Why live streaming is taking over e-commerce

Most big brands already know that live streaming e-commerce is a huge hit in China, and it is just starting to grow in other parts of the world. But as things are starting to really take shape and form, the question asked is: Why?

How did it come to be that one young man behind a camera, without a fancy studio or prior ‘home shopping network’ experience, is able to generate staggering numbers? A few days ago one Chinese live-streamer generated over 2 billion dollars in product sales during his live-stream. Just to put this into perspective, we know Amazon generated a little over $1 billion per day in 2020, so seeing one individual generate double their entire daily revenue is something marketers can no longer ignore.

E-commerce. Photo: Shutterstock

To understand why live-streaming is taking over e-commerce by storm, let's first understand how this all started.

Live-streaming e-commerce is the act of performing live in front of a camera and streaming it to an audience, in real-time. This means that when you are broadcasted on a livestream platform - shoppers can directly interact with you by asking questions or commenting on what's going on. Unlike old-fashioned pre-recorded videos that were used to promote products and were a stand-alone asset, when you live-stream about a product it's as if you're right there with your buyer. You can answer their burning questions and provide an 'on location' test to the products you highlight as the shopper can't physically try it out.

During Covid, we no longer shopped in stores. Covid completely changed the way people buy, and instead of walking into a shop, we are now virtually walking into an e-commerce platform. Those platforms used to be a great opportunity to place orders for specific items you knew you needed or to shop around while reading reviews and checking out ratings...But it lacked that special interaction we used to have.

And this is the answer to the question, “why live streaming is taking over e-commerce?” In fact, live streaming e-commerce came along and completely disrupted everything. First, we shopped in real stores where there was a salesperson guiding us, then we were pushed to buying online where there was no one around, and now a live streamer allows us to interact with them in real-time.

It is as if you're there - right next to them watching them talk about products you're interested in... And when they show off one special product that sparks your interest you can immediately react and ask questions about it! These talented live streamers have an opportunity to demonstrate products from different angles, highlight specific features and benefits and add so much value to the old and boring online shopping experience we used to have.

When you live-stream about a product you're talking directly to your audience - who can ask questions and comment in real-time. This means that shoppers don't have to wait for someone else's answer or knowledge of the products they are interested in because now they get an 'on location' explanation right away through live product demonstrations and chats.

Another highlight live streaming offers shoppers is the ability to ask specific questions about things that cannot be performed before they receive the final product, for example, the ability to ask a streamer to actually try a shirt on. This makes livestreams highly effective at driving conversion rates higher than brands’ traditional marketing strategies so far.

What do people prefer? Shopping completely alone on a boring online platform, which in the best scenario allows for limited communication through live chat or Q&A style comment sections under each product? Or do they prefer a community of other like-minded shoppers who all come to watch their favorite live-streamer together, discussing each product, sharing their own opinions and thoughts... The answer is obvious.

For quite some time, e-commerce live-streams were just different marketing strategies that big brands implemented to increase their brand awareness or their social media followers. But after the continuous growth we see in Asia - things in the U.S. are starting to change very quickly. During the first day of Alibaba Group’s annual shopping festival, two Chinese star streamers Li Jiaqi and Viya sold 18,905,825,280 yuan of goods in less than a day ($2.96B). Brands, e-commerce platforms, and US-based live-streamers can no longer ignore this number. Despite the fact that many predictions said livestreaming e-commerce is nothing but a passing hype, it is now clear that this 'hype' is definitely not going away soon.

What we expect to see happen is that in the U.S., where social shopping is still a very new phenomenon, live streaming e-commerce will be adopted even faster as giant brands will not want to miss out on such an opportunity.

The live streaming industry in the U.S. is exponentially growing. It’s enough to look at Facebook Live, Amazon Live, or even Twitch for example: this trend towards live streaming sales and product offers isn't going away any time soon, and the reason for this is obvious. Not only is live streaming extremely popular with shoppers, but is also a great way to reach them directly as they already got used to watching live streams on social media platforms. Utilizing this new approach doesn't involve paid advertisements that typically take up much of a brands’ marketing budget.

What does this new phenomenon mean for the future of live streaming e-commerce? Simply put, it means that soon enough live streamers will realize their true potential and will be able to influence platforms much more than brands or big companies could ever dream about doing. It is something that all brands should think about very seriously right now - because live streaming will be creating huge disruptions in every industry on earth.

Ehud Segev is the Founder of Logie, a live-streaming e-commerce platform