In 1986, the entire American public was captivated by a catchy TV commercial. In a short, less-than-a-minute promo, Steve Ballmer, the former CEO of Microsoft, who frequently topped the Forbes rich list, passionately introduced Microsoft’s first graphical user interface operating system, Windows 1.0.
After listing a series of enticing product features, an excited and flushed Ballmer exclaimed, "Not $500! Not $1000! Only $99, and it's yours to take home!"
This highly infectious commercial not only made the public remember Ballmer, who was acting as Microsoft's pitchman at the time, but also became a profound memory of TV shopping for a generation of Americans. As a precursor to live e-commerce, TV shopping originated in the United States, where the media industry was highly developed. Regardless of the region, before the widespread adoption of mobile internet and smartphones, TV shopping was an important channel for remote shopping and laid the foundational genes for live e-commerce deeply in the consumer market.
Although TV shopping originated in the United States, live e-commerce has been slow to take root here. It wasn't until recent years, with the rapid rise of short video platforms, that this business model finally saw its delayed spring.
A Belated Spring
For the American and even the European markets, live e-commerce is a business model "imported" from China.
In 2016, Taobao Live officially launched and made a splash during the Double 11 shopping festival. This marked the rapid growth of live e-commerce in China, with more than 300 live streaming platforms emerging in the country within just one year. In the following years, the industry exploded, with platforms, streamers, MCNs, merchants, and consumers all actively participating, making live streaming both inside and outside the studio incredibly dynamic.
Seeing the fervor across the ocean, e-commerce giant Amazon also launched a live e-commerce program in 2016, even inviting a group of well-known hosts, ABC News reporters, and top-tier actors to promote products online. However, after 15 months of this highly publicized trial, it quietly shut down due to dismal traffic.
(Amazon's live channel in 2016 looks like TV shopping)
Amazon was not alone; between 2016 and 2019, numerous internet platforms, including Facebook, Twitch (Amazon's video streaming platform), and Pinterest, also ventured into live e-commerce, only to fail without exception.
The reasons are numerous. Besides the early, rudimentary product features, the market education for live e-commerce in Europe and America was still in its infancy, lacking both widespread public participation and sufficient growth soil.
One of the key foundations for live e-commerce is the creator economy, which requires both content and influence. Before the rise of live e-commerce in the United States, creators were already able to earn significant income through ad revenue sharing and brand collaborations. Top YouTube creators could earn tens of millions of dollars annually, and leading Instagram influencers could charge tens of thousands of dollars for a single collaboration.
Compared to the lengthy work hours, high demands for sales techniques, and product knowledge required for live selling, ad revenue sharing and brand collaborations offered creators more control over their content. This was particularly appealing to Western influencers, who emphasize individuality and freedom and are keen on building a personal brand.
Moreover, the development of live e-commerce also requires a solid user base. As a new industry born from the mobile internet, the Chinese market has a more evident first-mover advantage. As of 2023, the number of mobile internet users in China is more than four times that of the United States. On major platforms like Taobao and Douyin, millions of people can be seen shopping live every night.
In addition to the creator economy and user base, a well-developed e-commerce ecosystem is another crucial engine driving the growth of live selling.
China's leading manufacturing sector not only supplies e-commerce with numerous high-quality and affordable products but has also simultaneously nurtured a relatively mature logistics supply chain. With years of competition among delivery companies like SF Express and JD Logistics, next-day and even same-day delivery have become commonplace in China, greatly enhancing the consumer experience in live shopping.
Due to the absence of these essential conditions, live e-commerce in Europe and America has been slow to take off.
Just as the industry thought this business model wouldn't work in the U.S., the sudden rise of short video platforms accelerated the adoption of content commerce among the general consumer population. On this basis, the global pandemic, which limited people's movements and shifted shopping from offline to online, acted as a catalyst for live e-commerce.
Players who had previously retreated came back to the field with renewed vigor. From social media platforms like Instagram and Facebook to traditional e-commerce players like Amazon and Shopify, everyone began placing live shopping prominently on their platforms.
Among them, a new player, TikTok, teamed up with Walmart at the end of 2020 to create a live shopping session that attracted seven times the expected audience.
The Rise of TikTok Shop
In 2021, TikTok's e-commerce platform, TikTok Shop, officially launched in Indonesia and the UK. In September 2023, TikTok Shop announced its full launch in the United States, with 150,000 creators and merchants attempting content-driven sales during that year's Black Friday, rapidly establishing a foothold for live e-commerce in the U.S.
Every emerging business model is a wealth-creating wave that rewards the brave and diligent. Currently, those standing at the forefront of live e-commerce in Europe and America are also a group of amateur streamers who have been venturing in the beauty industry for years.
