Is live shopping an opportunity for innovative businesses to engage with customers and make a profit, or as recently quoted in an article in the ABC, is it a new threat to offline markets that will negatively impact economies?

 

The ABC article raises the Indonesian Government's concern with the impact of live shopping on offline markets within the Indonesian economy. A concern so great they are bringing in new trade restrictions to ban live shopping.

What is live shopping?

Live shopping, also known as live-stream shopping or live commerce, is a relatively new trend in e-commerce.

It is e-commerce, coupled with video live-streaming, to create an interactive live shopping experience. It showcases shoppable content and allows merchants to bring the in-store experience to life online with minimal expenditure outlay. Rather than potential customers having to read product descriptions and customer reviews, they can now join a live video broadcast and have real-time conversations about products before buying directly.

 

The live-stream shopping trend started with Alibaba’s Taobao Live in China in May 2016. At this event, the Chinese retail giant linked an online live-stream broadcast with an e-commerce store for Singles’ Day, a major shopping event in China. This trend has grown from 2016 to 2020, where within the first 30 minutes of Alibaba’s Singles’ Day presales campaign on Taobao Live, an impressive $7.5 billion in total transaction value was made.

 

Since it started, live streaming has increased within the Chinese and other Asian markets. In 2022, it was estimated that half a billion Chinese people used live-streaming platforms for shopping, and a Populix survey in May 2023 of Indonesian consumers found that 800 out of 1,000 had tried live-stream shopping, with TikTok Shop being the most popular.

 

While live shopping has not caught on in the same way in Western countries, data shows that the number of consumers in Western societies is increasing. For example, in 2022, 20% of shoppers in the US and 24% of shoppers in Denmark participated in a live-stream event.

 

The lure of live stream shopping.

While the Indonesian government is concerned about the negative impact of live shopping on the offline economy, it is a very attractive trend to businesses and consumers for several reasons.

 

1.  Its ease and returns.

Several factors make live shopping easy and provide significant returns for businesses and brands.

a.  Closest thing to in-person shopping

Live shopping is the closest we’ve been able to get to replicating the in-store shopping experience – providing direct contact for consumers who can ask questions and interact with salespeople. Products are displayed in real-world settings, and people can have friends join in on the same livestream so they can give their input and shop together virtually – providing a more authentic shopping experience.

 

The other important aspect of live shopping is that customers join by choice. They are attending the live-stream shopping event because their interest has been piqued. Again, this is like the in-person shopping experience.

 

b.  Use of technology – particularly with Millennials

With increasing numbers of customers using their cell phones for everything from shopping, paying bills, and taking photos to their banking, this new way of shopping online lends itself well to current consumer behaviours, particularly as more than half of all internet traffic shopping is already done from a mobile device.

 

c.  Its Returns

The ABC article mentioned above gives the example of Indonesian beauty specialist Richard Lee, who made $800,000 in less than three hours selling his skincare products in a live shopping stream in August.

"We aimed for 2 billion [rupiah] in two-and-a-half hours, but we got 8 billion [rupiah] instead!"

 

In another live-streamed shopping event in early September, Dr Lee made 5.5 billion rupiah ($500,000) in one-and-a-half hours selling his skincare products.

 

Given these returns and the minimal outlay for setting up live shopping, it is a very lucrative option for many businesses and brands.

 

2.  Live shopping accelerates conversations between brands and potential customers.

Live commerce is entertaining immersive, and keeps viewers watching longer. It also telescopes customer decision journeys from awareness to purchase. Time-limited tactics such as one-off coupons are also used to generate a sense of urgency. These techniques result in companies reporting conversion rates approaching 30 per cent—up to ten times higher than in conventional e-commerce.

 

3.  Live shopping improves brand appeal and differentiation.

Done well, live commerce increases a brand’s appeal and distinctiveness and draws in additional web traffic. It can strengthen positioning among existing customers and attract new ones, especially young people keen on innovative shopping formats and experiences. Some companies are seeing their share of younger audiences increase by up to 20 per cent.

 

These factors make live shopping attractive to brands and customers seeking a customer experience that approximates in-store shopping from the comfort of their homes.

 

However, despite these benefits and the attraction of live shopping, governments and businesses need to think carefully about the potential negative impacts of live shopping, particularly those negative impacts that may go unnoticed at first.