The Current State of Live Commerce: Is it Ready for Mainstream?
Live commerce, an innovative fusion of social and e-commerce, is steadily gaining ground. However, to truly unlock its potential, businesses must tailor their strategies to match diverse consumer characteristics and preferences.
Back in 2016, Alibaba's Taobao Live marked the birth of live commerce.
As we fast-forward seven years, it's time to delve into the global landscape of live commerce. Our latest research shows that this shopping format, allowing real-time product interaction and purchases during live video events, is quickly becoming a cornerstone of social commerce. This approach leverages social media platforms, influencers, and interactive formats for promoting and selling products and services. Live commerce has already established itself as a mainstream phenomenon in China and is on a robust growth trajectory in markets like the United States and Europe.
This trend underscores live commerce's role in the forthcoming wave of e-commerce. However, our study has also exposed hurdles in fully realizing live commerce's potential. These obstacles range from concerns about stale content and inconvenient show timings to perceptions of value for money and limited product availability. These barriers, along with disparities in market maturity and user profiles, necessitate a tailored approach for each market to fully tap into live commerce's potential. With conversion rates up to ten times higher than traditional e-commerce, increased brand appeal, and heightened differentiation—especially among younger audiences—the integration of live commerce into broader e-commerce strategies promises significant benefits.
Key Findings
China stands as the most advanced live commerce market. 57% of Chinese live-commerce users have engaged with the format for over three years, in contrast to 5-7% in Europe, Latin America, and the United States. A mere 2% of China's surveyed live-commerce users had their first experience in the year leading up to the study, as compared to 78% in the US, 82% in Europe, and 83% in Latin America. China also boasts the highest proportion of frequent live shoppers, with 87% attending live-shopping events at least once a month. In contrast, these figures are 43% for the US, 52% for Europe, and 64% for Latin America.
While groceries top the purchase list for Chinese users in the last 12 months due to the pandemic-driven trend of live-streaming farmers, clothing dominates live-commerce categories in Europe, the US, and Latin America. Insurance and experiences like travel constitute the least-purchased categories in these regions.
Despite China's mature market, live commerce's growth potential remains robust. 72% of Chinese users expressed interest in purchasing more via live commerce, compared to 63% in Latin America, 49% in the US, and 38% in Europe. Additionally, 67% of Chinese users wish to spend more. Outside China, convenience is the prime barrier to adoption in Europe (29%), the US (32%), and Latin America (44%). Value for money concerns and difficulty in making choices are also deterrents in these regions. In China, limited product availability (49%) and better value elsewhere (47%) hinder wider live commerce use.
Content dullness and overt sales pitches raise concerns globally. In the US and Europe, shows are often considered too long.
Demographics of Live Commerce Users
Globally, the average age of frequent live-commerce users hovers between 33 and 36, with 25 to 34-year-olds constituting the largest segment. Market differences exist: the US users span various age brackets, China and Europe skew younger (18-34), while Latin America's users center on those aged 25-44.
Live-commerce users' gender diverges mainly in China (58% female) and the rest (59% male in the US, 58% in Latin America, and 53% in Europe). The income spectrum of frequent users in the US and Europe mostly ranges between $25,000 and $50,000, but in the US, 32% exceed $100,000, compared to only 5% in Europe. Urban users dominate Latin America (86%), while the US and Europe exhibit more even urban-rural distribution.
Motivations and Shopping Destinations
Frequent users in the US (42%) and Europe (38%) view live commerce as a source of entertainment, followed by better prices (35% in the US, 30% in Europe). Contrastingly, fun ranks last in China (6%), where functionality drives live-commerce use.
Notable live shopping platforms include Douyin and Taobao Live in China, and Facebook, Instagram, YouTube, TikTok, and Amazon in the West. Brand-specific websites see little traction in China but more in the West (16% in Latin America, 9% in the US and Europe).
Preferences and Patterns in Live Commerce Usage
Globally, exclusive deals and promotions are the most popular content (64% in Latin America, 56% in China, 47% in the US, 41% in Europe). The second-most popular content type varies geographically.
Shopping frequencies differ across markets. Chinese users engage more frequently but spend less per show. In the US, 40-54% buy during the show, while in Europe it's 28-46% and in Latin America it's 33-58% (21-46% buy on the company's website after the show). Conversion rates hover around 30-36%.
Implications for Companies
China's live commerce thrives due to social media and live-commerce platforms fostering social interaction and status-building. In the US and Europe, the absence of extensive functionality limits live commerce's impact. Strategies should focus on turning websites/apps into live shopping destinations and making content engaging. Latin America requires a nuanced approach.
In conclusion, live commerce's growth trajectory is undeniable.
Tailoring strategies to market peculiarities is vital to harness its potential in the broader e-commerce landscape.
In 2023, TOP Group has joined hands with MOBIDOO to bring the Live Commerce platform to the Vietnamese market, promising to contribute more interesting and effective choices for businesses implementing e-Commerce.
