What is Live Commerce? A comparison between China and the USA

Anagha Venugopal
Technical Content Writer

With e-commerce evolving periodically to fit the needs of consumers, several new buzzwords have been coming up. One among them is Live Commerce. In this blog, let’s take a closer look at what this e-commerce branch is all about. 

Live Commerce

Live streaming was initially used for people to interact and entertain their followers. However, with time, it evolved and started creating quite a buzz in the world of e-commerce. In live commerce, shopping happens in the middle of a live stream. A retailer organizes a live event, and a livestreamer, often called an influencer, demonstrates a product live. Meanwhile, customers interact and ask questions about the product and can also make purchases through shopping links.

Got Deja vu?

Live Commerce must remind some of you of the old TV shopping shows like Home Shopping Network and QVC. You are not wrong! Live streaming, for sure, is very similar to that, but what sets it apart is that it is far more interactive. Customers get their doubts cleared live by interacting with the presenters through chats. Influencers get to choose what style works best for their products and audience and stick to that. There is no specific norm or style to be followed.

The term influencer has been doing the rounds for a while, especially on platforms like Instagram. But when it comes to Live streaming, influencers do not have the luxury to conduct an elaborate shoot of the product they plan to sell/promote. Everything has to happen while your followers are watching, and it should be as organic as possible. 

Live Commerce and China

However, there is one country where the lines between live commerce and traditional e-commerce are slowly blurring: A country where live streamers have mastered the craft exceptionally well, and viewers prefer it over conventional e-commerce. It probably comes as no surprise that it is China! The popularity of live streaming in China is so humongous that it would sound preposterous to discuss live commerce without discussing its reach there.

The beginning  

Now, when did all this begin? Post-pandemic? Not really. In China, the retail giant Alibaba first introduced live streaming through their app Taobao Live as early as 2016. 

However, with the onset of the pandemic, its popularity boomed (for obvious reasons!). Fast forward a few years, and anything from groceries to designer clothes is now sold via livestream. 

So far so good

To understand how successful this concept is in China, let’s look at the sales during the first 30 minutes on Single’s Day via live streaming – A whopping 7.5 billion dollars! There is also an example where a livestreamer raked up around 14 million dollars in sales in just seven days by showcasing products for a mere 3 seconds in another popular live-streaming app, Douyin.

In China, live streamers are called Key Opinion Leaders (KOL), and two KOLs have been ruling the world of live streaming – Viya and Li Jiaqi. They are considered the king and queen of live streaming. Viya is often touted as being able to sell anything. Li Jiaqi, also called the Lipstick King, has a reputation for selling 15,000 lipsticks in five minutes. You might now have understood what levels of popularity we are referring to now. 

How did Live Commerce succeed in China?

Chinese Apps facilitate live-streaming

E-commerce platforms in China are equipped to accommodate live streaming. One of the most popular live streaming platforms, Taobao Live, is linked to the Taobao app, which is integrated with Alipay and allows users to shop during live streams in a few clicks.

Live Commerce is entertaining and educative

Chinese people trust the opinion of influencers, most of whom enjoy a mini-celebrity status. So, when an influencer tries a product and gives an honest opinion, it has more value in the eyes of Chinese consumers than finding a product online. They also value the interaction that happens with the influencers during these livestreams. Moreover, the influencers themselves are well-trained to do the job in a fun and interactive way. 

Professionalism of influencers

Plenty of Multi-Channel Networks (MCNs) offer training and resources to influencers. So, influencers are more equipped to handle all the requirements of such a dynamic job. 

People trust Live Commerce more than traditional e-commerce. 

In the West, people generally prefer the speed and convenience of traditional e-commerce platforms. There is rarely a requirement to sell products to people because they usually visit stores with the idea of making a purchase, which they quickly do on these platforms where all the information they need to make a purchase is available. However, in China, multiple scams have dissuaded people from relying on online stores, and they prefer the trust factor that livestreamers offer to traditional e-commerce platforms. 

Where do other retailers fit in the picture?

Many retailers like Nordstrom, Aldo, Bloomingdale’s, and online giants like Amazon have also embraced the idea of live streaming. Amazon has an influencer program that makes it easier for influencers to create their own storefront through which users can interact with them. Influencers earn a commission of around 10% of the sales they bring through click-throughs during live streams. Amazon also offers a flat fee to influencers who go live regularly. Apart from this, influencers can also earn money by exclusively promoting specific brands. 

Different brands have been testing the waters in this relatively new space. JBL is a brand that saw a rise in purchases by first-time buyers after showcasing their waterproof speakers in an Amazon livestream. There was also a marked increase in traffic to their Amazon pages. Walmart is another big name that has been slowly venturing into live e-commerce. It held about 150 live-streaming events in 2022.

Benefits of implementing live commerce

Impulse buying

Livestream often features limited-time offers and exciting deals. When coupled with the constant reminder by influencers that thousands of other people are checking out the products, it prompts people to indulge in impulse buying.

