Livestream Ecommerce: What We Can Learn from China

Livestream ecommerce is a business model in which retailers, influencers, or celebrities sell products and services via online video streaming where the presenter demonstrates and discusses the offering and answers audience questions in real-time. A livestream session could take place on an ecommerce website or on a social media platform. It can be store or brand-specific; influencers can also host livestream events promoting items from various vendors.

Livestream ecommerce has been surging dramatically in China. According to Forbes, this industry is estimated to earn $60 billion annually. In 2019, about 37% of the online shoppers in China (265 million people) made livestream purchases. On Taobao’s 2020 annual Single-Day Global Shopping Festival (November 11th),livestreams accounted for $6 billion in sales (twice the amount from the prior year).

This trend is spreading beyond China, to the United States and other countries. TikTok teamed up with Walmart and presented its first livestream selling event in December 2020. Ten influencers promoted Walmart products with some try-on demonstrations during the one-hour event. People could browse the list of featured items and even place an order directly within the TikTok app during the event. 

Amazon has also launched its live platform, where influencers promote items and chat with potential customers. And Facebook and Instagram are exploring the integration between ecommerce and social media. For instance, the new Shop feature on Instagram allows users to browse products and place orders directly within Instagram — a form of social commerce. (We compare social commerce and livestream ecommerce later in this article.)

This article analyzes how livestream ecommerce works, as well as what traditional ecommerce sites can learn from it to better serve customers.

Since the livestream ecommerce in the United States is still in a preliminary phase, many of the examples we provide in this article are from our user studies in China.

The Anatomy of a Livestream Session

Basic Livestream Interface Components

To better understand what a livestream-ecommerce session involves, let’s look at its components first, using an example from Amazon Live.

A typical livestream session has the following basic components:

1. The video stream, where the host shows the products, talks about them, and answers questions from the audience.

In the Amazon Live case, the stream occupies the most of the screen space.

2. The list of products being promoted, with the product currently being shown highlighted

This list appears at the bottom of the Amazon video stream.

3. A chat area, where viewers can type questions and comments to interact with the host and other viewers 

The chat area is at the right of the live stream on Amazon Live.

4. A reaction button, that users can use to send reactions, displayed as animated emojis 

The reaction button shows up as a little star icon at the bottom right of the video stream on Amazon.

More Livestream Features in Chinese Apps

Besides these basic features, the livestream interface in Chinese apps often includes additional features such as:

• Picture-in-picture view of the livestream on the current product’s detail page

Customers can go to the product-detail page of a promoted product without missing the livestream demonstrations — they can view the video stream in a picture-in-picture style.

• The ability to watch the presentation of those products they are interested in 

Viewers can watch recorded demonstrations of previously shown products; if the products are on the featured-product list without any demonstrations, they can request the host to show that product. Thus, the livestream has an on-demand component — if viewers are interested in particular products, those get priority in the presentation. 

• Coupon centers

Viewers are prompted to check out available coupons before purchasing. Some coupons are available immediately after users enter the session; others require more engagement, such as watching the session for 10 minutes or sharing the session with 3 friends.  The host can decide details (such as the discount amount) for each coupon.

• Loyalty levels

Each viewer has a loyalty level that represents their past participation in that host’s livestreams. Watching, commenting, and making purchases can increase the level (as a form of gamification). The loyalty level shows next to the username when the viewer makes comments. Some hosts reserve high-value coupons only for loyal viewers.

(You may notice that American livestream sessions can typically be accessed on desktop or mobile devices, but in China, livestream ecommerce is heavily focused on smartphones. The major reason is that most Chinese online shoppers place their orders on their smartphones — according to iresearch.cn, mobile transactions made up about 85% of all online purchases in 2019.)

Key Characteristics of Livestream Ecommerce

Livestream ecommerce has several unique features: 

• Integrated into various platforms: Most livestream sessions don’t rely on new platforms, apps, or services, but take advantage of current popular platforms. 
• Mimics in-store shopping experiences by showing products in context: Customers can see the host showcase how products look like from different angles and even request that a specific model put on a specific outfit.
• Highly interactive, social, and playful with gamification:  Users can interact with the host and other people watching the same session, getting their questions and concerns answered. Reinforcements like coupons and giveaways are used occasionally to increase engagement, and the host may tell jokes. One of our participants saw it as “a new form of entertainment.”
• Often reliant on scarcity and urgency: Users feel that they will lose the deal if they don’t place an order during the livestream, because it offers good discounts and limited stock. 

Integrated into Platforms

Brands and individuals have two ways to promote products through livestreaming: on social media or ecommerce platforms. No matter which platform they use, the livestream channel is naturally integrated into the platform’s basic features.

In traditional ecommerce apps such as Taobao, when users search for an item, the product list will include those featured in livestream sessions, with a special animated icon indicating that an ongoing livestream is available for that product.

On social media platforms such as Douyin (the Chinese name of TikTok), a specialized Livestream channel is featured on the homepage. It works in the same way as other content on  Douyin. Within the Livestream feature, viewers can swipe up to see a different (possibly related) livestream session. (People use the same gesture to browse through short videos: they swipe up to discover a new short video, either posted by someone they’ve followed or a random video recommended by the algorithm.)

