How live commerce is changing the world of e-commerce, and why everyone will use it

How live commerce is changing the world of e-commerce, and why everyone will use it

JMIND team, creators of Infinite, share their experience.

The JMIND team, part of the TECHIIA holding, has developed its own product Infinite to integrate video shopping. The idea to create a product came after researching and working with Asian markets: they have been having such a thing for a long time. Dmytro Yeremenko, Business Analyst Lead at JMIND, and Mykhailo Marshalok, Business Analyst at Infinite, explain what live commerce is, why it is popular in the East and why the company decided to invest in a new product that is not yet popular in Ukraine.

Live commerce is a new type of online shopping that originated in Asia and became popular in the West during the pandemic. It is an analog of TV shops, but with bigger involvement of viewers, who can now communicate with the seller right during the broadcast.

According to McKinsey & Company, by 2026, one in five online purchases will be made via live commerce.

The new era TV Shop

Such a format allows sellers to demonstrate their products and services during live video broadcasts. Shoppers can chat with sellers in real-time chat, receive personalized product recommendations, and instantly purchase online from the stream.

The results of live commerce speak for themselves: the conversion of sales during such streams is up to 10 times higher than in traditional e-commerce. The number of returned goods is halved, and more than half of the audience joins discussions or reviews of goods.

Eastern roots of live commerce

Although we are accustomed to such tools often coming from the West, this trend is coming from Asia. The first sprouts of live commerce appeared in China in 2014. Then several online trading sites began to use live broadcasts to demonstrate goods.

One of the experimenters was the Internet giant Alibaba. The company tested the new sales format during 11.11 Singles Day. This is China's Singles Day, which has been held annually on November 11 since 2009 and is reminiscent of Western Black Friday with mass sales. The experiment was so successful that in May 2016, Alibaba launched the world's first live commerce marketplace - Taobao Live.

Since then, the format has exploded. According to iMedia, from 2017 to 2020, live sales in China increased 45 times - from $3 to $144 billion. In 2020, the number of streamers on Taobao Live increased by 661% compared to 2019.

Today, the platform hosts dozens and sometimes hundreds of online live broadcasts with sales. During the 2021 Singles Day, Alibaba's total turnover on Tmall and Taobao reached more than 540 billion yuan (about $85 billion). Live commerce, in particular, has become the second most popular sales channel after traditional mobile versions of platforms.

How live commerce is changing the world of e-commerce, and why everyone will use it

Credits: Statista

Live commerce conquers the world

Taobao Live’s success depends significantly on the constant work with influencers (or KOLs - key opinion leaders). Taobao has set up special schools for opinion leaders to teach them how to demonstrate products properly and interact effectively with their audiences. Alumni include the most popular Chinese influencers, Viya Huang with 90 million and Austin Li with 56 million Taobao Live subscribers. Their streaming sales are absolutely crazy. For example, during Singles Day in 2021, Austin Li sold goods worth 1.7 billion yuan (about $268.4 million) in 12 hours of a continuous live broadcast.

McKinsey expects the Chinese live commerce market to reach $423 billion by the end of 2022. Taobao Live's wild results were noticed by neighboring countries, and the new sales format went rapidly through Asia. Today, live commerce is already widely used in India, Thailand, Cambodia, Indonesia, Singapore, Malaysia, and the Philippines.

South Korea has a special status, where Korean actors and K-pop stars often host streams. According to Hootsuite and Semrush, in the fourth quarter of 2021, Korea's largest marketplace Naver, which offers the opportunity to sell goods live on its online platform, ranked 11th in the world in terms of traffic.

With the advent of Covid-19 live commerce started in the West. Such well-known brands as Guess in Italy, Matas in Denmark, Lacoste and Leroy Merlin in France, Tommy Hilfiger, and Avon in the USA were among the pioneers of sales during streams.

An interesting example is Douglas, a German perfume chain. It launched the format in March 2020, and in 2021 attracted 1.2 million viewers to live sales on its website. Almost every second spectator shopped during some of their shows.

Giants Amazon Live, Walmart, and Shopify are testing the new technology and format. Western trading platforms specializing exclusively in live commerce are emerging and attracting venture finance: Whatnot, NTWRK, Popshop Live, Buywith, and Swirl. According to Coresight Research, online live sales in the US might reach $25 billion in 2023.

What makes live commerce so attractive to retail and viewers

The main advantage of live commerce broadcasts is high sales conversion. It is stimulated by a format that gives a unique experience, in contrast to everyday online shopping.

During the live broadcast, the buyer can see the product live from different angles, hear tips on how to use it, ask questions in the chat and get an instant answer. Hosts can be creative with a variety of interactive elements to engage the audience: promo codes with discounts, giveaways, surveys, or time-limited offers. All this increases customer confidence in the brand and online store.

One-on-one communication is most common in physical stores or online platforms. Instead, live commerce allows you to reach more potential buyers through one-to-many interactions - but maintains a personalized approach. Affordable video broadcasts are really attractive for Generation Z, for whom online streams, social media, and interacting with influencers are like water for fish.

Unlike live broadcasts on video streaming platforms and social networks such as YouTube, Twitch, Instagram, or Facebook, live commerce technology allows you to stream videos directly on the site and in a mobile application for e-commerce. Viewers can easily buy on the platform without leaving the stream. All you have to do is click on the product icon and pay.

The seller also gets benefits by having complete control over the process, as well as statistics of views and sales of the store. Live commerce can also be used as a new channel of contact with customers, and with the addition of elements of your own brand identity - as an additional tool for marketing and PR.

Experiments are here

Live commerce gives a lot of space for improvisation. Vendors can experiment with broadcast formats. Experts, well-known influencers, and show business stars can be invited to host such broadcasts to attract a wider audience and increase sales.

How live commerce is changing the world of e-commerce, and why everyone will use it

Credits: Infinite

The range of goods and services for live promotion is huge. In addition to the most common clothing, jewelry, cosmetics, or electronics, live commerce is suitable for the sale of food, furniture, building materials, real estate, cars, and even agricultural machinery.

Authors: Dmytro Yeremenko, Business Analyst Lead at JMIND

Mykhailo Marshalok, Business Analyst at Infinite

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