Live Shopping in the USA and China.
Live shopping has witnessed substantial growth in China, reaching $327 billion in 2021, reflecting 108% growth over the previous year and 220% growth the year before, accounting for around 10% of the eCommerce market in China. However, this impressive growth rate appears to be slowing down, as the total retail market in China is estimated to be around $6.4 trillion, making live shopping only about 5% of the overall market. In comparison, live shopping in the US was about $20 billion in 2022, accounting for about 2% of the eCommerce market and 0.3% of the total retail market, with eCommerce sales just over $1 trillion and total retail sales around $7.1 trillion. The livestream shopping industry is growing, as revenue is expected to reach $31.7 billion by the end of this year in the US. In the US, Meta has shut down live shopping on Instagram, and Facebook. Consumers can still shop in livestreams on Amazon, Youtube, Tiktok, or on some brands’ own websites.
In China, TaoBao dominates with almost 80% of the live shopping market, while Douyin and Kwai hold the remaining share. China’s live shopping success has been impressive, there are concerns about the market’s upper limit. Douyin, the second-largest player in the Chinese market, anticipates that live shopping growth will stagnate in the next two years, potentially capping it at around 20% of eCommerce sales. Additionally, research suggests that consumers have a limited tolerance for commerce in their livestreams; if more than 10% of a user’s feed consists of commerce, time spent on the site and overall retention start to drop. Douyin has already responded to this trend by reducing the percentage of commerce streams in its users’ feeds from 30% to 20%.
Several factors have contributed to live shopping’s success in China:
- Fear of missing out (FOMO): Livestreams often feature limited-time deals and countdowns to create a sense of urgency and encourage consumers to purchase immediately.
- Hype and anticipation: Influencers leverage their social media reach to build anticipation for livestream events, generating excitement and buzz among potential viewers.
- Entertainment value: Chinese livestreams are typically highly produced and engaging, with dual hosts, interactive chat moderation, and a focus on keeping the audience captivated.
- In contrast, live shopping in the US has struggled to replicate this success due to several challenges:
- Lack of charisma and engaging content: Many US livestreams are perceived as dull and lackluster, failing to capture the attention and interest of viewers.
- Technical difficulties: The fragmented app landscape in the US creates friction in the shopping process, as consumers often encounter difficulties when transitioning from a livestream to a purchase.
- High costs and questionable returns: Retailers and brands may need to invest heavily to capture sales through live shopping, and there is a risk of incurring significant discounts or returns to entice consumers to buy.
While live shopping holds potential, replicating China’s success in other markets will require significant effort and investment.
A livestream shopping video from Youtube:
Questions:
Identify the main challenges live shopping faces in the US market, such as technical difficulties and content quality. How can these be addressed to boost growth?
Evaluate the role of influencers in the success of live shopping in China. How does this compare with the influence of content creators in the live shopping market in the USA?
Recommend Five features US companies can integrate in livestream shopping to improve the user experience.