2024-07-24
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In 1986, the American people were brainwashed by a magical TV commercial. In the less than one-minute promotional video, former Microsoft CEO Ballmer, who has long been ranked high on the Forbes rich list, introduced Microsoft's first graphical user interface operating system Windows 1.0 with great emotion.
After throwing out a series of attractive product advantages, Ballmer, with a red face, danced and shouted excitedly: "I don't want $500! I don't want $1,000! I can take it home for $99!"
This highly infectious advertisement not only made the public remember Ballmer, who was a Microsoft promoter at the time, but also became a profound memory of TV shopping for a generation of Americans. Even Chinese netizens who are accustomed to live streaming e-commerce 40 years later could not help but sigh after watching it, saying it was "the originator of live streaming hosts who sell goods."
As the predecessor of live e-commerce, TV shopping was first born in the United States, where the media industry is well developed. It was not until 1992 that the Chinese public was exposed to TV shopping through Beijing TV’s “TV Mall”, which opened an era of celebrity anchors. Many people still remember Mr. Loustendon, the “Eight Hearts and Eight Arrows”, and Zhou Zhenglong, the “Tiger-Shooting Farmer”.
Whether in Europe and the United States or in the domestic market, before the popularization of mobile Internet and smart phones, TV shopping has always been an important channel for remote shopping, and it is also the gene of live e-commerce that is deeply rooted in the mass consumer end.
Although TV shopping originated in the United States, the seeds of live e-commerce have been slow to take root in Western countries. It was not until recent years, when short video platforms have risen strongly overseas, that this business model finally saw its long-awaited spring.
For the American and even European markets, live streaming e-commerce is a business model "imported" from China.
In 2016, Taobao Live was officially launched and made its mark during the Double 11 shopping festival. This marked the beginning of the rapid growth of China’s live e-commerce industry, with more than 300 live streaming platforms emerging in China in just one year[1]. The following years saw a major industry explosion, with platforms, anchors, MCNs, merchants, and consumers all appearing on the scene, creating an exciting scene both inside and outside the live streaming studio.
Seeing the popularity of live streaming e-commerce on the other side of the ocean, e-commerce giant Amazon also launched a live streaming e-commerce program in 2016, and invited a number of well-known hosts, ABC news reporters and top actors to promote products online. However, this high-profile trial of live streaming e-commerce in the United States lasted for 15 months before it was quietly shut down due to low traffic[2].
It's not just Amazon. Between 2016 and 2019, a number of Internet platforms including Facebook, Twitch (Amazon's live video streaming platform), and Pinterest have launched live streaming shopping businesses, but all have failed without exception.
The reason for this is that, in addition to the simple functions of early products, the market education level of live e-commerce in Europe and the United States is still in the preschool stage. It has neither formed a wave of national participation nor lacks sufficient soil for growth.
One of the important foundations of live e-commerce is the creator economy, which requires the dual drive of content and influence. Before the rise of live e-commerce in the United States, creators were able to earn considerable income through advertising and brand cooperation. The annual monetization income of YouTube's top bloggers can reach tens of millions of dollars, and the single cooperation quotation of top Instagram influencers can be as high as hundreds of thousands of dollars.
Compared with the work intensity of live streaming that can easily last for more than ten hours and the high requirements on sales skills and product knowledge, advertising revenue sharing and brand cooperation do allow creators to have more initiative in content. The latter is more attractive to European and American experts who advocate personal freedom and focus on establishing their "personality".
Secondly, the development of live streaming e-commerce requires a solid user base. As a new business model spawned by the mobile Internet, the first-mover advantage of the Chinese market is more obvious. By 2023, the number of mobile Internet users in China will be more than four times that of the United States[3]. On leading platforms such as Taobao and Douyin, you can see the spectacular scene of tens of millions of people shopping in the live streaming room at the same time every night.
In addition to the creator economy and user base, a complete e-commerce ecosystem is also an important engine driving the development of live streaming e-commerce.
China's leading manufacturing industry not only provides e-commerce with a large number of high-quality and low-cost products, but also gives birth to a relatively mature logistics supply chain. After years of competition among express delivery companies such as SF Express, JD Logistics and STO Express, next-day delivery and hourly delivery are now common in China, which has greatly improved consumers' live shopping experience.
