The popularity of live shopping in China may be unique to
china.
That's putting it bluntly.
In the modern world, where social media platforms are increasingly pulling back on social commerce initiatives due to challenges with user experience and privacy concerns, an old cinematic quote from 1989—"If you build it, they will come"—couldn't be more wrong.
Just a year ago, social media sites hoped
that millennials would be the driving force behind social media's shift from marketing-driven platforms towards shopping destinations and video entertainment. They are shopping, but somehow the dream of having them shop in real time on Facebook never happened.
Facebook parent company Meta shut down its live shopping feature on October 1.
Meta first launched Live Shopping in December 2018, and in
May 2021 launched a Live Shopping Fridays project. Participating brands and retailers will no longer be able to curate product playlists or tag products in their Facebook Live videos, the company said. “As consumers’ viewing behaviors are shifting to short-form video, we are shifting our focus to Reels on Facebook and Instagram, Meta’s short-form video product,” Facebook said in a company blog post.
A number of technology giants
like Meta as well as Amazon started experimenting with live shopping several years ago, encouraged by the format’s success in China, as well as accelerated e-commerce sales during the pandemic.
The news from Meta shows that their investments are less productive than they hoped.
The takeaway here is that the social media platforms in the US are still struggling to make livestreaming a destination
experience for audiences.
But why?
Long Form Shopping Doesn't Work in the USA.: While the U.S. loves scrolling through content, it doesn’t appreciate being marketed to—and that's why social media platforms like TikTok and Reels haven't caught on here as they have in other countries like China.
Many platforms have tried to add commerce to their offerings, but doing so has the potential to weaken users’ engagement with the platform and take away from what originally attracted them in the first place. On platforms such as TikToks and Reels, where videos are designed to be watched in rapid-fire succession, livestreaming shopping content feels forced.
It’s clearer than ever that audiences in the U.S. prefer short-form
content to watch on social media—not just because it's possible for them to do so, but also because they're more likely pay attention!
The USA isn't Like China: While livestreaming seems to be all the rage here in the U.S., it's been making serious bank for years farther east—specifically, China, where live-streaming brought in $300 billion in sales last year alone. Coresight Research estimates
that livestreaming accounted for about only $11 billion in revenues last year within the U.S.
The success in China has created a domino effect across Asia, as TikTok Shop has now launched in Thailand, Malaysia and Vietnam and has been available in Indonesia since last year. It is now a waiting game to see whether the success across Asia will follow in the footsteps of Chinese consumers, with sales soaring, or whether it will follow a similar path to the
UK and fail to take off.
Despite its recent growth, commerce revenues in the USA still lag behind those of the China, which would lead one to believe that Western countries will eventually catch up with their Eastern counterparts. This might not be true. Livestream commerce took off in China, where over the past two decades a mobile-first economy has mixed with a preference of “SuperApps”—applications that manage almost everything
people need to live and work efficiently.
Vincent Yang, the CEO of Firework, recently remarked in a podcast that over 90% of all commerce still happens through retailers’ websites or brands and not social media apps like Facebook.
However, In the U.S., consumers treat platforms in a siloed fashion for singular solutions (and dopamine hits): TikTok is for entertainment, Instagram for
aspiration, Snapchat for ephemerality and Pinterest creatives—but Facebook still reigns supreme as community building platform of choice.
One reason for China’s recent livestreaming boom is the absence of major ecommerce sites. In China, the bulk of all ecommerce sales happen inside social media apps like Douyin or Taobao. That’s because there isn't an Amazon equivalent in China to allow for easier cross-platform
purchase
People Don't Trust Facebook
While many websites offer live commerce, it is important to note that network security remains a hidden threat. Customers may be concerned that online shopping platforms—though they provide the opportunity for users to buy and sell products in real time—may not be able to protect sensitive information such as banking
details. Hackers are making bogus versions of online stores that look real and fool customers into thinking they're legitimate.
People frankly trust brands like Amazon that they know are reliable.
While live shopping displays product qualities in real-time, there are still issues with product quality and deceptive promotion. The content of live commerce—the actual goods being sold on the
site—is critical to customers’ rights and interests.
Social Media is too Cluttered
Social media can generate a lot of traffic, but it doesn't necessarily convert that into sales. Because most social media sites are populated with user-generated content, it is often difficult to find information geared toward a specific audience. Brands are always trying to
get noticed amid a flood of information, but creating content that can stand out among the crowd and boost customer loyalty is difficult.
Due to low shopping intent, there is a small chance that social media traffic will convert into sales. According to most data points…add-to-cart rates across live commerce setups vary between 0.1–0.2%. In comparison, 97% of transactions still occur on the brand's website where high-intent traffic is
present and ready to transact.
Social media might be good for impulse buying. However, it is not the lead anchor of a powerful live commerce growth strategy involving significant CX improvements—that's something else entirely.
It's clear that Live Shopping isn't going to "take off" in the USA, but that doesn't mean that it's gone completely -- it will just probably evolve into something
else.