Stormi Steele is a young woman from a small town in Mississippi, USA, who founded the beauty brand Canvas Beauty in 2019. Being internet-savvy, she quickly entered the live e-commerce space as soon as it emerged. First, she used short videos to turn a body lotion into a viral product with millions of views and likes, and then she used it to drive traffic to her brand's live stream, making it one of the top sellers within a year.
(Stormi Steele, founder of Canvas Beauty)
On June 8 this year, during a live selling session, this young woman from a small town achieved over a million dollars in sales within just a few hours, breaking the then-record. A month later, another Spanish-speaking American streamer, Mandys Pena, increased this record by 20%.
Similarly, British beauty brand founder Mitchell Halliday collaborated with several creators for a grand live streaming event at the end of June.
The well-designed interactive segments in the live stream and the frequent exclusive discounts on popular products made even the usually rational and conservative British netizens unable to resist shopping, with items being sold almost every second.
This highly engaging live stream led to a total sales revenue of over a million dollars for the brand Made By Mitchell that day, with live stream sales alone reaching 830,000 dollars, setting a new record in the history of live e-commerce in the UK.
(MMMMitchell aka Mitchell Halliday broke his records with his sales for Made by Mitchell)
The rise of Stormi Steele and Mitchell Halliday is not a rare case. Alongside million-dollar live streaming rooms and daily sales records, a large number of mid-tier and micro influencers and brands are also emerging in Europe and America.
Behind the strong growth momentum of live e-commerce is its long-awaited and powerful eruption in the Western market.
An Unplanned Migration
The rapid growth of China's live e-commerce, celebrated by the whole population, provides the world with practical experience: on the surface, it seems that simply having a streamer liven up the atmosphere and shout a few slogans like "Buy, buy, buy!" and "Family, hurry up and hop on board!" easily creates sales miracles. In reality, it involves the collective participation of the entire e-commerce supply chain.
Similarly, what fundamentally drives the flourishing of live e-commerce in Europe and America is an unplanned migration involving platforms, creators, users, and brands.
Content has always been an important channel for consumer consumption. From TV shopping before the widespread use of the internet, to mid-length video ads and product placements in the PC era, to short videos and live selling in the mobile era. Wherever the traffic is, that is where the main battlefield for consumer consumption lies.
More importantly, in different content eras, those who first migrate to new platforms are often the young users with the most consumption potential. For example, according to data from Search Logistics, nearly 45% of TikTok users belong to Generation Z, meaning there are 75 million potential consumers, including Gen Z and their parents.
As younger generations become heavy users of short video platforms, the main stage of the creator economy also shifts.
At the end of 2023, a wave of OG creators began announcing "Quitting YouTube," and one after another, they posted their "final" videos to say goodbye to their fans.
(Creators are quitting YouTube)
This is not just an ordinary protest; in the videos, creators with millions or even tens of millions of followers emotionally recall their journey from obscurity to stardom. While they express gratitude for this extraordinary experience, they also declare that it's time to say goodbye. Nearly all the creators quitting YouTube mentioned the challenges of mid-length videos.
On the one hand, creators are keenly aware of the significant decline in traffic, with Joeman, who has 2.58 million followers, mentioning that his channel's views have dropped by 40%-60%. The sharp decline in traffic directly impacts their earnings; on the other hand, creators feel that the long-established content format limits their creative inspiration and fresh experiences, prompting them to seek out new content creation models.
As mid-length video platforms lose their core creators, 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 experimenting with more flexible and innovative content, creators also have more diverse monetization channels.
Take the "affiliate marketing feature" launched by TikTok Shop as an example: Creators can promote brand products through live streaming and short videos. When viewers click on the link or tag to make a purchase, the creator receives a corresponding commission. At the same time, creators can still attract brand deals and sponsorships through content placement.
Comparing the monetization logic of mid-to-long videos with short videos, it’s clear that the former relies on brand advertising powered by the creator’s influence, where the Matthew effect is prominent for creators with varying fan levels. In contrast, the latter adds e-commerce live streaming as a monetization method, providing mid-tier influencers the opportunity to surpass others in earnings.
Her Campus Media, a digital media platform, recently discovered that TikTok is gradually becoming a dominant platform in the search field. 74% of Gen Z users use TikTok to search for products, and more than half prefer it over traditional search engines like Google.
Ultimately, as a product of the mobile internet era, short video and live streaming platforms have developed and utilized traffic monetization to the extreme.
When the content consumption platforms for young users and the monetization channels for creators change simultaneously, brands with sharp business acumen are also making their choices. After all, compared to traditional pre-roll ads and soft placements, where conversion effects are difficult to track, the high return on investment in live-streaming e-commerce is much more enticing.
From downstream to upstream, from content to brand
In the e-commerce industry centered around consumption, downstream demand always dictates upstream strategy. This is why DTC (Direct-to-Consumer) is seen as critical by both international chain brands and small startups.
However, for brands, DTC was long seen as an abstract concept that was hard to grasp. In the TV era, brands fought tooth and nail to gain presence during prime-time shows. In the mid-to-long video era, ad-free memberships restricted brand placement strategies.