It is precisely because of the lack of these necessary conditions that live streaming e-commerce in Europe and the United States has been slow to usher in the spring it deserves.
Just when the industry thought that this business model would not work in the United States, the rise of short video platforms accelerated the universality of content e-commerce for mass consumer groups. On this basis, the global epidemic has restricted people's travel and shopping has shifted from offline to online on a large scale, giving live e-commerce, which is real-time and interactive, a dose of "ripening medicine".
Players who had previously stopped their efforts are now back in action. From social media platforms such as Instagram and Facebook to traditional e-commerce players such as Amazon and Shopify, live shopping has been placed prominently on their platforms.
Among them, the shopping live broadcast room jointly created by new player TikTok and Walmart at the end of 2020 attracted 7 times the number of viewers expected by both parties.
In 2021, TikTok Shop, an e-commerce platform based on TikTok, was officially launched in Indonesia and the UK. In September 2023, TikTok Shop announced its full launch in the United States. During the Black Friday of that year, 150,000 creators and merchants tried to sell goods through content, making live e-commerce take root in the United States quickly.
Every emerging business model is a wave of wealth creation that rewards the brave and the hardworking. At present, the first batch of live broadcast e-commerce in Europe and the United States are also a group of amateur anchors who have been engaged in the beauty industry for many years.
Stormi Steele is a small-town girl from Mississippi, USA. She founded the beauty brand Canvas Beauty in 2019. Familiar with the Internet, she quickly entered the live e-commerce market as soon as it emerged. First, she used short videos to turn a body lotion into a hot product with millions of views and likes. Then she used it to attract traffic to the brand's live broadcast room, and it ranked among the top sales in less than a year.
In a live broadcast on June 8 this year, this small town girl achieved sales of over one million US dollars in just a few hours, breaking the historical record at the time. A month later, another Spanish-speaking anchor in the United States, Mandys Pena, directly improved this record by 20%.
Coincidentally, Mitchell Halliday, founder of a British beauty brand, teamed up with several creators to hold a grand live broadcast at the end of June.
The carefully designed interactive segments in the live broadcast room and the frequent exclusive discounts on popular products made the British netizens, who have always been rational and conservative, unable to suppress their desire to buy, and items were sold almost every second.
The explosive atmosphere of this live broadcast made the total sales of the brand Made By Mitchell exceed one million US dollars that day, of which the sales in the live broadcast room alone reached 830,000 US dollars, which also set a new record in the history of live e-commerce in the UK.
Stormi Steele and Mitchell Halliday are not the only ones to become popular. Along with the emergence of million-dollar live broadcast rooms and single-day sales, there are also many mid-level live broadcasters and brands in Europe and the United States that bring goods.
Behind the strong growth momentum of live streaming e-commerce is its long-accumulated full-scale outbreak in the European and American markets.
China's live-streaming e-commerce, which has grown rapidly amid the cheers of the whole nation, has told the world with its simple experience: On the surface, it only takes the anchor to liven up the scene with vivid descriptions and shout a few words like "buy, buy, buy" and "family members, hurry up and get on the bus" to easily create a sales miracle. In fact, it requires the collective participation of the upstream and downstream of e-commerce.
Similarly, what fundamentally contributed to the booming live-streaming e-commerce in Europe and the United States was an uncoordinated large-scale migration of platforms, creators, users, and brands.
The first are general users whose consumption habits change as content platforms change.
Content has always been one of the important channels for mass consumption. From TV shopping before the popularization of the Internet, to the patch ads and soft implants in long videos in the PC era, to short videos and live streaming in the mobile era, wherever the traffic is, there is the main battlefield for mass consumption.
More importantly, those who first migrate to new platforms in different content eras are mostly young users with the greatest consumption potential. Taking short video platforms as an example, Search Logistics data shows that nearly 45% of TikTok users belong to Generation Z, which means there are 75 million potential consumers including Generation Z and their parents[4]. Relevant data shows that the repurchase rate of this group of users in TikTok Shop exceeds 27%.
When the younger generation became heavy users of short video platforms, the main battlefield of the creator economy also shifted.
