The Opportunity with Livestreaming Today & Tomorrow

Count me skeptical.

To enjoy a livestream, you need some combination of really wanting to learn about a product, love the featured brand, or really enjoy the influencer/host…otherwise, “mind-numbing” doesn’t even do it justice.   

Yet, livestreaming has become one of the most talked about ways to sell products in 2021.

While many brands have been hesitant to test the format, Amazon launched 1,200 livestreams during Prime Day 2021, Walmart has tested the opportunity in the beauty category via TikTok earlier this year, Home Depot expanded its in-person workshops to a much broader audience, and QVC and HSN are launching their own livestream shopping app in partnership with Comcast.

Image Source: Walmart press release

It wasn’t always so in vogue. This article from early 2019 captures the vibe:

“That Amazon thinks we are all looking for the kind of human connection craved by QVC viewers -- and hopes we'll stumble on that connection on the soft-launched streams of Amazon Live -- should tell you all you need to know about the company and its particularly sad corner of our shared internet realm.
 
But that hasn’t stopped Amazon. As this is being written, there are 14 livestreams occurring on Amazon across pet, apparel, tech, gifts, home, and food categories. Plus, there are hundreds of prior recordings across those categories along with fashion and beauty, books, media, fitness, cooking, gaming, health and wellness, and baby.  
 
 

Image Source: Amazon Live Homepage

Why is everyone talking about it?

3 Primary Factors:

  1. China: Livestreaming is wildly popular in China, accounting for $300 billion in retail sales according to eMarketer. Many expect the US market to see a similar trajectory if retailers/brands/platforms can hit on the right formula.
  2. Social: Social commerce is growing in importance as the path to purchase collapses to a point where discovery and transaction can all happen “on-platform”:
    1. Facebook: Launched live shopping Fridays in May 2021
    2. Instagram: Expanded the number of hosts per livestream in March 2021
    3. Pinterest: Launched its first livestream test in May 2021
  3. Can’t Let Go of the Past: QVC's and HSN's historical success on linear TV suggests some version of this type of selling can resonate with the US consumer.

From eMarketer:

China loves it, but what about the US?
Coresight estimates livestream sales will be sub $10 billion this year in the US but predicts $25 billion by 2023. 

Does $25 billion matter?  Well, no, not really. The retail market in the US did $5.6 trillion last year, meaning this would amount to less than 50 basis points. 

If we look at just eCommerce, $25B is closer to 3% of that total. Still pretty small.

Part of why its small and forecasted to stay fairly small is brands haven’t fully caught on to what works.  Coresight's CEO Deborah Weinswig stated: Brands that we work with in China right now are streaming 16 hours a week at a minimumWe have companies in the U.S. that are like, ‘We’re going to plan for four months for a one-hour shoot'.”

Amazon, Walmart and others see an opportunity and believe that the US market hasn’t fully fleshed out the right format, and brands have not developed a consistent commitment to delivering content, making the future forecasts cited above too conservative. 

In other words, if livestreaming has the potential to be a new, disruptive means towards reaching consumers, the ceiling is going to be higher than $25 billion.

And there are some green shoots emerging. Some influencers that Amazon has contacted to sell on its livestream platform are now making as much money on it as brand sponsorships, their typical bread and butter income.

In addition, some believe that sales isn't the right, or at least the only metric that matters.  Building a connection with a digitally savvy generation and growing awareness are equally important in their minds.

What seems to work the best with livestreams?

  1. Foster Engagement: One of the appeals of watching livestreams is the interaction between host and viewer.  A typical way this is done is through the chat function where the host can answer questions on the fly.
  2. Consistency and a Build Up Needed: For Amazon Live to materially impact sales on, say, Prime Day, sellers would need to have been using it consistently for months so they’d have the status necessary for winning a highly visible location” said Katie Capka, inbound marketing manager at Kaspien.
  3. Events Work Better than Stand-Alone: Ntwrk, a livestream shopping app, is seeing greater demand by creating shopping festivals where celebrities hawk limited-edition items from brands like Adidas and PepsiCo’s Mtn Dew. The festivals run for two days and feature 60 to 100 livestreams. Its prior festivals have generated 10 million views each, with 250,000 buying during the event (2.5% conversion rate).  The analogy for big retail is something like Prime Day would work better than a random shopping day because of the momentum the event features.

So while it’s not rising to the top of marketers’ list of critical activations, the potential of the format is why retailers think its a good area for brands to apply some of that test budget, even with a healthy dose of skepticism. 

Questions to Consider:
  1. What are we doing today from a livestream standpoint? What has worked, what hasn’t?
  2. Are there influencers livestreaming our products without our knowledge? Is there an opportunity to support them?
  3. Are there important influencers in the communities that use are products that could be a potential host?
  4. Are our competitors doing livestream tests? If so, what stands out as a great experience and how can we improve on that? If not, does that create an opportunity to be a first mover and possibly even lock up important influencers with an exclusive?
  5. Could we leverage a livestream test with a retail partner as part of our broader negotiations with them?
  6. Should we livestream on a retail site such as Amazon and/or on a stand-alone livestream app like NTWRKLivescale, or Bambuser?