Storyboard18 - Live commerce and the rise of shopatainment

In 2020, the first 30 minutes of Alibaba’s Singles’ Day pre-sales campaign on Taobao Live generated an impressive $7.5 billion in total transaction value.

A McKinsey report published in July 2021 predicts that if China’s experience is any guide, its analysis indicates that live commerce-initiated sales could account for as much as 10 to 20 percent of all e-commerce by 2026.

Back home, a recent report published by RedSeer Consulting predicts that the gross merchandise value of live commerce through short videos would touch $5 billion in India by 2025. This growth trend indicates prevalent consumer and market interest in this emerging segment of content-led commerce experiences.

What makes live commerce popular?

Experts believe that most shopping sites on the open web are boring while live shopping is exciting, interesting and it draws users in. It is also immersive and allows you to interact and have a community and build conversations. It answers all product related queries, seeing the product live, and allows purchase.

“People log into a live-stream because they are interested in that content, wish to know more about the product in a fun and engaging manner, and there’s an immediate purchase option,” says Brian Pearlman, head of direct-to-consumer (DTC) business, Firework, a company that helps clients with interactive short form web story video platform to engage and convert their website visitors.

In India, Firework works with clients such as direct-to-consumer (DTC/D2C) brands Bella Vita Organic, Sugar Cosmetics, and The Man Company, ethnic wear brand Fabindia, Big Bazaar, and ITC Group.

Pearlman points out that Gen Z and millennials do not like to read text and most shopping experiences are currently static websites and text heavy. Therefore, these two segments are much more drawn to a product when they can learn about it from a video. “It’s much more powerful from an engagement perspective. Live stream can draw 5X engagement over a static website,” he adds. 

People used to buy products from home shopping networks and that audience is also looking to be engaged but only this time on a digital format, according to Pearlman who says they found that “everything from health and beauty, fashion and retail, food and beverage among others have found success in live shopping.”

The early adopters  

Flipkart is betting big on live commerce. In November 2021, its fashion and lifestyle platform, Myntra, for instance, launched live video streaming and live commerce platform M-Live. It aims to facilitate a real-time engagement between consumers and brands by allowing influencers and experts to host live video sessions of product and styling concepts curated by them, on the Myntra app, enabling viewers to shop instantly.

The company said that it aims to churn out close to 1,000 hours of live video content per month for deeper consumer engagement. It believes social commerce is likely to engage about 50 percent of its monthly active users in the next three to four years.

“Many Indian customers are looking for answers to their fashion questions, they are looking to talk to somebody and also have fun while shopping. Live commerce beautifully complements all this—it allows shopping with trust as there is a host that is answering all questions before making a purchase, engagement tools are being used to make it engaging,” says Achint Setia, VP and business head, social commerce, Myntra.

Flipkart, Meesho and more betting on live commerce

In December, Flipkart partnered with homegrown short video platform, Moj, to enable video and live commerce experiences at scale. Moj claims to have a monthly active user base of over 160 million members, this collaboration also incentivises content creators in the Moj ecosystem by enabling new commerce-led revenue streams.

Ravi Iyer, senior vice president and head, corporate development, Flipkart, says, “The rise of short-form video as a preferred content format across India today has created the right opportunity for us to pursue video and live commerce at scale.”

The strategic collaboration between Flipkart and Moj will play a key role in onboarding the next 200 million e-commerce users while creating “an ecosystem that benefits all stakeholders involved—from brands and sellers to content creators,” says Iyer.

Meta-backed ecommerce company, Meesho, which has grown by leaps in the past five years to almost corner non-metro markets, is also reported to be building a live commerce platform for influencers to boost sales and take on bigger players such as Flipkart, according to reports. Meanwhile, smaller players such as social commerce startup, Stage3 is building to provide social, personalised and an influencer-led commerce experience.

“Anyone coming on our platform to sell something have the option of creating a lot of video-led content that can be tagged back to the product, which upon clicking will take the user to the creator’s storefront where the order can be placed. Live streaming is something that is a part of our roadmap,” says Sanchit Baweja, co-founder, chief business officer and cofounder, Stage3.

Boost to video platforms and influencer marketing

Currently, homegrown short-form video platform, Moj, is busy investing and building technology to help with both active and passive live shopping.

In active live shopping, a creator may be selling products directly through a livestream while in passive live shopping, the platform will identify products that a creator might be wearing in a livestream, matching them with catalogs, and recommend similar-looking products, fetch, and help consumers place the order.

“A platform like Moj gives e-commerce players a large enough audience, a number of super creators with huge following whose words carry a lot of weight. Live commerce also captures the latent buying intent so a lot of impulse buying can be facilitated. It is additive to the overall commerce pie,” Manohar Singh Charan, chief financial officer, ShareChat and Moj, tells Storyboard18.

From a platform’s perspective, live shopping is a lucrative revenue stream as well. While in the US the average revenue per user (ARPUs) per year from advertising alone for big social media platforms is around $100, in markets like India, it usually stands around $5-$7.

“While one can still run profitable business on these numbers, it won’t have the kind of margins that Western social media can manage to have from advertising alone. Live commerce is an additive lever for platforms and helps make more revenue per user. It also allows creators to monetise their following over and above what short-video platform is paying them, which is often an amount that is capped,” Charan shares.

Moj is targeting to generate about $1 billion through live commerce in the next three years. It is aiming to have about 15 to 20 percent of its revenue coming from commerce or live commerce-like revenue models in the next five years.

Live commerce is also expected to boost influencer marketing business by making it more return on investment (RoI)-driven, says Prashant Puri, co-founder and CEO, AdLift, a digital marketing agency. AdLift is currently busy working on various live commerce activities on Instagram and YouTube livestream with its clients.

“Brands will now be able to measure the impact on sales with the growth of live commerce in India where influencers and content creators are often seen talking about the product or service which can be bought in real time,” he adds.

The glitches and challenges

Live commerce in India is fairly new and just now inviting interest from brands. But it has its own set of challenges including a general lack of awareness.

Sunil Nair, CEO, Firework India highlights that the big challenge is to change the perception that livestream doesn’t necessarily mean an Instagram live, and help brands to direct consumers to their own platforms and engage with them.

“With changes in the data policy and first party data not being readily available to brands in a couple of years, brands will have to look at building their own communities. Companies such as Apple and Google are making tracking mechanisms and attribution really challenging and most of the social media platforms are earning revenue through performance marketing where they use social to drive purchases. Therefore, the cost of advertising is going up in social media forcing brands to build their own digital assets,” he explains.

Fuelling the rise of 'shopatainment'

Connie Chan, general partner at a16z, defines Shopatainment as sellers leveraging video over photos to sell products, and where buyers browse seller videos “as if they’re switching TV stations, looking for entertainment.” According to Chan, “Shopatainment is part art, part game show, part theatre, part supply chain management, and part auction house.”

As more people switch to online platforms to meet their shopping needs, live commerce is bound to gain traction and adoption. How exactly this new channel will develop remains to be seen.

But live commerce can make shopping exciting and immersive, allowing users to interact with each other, build a community and have conversations. With further integration of innovations around commerce and social experiences like gamification, it could change shopping online from an activity to a form of entertainment for digital natives and noobs.