Starting from the end of 2023, a group of OG (veteran)-level creators announced that they would "quit YouTube" and released "end-of-show" videos bidding farewell to their fans.
This is not an ordinary strike movement. In the video, creators with millions or even tens of millions of fans emotionally recalled their wonderful journey from obscurity to the spotlight. They said that although they are grateful for this extraordinary life experience, it is time to say goodbye.
Creators who choose to leave YouTube
Almost all creators who chose to quit YouTube mentioned the dilemma of medium and long videos.
On the one hand, creators clearly feel that traffic is declining significantly. Joeman, who has 2.58 million followers, mentioned that the number of views on his channel has dropped by 40%-60%[5]. The rapid decline in traffic has directly affected the income of creation. On the other hand, creators believe that the long-term solidified content model has made them lose creative inspiration and fresh experience, and hope to try a new creation model.
As medium and long video platforms lose core productivity, a large number of content creators are flocking to short video platforms.
According to Forbes, many high-quality creators joined short video platforms in 2023. While trying more flexible and innovative content, creators also have more diverse monetization channels[7].
Take the "affiliate marketing function" launched by TikTok Shop as an example. Creators can promote brand products through live broadcasts and short videos. When viewers click on links or tags to make purchases, creators can get a corresponding commission. At the same time, creators can still attract brand transactions and sponsorships through content implantation.
Comparing the monetization logic of medium-length and long videos with that of short videos, it is not difficult to find that the former is a brand advertisement relying on the influence of the creator, and the Matthew effect of the income of creators with different fan bases is very obvious. On the basis of the former, the latter has added the monetization channels of performance advertising, including live e-commerce, giving mid-level influencers the possibility of overtaking in terms of income.
Digital media platform Her Campus Media recently found that TikTok is gradually becoming the dominant platform in the search field. 74% of Generation Z users use TikTok to search for products; more than half of them prefer it to traditional search engines such as Google.
Ultimately, as a product of the mobile Internet era, short videos and live streaming platforms have exploited the efficiency of traffic monetization to the extreme and thoroughly.
When young users’ content consumption platforms and creators’ content monetization channels changed at the same time, brands with a keen sense of business also voted with their feet. After all, compared with traditional patch ads and soft placements whose conversion effects are difficult to trace, the high input-output ratio of live e-commerce is more attractive.
In the consumer-centric e-commerce industry, downstream demand always determines upstream strategy. This is the fundamental reason why DTC (direct to consumer) is regarded as the key by international chain brands and small and medium-sized start-up brands.
However, for brand owners, DTC has been an invisible and intangible mystery for quite a long time.
In the TV era, brands are trying their best to make their presence felt in prime-time programs. In the era of medium and long videos, the ad-free membership program has severely restricted the brand's product placement strategy, and they can only learn from the flexible cold medicine and yogurt manufacturers and infiltrate into the plot gaps.
Ultimately, the core demand of brands is nothing more than getting closer and more extensive contact with consumers. However, these past DTC strategies seem to keep up with the times, but most of them have not hit the mark. Even Lululemon, a model DTC student, has only really tasted some sweetness through the offline "community + KOL" model.
What really makes digital DTC a success is the short video live streaming platform.
For international chain brands, short video live streaming platforms have made it possible for the "DTC strategy to start from the product development stage." From audience observation and market research in the early stages, to technology communication during R&D, to expert evaluation and live streaming sales after the launch, brands can use platform functions and tools to interact with consumers in real time.
In contrast, small and medium-sized brands have limited funds at the beginning of their business, and short video and live streaming platforms like TikTok have become an ideal choice for them to "face consumers directly" and make a small investment for big gains.
For example, the Canvas Beauty brand founded by Stormi Steele was on the verge of bankruptcy due to its lack of operating experience and the impact of the epidemic. However, Stormi Steele used social media, especially TikTok's live broadcast, to play to its content creation advantages, created a sensation through short videos to attract traffic, and then retained users by giving gifts, etc., successfully pulling the brand back from the brink of bankruptcy, making it a highly watched start-up beauty brand.
There are many small and medium-sized brands like Canvas Beauty that benefit from short video live streaming platforms.
