched in the US in August 2020 and this is expected to roll out in Germany in 2021, and hopefully the next step is payment integration with Apple Pay / PayPal. Software providers are now emerging in Germany which enable retailers to connect their live stream directly with their online shop, meaning consumers can buy the retailer's products mid-stream in just one click.

In terms of tracking success, specialist platforms with direct click-through to the online shop can directly measure conversions during a live shopping event. Some brands using Instagram Live such as flaconi offer live shoppers a special discount code to use when purchasing products on their online shop which can help to track conversions. Brands are even driving conversions with incentives  – Tchibo incentivises its discount code with the chance to enter a competition for a coffee subscription. Douglas offers live shoppers a free gift if they purchase during the stream. Brands should also note general live streaming success metrics including live viewership, repeat traffic and viewer engagement.

What do the critics say?

Live shopping has attracted some critics since it came on the scene. Detractors point to the fact that products often sell for the cheapest price, and there is a high cost of doing business. Paying an influencer costs money, even if they work on a commission basis, and there are shipping costs to consider, particularly if products have a high return rate. Critics also highlight the differences between Chinese and Western influencers and the “influence” they wield. Chinese influencers have extremely high reputations and credibility, while trust in Chinese brands and products is generally low. It is only for this cultural reason, they say, that Chinese influencer recommendations have so much impact and thus generate significant turnover.  

The future of live shopping in Germany

Criticism notwithstanding, the sales figures from live shopping emerging from China even pre-lockdown shows that this is no passing craze. With social sites in Germany set to react to the trend this year, an attractive target group, a relatively simple set-up procedure and trackable ROI, many consumer brands will want in. Our advice: if the product and target group fits, then it is worth experimenting earlier rather than later. Because live shopping could just be the next big e-commerce craze.

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