Essentially, a brand’s core demand is nothing more than closer and broader consumer reach. But these past DTC strategies, though seemingly advanced, often missed the mark. Even DTC model student Lululemon only truly succeeded through an offline "community + KOL" model.
What truly brought digital DTC to life was the short video and live streaming platforms.
For international chain brands, short video and live streaming platforms made "DTC strategy starting from product development" a reality. From early audience observation and market research, to technology dissemination during development, to influencer reviews and live sales after launch, brands can interact with consumers in real-time using platform features and tools.
In contrast, small brands/startups with limited initial capital find short video and live streaming platforms like TikTok to be the ideal choice for 'direct-to-consumer' strategies that punch above their weight.
For example, the Canvas Beauty brand founded by Stormi Steele was once on the verge of bankruptcy due to a lack of operational experience and the impact of the pandemic. However, leveraging social media, especially TikTok live streaming, Stormi Steele used her content creation skills to create viral short videos that attracted traffic and retained users through tactics like gift-giving, successfully pulling the brand back from the brink and making it a highly regarded beauty startup.
(Stormi Steele was interviewed by CNBC after her breaking national live sales records)
There are many other small brands like Canvas Beauty that have benefited from short video and live streaming platforms.
According to an Oxford Economics report, TikTok has a large number of enterprises and active users in the United States, with nearly 40% of small businesses stating that TikTok is crucial to their survival. Statistics show that TikTok has helped U.S. small businesses create 220,000 jobs. TikTok's recent SOAR program offers even more opportunities for small businesses.
The continuous influx of brands into live-streaming sessions has fueled the rapid rise of live-streaming e-commerce in the U.S.
Data from eMarketer shows that in 2022, the penetration rate of live-streaming e-commerce in the U.S. was 3.1%. In the second quarter of 2023, U.S. e-commerce sales reached $277.6 billion, a year-over-year increase of 7.5%, with e-commerce penetration continuing to climb to 15.40%. Market research firm Coresight Research predicts that by 2026, the U.S. live-streaming e-commerce market will grow to $68 billion.
This impressive growth rate is driven by the simultaneous competition of social media and traditional e-commerce platforms in the live-streaming e-commerce arena. These two platforms, which have been side by side in the internet era for several years, have distinct yet complementary strengths in live-streaming e-commerce.
Social media platforms, while holding the advantage at traffic entry points, lack experience in managing product inventory, controlling product quality, and establishing supply chain logistics systems, making it difficult to sustain stable business traffic after the live-streaming e-commerce boom.
On the other hand, traditional e-commerce platforms are more adept at handling the entire transaction chain but are limited by a rigid shelf display system that has been in place for years, lacking fresh and interesting content formats and an interactive community ecosystem, leading to a situation where 'even good wine fears no one will find it.'
For live-streaming e-commerce in the U.S. to maintain its momentum, both social media and traditional e-commerce platforms need to continually address their weaknesses.
As a DTC representative of the mobile internet era, TikTok live-streaming e-commerce may offer some reference value through its innovative sales channels from downstream to upstream and its model of converting content into brand power.
Conclusion
The traffic on the PC internet once dried up. The advent and popularity of smartphones ushered in the mobile era, giving the entire internet the confidence to declare that "every field is worth redoing." This is the 'iPhone moment' as described by Jensen Huang, a classic example of disruptive innovation.
(The iPhone Moment of AI has started, says Nvidia CEO, Jensen Huang)
In the mobile internet era, live-streaming e-commerce, born out of the extreme development of e-commerce models, may not have the power to reshape entire industries, but for those latecomers looking to compete, live-streaming e-commerce is a low-cost, high-efficiency lever.
As the most mature and purchasing-powerful market, e-commerce competition in Europe and America has entered a white-hot phase. Amidst the fierce price wars of traditional shelf e-commerce, live-streaming e-commerce offers brands a chance to connect directly with consumers and balance price and volume through their capabilities. It also provides countless mid-tier creators a chance to overtake competitors.
It’s undeniable that live-streaming e-commerce is still in its early stages overseas and requires significant market education and user accumulation, but this also represents a golden period for platforms to capture user mindshare. A blue ocean battle is brewing in European and American live-streaming e-commerce markets.
For companies involved, despite the vast market potential, it is essential to remember the most basic principles of business. As Mike George, President of the National Retail Federation, puts it:
"The fundamental needs that have always defined retail have not changed. Just as maintaining customer relationships one-on-one was crucial in the past in physical malls, in the virtual world, it still revolves around the power of human connection and the joy of discovery—stepping into your favorite store, having interesting conversations, learning the stories behind products, and finding inspiration."
If you like this article and want to show your support to Omi Live, join our waitlist today! Earliest notifications of all our events and exclusive offers!
コメント