Accelerated sales and conversions

From the numbers we discussed above, it is clear that a well-presented livestream has the power to generate bulk sales in a short time. Companies that have adopted live commerce report conversion rates of nearly 30%, which is almost ten times higher than those of conventional e-commerce.

Ease of shopping

Online markets are oversaturated with products. You enter an online store and type sunscreen, and a thousand products pop up. Sometimes, the mere inability to choose from this vast array of products could make some of you give up shopping mid-way through. Live streaming makes your task easy in such circumstances. Instead of going through thousands of customer reviews and finalizing a product, you have someone sharing their opinion, making the decision-making process easier.

Reach a wider audience

With the advent of omnichannel marketing, reaching consumers through multiple platforms is possible, thereby reaching a large audience and improving sales.

Live Commerce in the US

The elephant in the room 

The fact that this method succeeded in China doesn’t mean it works well in other parts of the world. Data from McKinsey and Company suggest that compared to 57% of live users using live commerce in China, only 5-7% of users in Europe, Latin America, and the United States use live streaming for shopping. Meta chucked its live shopping feature less than three years into its introduction. So why isn’t it taking off in the USA as it did in China?  

Technical glitches

The Chinese economy has always been mobile-oriented and is used to super apps. In contrast, apps in the US are still trying to navigate existing issues hampering the smooth shopping experience. TikTok, for instance, had an issue where its shoppers had to navigate away from the app to make a purchase. We don’t have to tell you how big a hassle that can be for customers, especially when they are in a hurry to purchase.

Not consumer-centric 

In the West, most live streams focus on the seller, not the consumer. It’s essential to generate content an average consumer can relate to. That’s where Chinese influencers like Jiaqi win. 

Livestreaming lacks zing

Chinese influencers often conduct livestreams with multiple cameras, conduct their shoots from landmark locations, and ensure the product is the centre of attention. Live streamers from the rest of the world don’t stress this aspect. Their presentation is often bland and features sombre backgrounds, which lack the appeal and charm of the former.

Minimal interaction

The interaction between live streamers and viewers isn’t as quick and streamlined as in China. More often than not, live streamers ignore comments from viewers, which is in stark contrast to Chinese influencers, who are accompanied by assistants dedicated to answering comments and troubleshooting issues. They also offer a slew of giveaway items. All this makes people feel valued and listened to.

The silver lining

Data from CoreSight Research suggests that livestreaming in the USA is expected to boom in the coming years. A lot of money is being pumped to develop apps that allow shopping in the middle of a live stream. TikTok, for instance, is now testing a function on US users in collaboration with ByteDance. Named TikTok shop, it allows customers to make purchases without leaving the app. It has also added an in-app payment function.

Shopify and YouTube are also collaborating as part of their efforts to step into live streaming and help users click and buy from YouTube without having to exit the app.

Several successful startups like TalkShopLive are dedicated entirely to developing platforms for live streaming. They make shopping possible for people who have missed out on the live by retaining the link to purchase the products even after the live show ends. Walmart has relied on TalkShopLive for all its livestreaming events. The app is also popular among celebrities like Oprah Winfrey, Alicia Keys, and Mathew McConaughey, to name a few, who have used it to promote products.

That’s not all. Many influencers from the USA are making it big in the live commerce space. Popflex, for example, is a US brand that has successfully implemented live commerce. The founder started as a Pilates instructor and eventually went on to create her brand of workout apparel thanks to the popularity her livestream workouts received. All these examples are indicators that there is scope for this model to succeed.

Influencers – The good, the bad and the ugly

It’s time to address the natural question. Why are influencers flocking to this stream of commerce? The answer is simple. ‘It’s all about the money, money, money’. Many people have left their full-time jobs to become influencers because of how lucrative this profession is. In China, there is even a bizarre example of all the employees of a private tutoring company becoming full-time influencers selling agricultural products and books. Though not as popular as in China, even in the US, there are odd examples of attorneys and investment bankers leaving their well-paying jobs to choose this glittery career alternative because it helps them reap at least 5-6 times more than their daily jobs. 

But there is a slightly murky side to this profession. Interacting with thousands of people during a livestream is more challenging than it looks. Customers are free to give their opinions, which on rare occasions might rub the hosts the wrong way. Li Jiaqi recently had an outburst during one of his livestreams, costing him around 30 million followers(ouch!). Viya was recently slapped with a fine of 210 million dollars for tax evasion, acting as a not-so-gentle reminder of the importance of complying with laws. These examples indicate that live commerce is an area that should be tread with caution.

Let’s wrap up today’s livestream

Despite its issues, Live Commerce is still a promising avenue. While drawing parallels between the USA and China, it is essential to remember that their demographic difference is significantly big. There is also a marked difference in the culture and behaviour of the people. These factors are primarily responsible for live commerce being perceived differently in the two places. If the existing roadblocks are addressed, and influencers stay honest and meticulous, this new and unique commerce model will surely succeed in other parts of the world.

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