According to a report by Oxford Economics, TikTok has a huge number of businesses and active users in the United States, and nearly 40% of small and medium-sized enterprises say that TikTok is essential to their survival. According to statistics, TikTok has created 220,000 jobs in small and medium-sized enterprises in the United States[6]. The SOAR plan recently launched by TikTok e-commerce provides more possibilities for small and medium-sized enterprises.
The continuous influx of brands into the live broadcast rooms has added fuel to the rapid rise of live broadcast e-commerce in the United States.
According to eMarketer data, the penetration rate of live e-commerce in the United States was 3.1% in 2022. In the second quarter of 2023, US e-commerce sales reached US$277.6 billion, a year-on-year increase of 7.5%, and the e-commerce penetration rate continued to rise, reaching 15.40%. Market research firm Coresight Research predicts that by 2026, the size of the live e-commerce market in the United States will grow to US$68 billion.
Such a remarkable growth rate is driven by social media and traditional e-commerce, which competed in the live e-commerce track at the same time. These two platforms, which have been running side by side for several years in the Internet era, have very different but complementary characteristics in live streaming.
Although social media platforms have the advantage of being a traffic entrance, they lack experience in managing product inventory, controlling product quality, and establishing supply chain logistics systems. It is difficult for them to continue to undertake and maintain stable business traffic after the explosive growth of live e-commerce.
Although traditional e-commerce platforms are more adept at the entire chain of commodity transactions, they are confined to the shelf presentation system that has been solidified for many years. They lack fresh and interesting content formats and a highly interactive community ecosystem, which has put the live streaming e-commerce business into the dilemma of "even good wine needs no bush".
If live streaming e-commerce in the United States wants to achieve longer-lasting popularity, both social media platforms and traditional e-commerce platforms must continue to make up for their shortcomings.
As a representative of DTC in the mobile Internet era, TikTok's live e-commerce sales channel innovation from downstream to upstream, as well as its model innovation of converting content into brand power, may have certain reference value.
The PC Internet traffic once dried up. The advent and popularization of smartphones opened the chapter of the mobile era, giving the entire Internet the confidence to shout "all fields are worth redoing." This is what Huang Renxun calls the "iPhone moment" and a typical example of disruptive innovation.
In the era of mobile Internet, live streaming sales, which was spawned by the development of the e-commerce model to its extreme, may not have the power to reshape the entire industry, but for latecomers who want to participate in the competition, live streaming e-commerce is a low-cost and high-efficiency lever.
As the most mature market with the strongest purchasing power, the competition in European and American e-commerce has entered a white-hot stage. As the price war among traditional shelf e-commerce companies is fierce, live streaming has given brands an opportunity to face consumers directly and find a balance between price and sales volume. It has also given countless mid-level creators a revenue-generating channel to overtake others.
It is undeniable that live streaming e-commerce is still in its early stages of development overseas and requires a lot of market education and user accumulation, but this is also a golden period for major platforms to seize the minds of users. Overseas live streaming e-commerce is ushering in a blue ocean war.
For companies involved in this, despite the huge market potential, they still need to keep in mind the most simple business practices. As Mike George, chairman of the National Retail Federation, said:
“The fundamental needs that have always defined retail have not changed, just like the one-on-one customer relationships in offline malls in the past. Even in the virtual world, it is still about the power of human connection and the joy of discovery - walking into your favorite store, having interesting conversations, learning the stories behind the products, and getting inspired.”
Author: Shen Danyang
Editor: Li Motian
Visual design: Shu Rui
Editor-in-charge: Li Motian
Cover image from ShotDeck
[1] 2016-2023, A brief history of the development of live streaming e-commerce, E-commerce News
[2] The Rise Of Live Video Shopping And How E-Commerce Businesses Can Get Started，Forbes
[3] Public data on the Internet
[4] TikTok Shop Is Attracting Millions Of Consumers. 7 Facts About Who They Are, Forbes
[5] Joeman video, YouTube
[6] SMB's use of TikTok Contributed $24.2 Billion to U.S. Economy in 2023, Oxford Economics Report
[7] Why Content Creators Are Flocking To TikTok Shop, Forbes
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