During our usability-testing study in China, a user shopped for a cabinet organizer on the Pinduoduo mobile app. She typed her query and got a list of results. Attracted by a livestream session which stood out from other products, she visited its detail view. She tapped the livestream video and watched for half a minute. “The ones with livestreaming can show you the real products, so they are more trustworthy,” she said. “It’ll show you the size, shape, and material. It’s more intuitive than the descriptions.”

Show the Product Dynamically and in Context

Livestream sessions show users what products look like, how to use and style them, and even how they’re made.

The participant who shopped for the cabinet organizer praised the livestream for helping her get an immediate impression of the product’s material and size. She said, “If it says PPC as its material, I may not understand what it is. But during livestreaming, they’ll put the product very close to the camera, so you have a direct view of what it is. Also, 40x50 cm is hard for me to imagine, but when I see the female host holding those organizers, I have a better understanding of their sizes.” 

Livestreaming can introduce a new brand and bolster its credibility. For example, some influencers selling local products may host livestream sessions explaining where the products are from and how the locals consume the products before they even start to sell the products. This approach helps city dwellers build trust with small businesses and products from rural areas.

Highly Interactive and Social 

Livestream sessions are similar to product videos in that they show product details up close. Some retailers may even feature livestream clips as product videos on product-detail pages. However, there is a big difference: livestreams are interactive. As one participant pointed out, “I prefer livestreaming [over product videos] because I can ask questions and get answered immediately.”

The interactivity makes livestreaming a highly efficient way to learn about products and get questions answered at the same time. It's just like walking into a physical store: the host may greet you, ask which products you want to see, and even provide recommendations. Though users can’t talk with the host directly, they can send text messages, which show up in the chat history for everyone in the session. If multiple models show the clothes, users can ask a specific model to wear a particular outfit to mimic their in-store try-on experience.

This aspect of livestream ecommerce is particularly appealing right now, as many countries and regions are still locked down in the COVID-19 pandemic. Even in places where visiting stores is possible, many customers are still hesitant to do it and see it as a health risk. 

Personal, specific questions that may not be anticipated or covered on the product-detail page can get answered quickly. For instance, a participant watched a livestream session featuring hoses for car washing. “My faucet is on the second floor, so I want to make sure that the hose is long enough. The host answered my question quickly, so I placed the order immediately.” 

The answers to one customer may benefit others, as well.  A participant stated, “People may ask questions that I didn’t think of before. Seeing how the host responds to their questions also helps me make purchase decisions.” 

Often, an ad-hoc community arises around a series of livestream sessions:  The followers of the brand or of the influencers become a loyal audience for their livestream events. They help the busy host by typing answers to new users’ questions and sharing their own experience. Their words add to the credibility of the brand or product: they are real users who give their opinions live; they may even have a badge next to their username, indicating how long they’ve been in the session and the volume of purchases that they made. Returning users get rewarded with extra coupons and incentives.

The live comments also enable sellers to gauge which items are popular and replenish supplies.

Create a Sense of Scarcity and Urgency

Some livestream events utilize psychological techniques to create a sense of urgency: they make the customers believe that they will lose the deal if they don’t place the order right away.

• Greater discounts and more gifts: The products may be available all year round, but discounts and gifts are available exclusively for people attending the livestream session. To distinguish the loyal livestream viewers from ordinary users who just run into a discounted product accidentally, some companies may require livestream viewers to enter a unique ‘promo code’ when placing the order to get even more gifts and cashback. The promo code would only be announced randomly during the livestream; thus, it allures users to stay longer. This practice also helps users form the mental modelthat livestreaming equals special discounts and gifts.
• Limited Stock: Discounted products usually have limited stock. The hosts might emphasize, “There’re only 10,000 sets available at this crazy price.” 
• Time-sensitive coupons: Many livestream sessions give out ¥10-20 coupons that expire in a few hours. This tactic pressures users to make quick, impulsive purchases. 
• Incentives and giveaways for users who made a purchase during the livestream:  During the livestream, the session host will sometimes announce surprise giveaways available only to those audience members who have bought something. These bonus prizes make the users even more motivated to commit to a purchase.

Differences Between Livestream Ecommerce and Similar Concepts

Livestream ecommerce bears some resemblance with other, perhaps more common, ways to shop: 

• Social commerce
• TV shopping channels
• Influencer reviews 

Social Commerce vs. Livestream

Social commerce refers to the ability to make a purchase on a social-media platform like Facebook or Instagram, without switching to another dedicated ecommerce channel (such as a website or app). As we discussed earlier, Instagram and Facebook Shop features allow users to place an order directly within the platform.

Livestream ecommerce can be a form of social-media commerce if the livestream is embedded in a social-media platform (like in the above-mentioned example of the Walmart livestream event on TikTok).  The live video format is different from the more common formats used for social ecommerce (that is, picture and text), but it’s still one that can be easily accommodated by a social-media platform. 

Like social commerce, livestream ecommerce supports in-channel purchases (i.e., users can place an order without going to a different site or application) and lowers the interaction cost.  Unlike social commerce, livestreams can create a sense of urgency by offering a time-sensitive discount for the livestream audience. 

However, not all livestream ecommerce is social-media commerce, since, like we saw in the case of Amazon Live, livestreams can be embedded on ecommerce sites and apps. But even on those channels, livestream ecommerce usually includes social features such customer comments or other reactions. And often such livestreams are advertised on social media.

Taobao, an ecommerce app in China, goes further by allowing brands and influencers to post news, like their Taobao livestream schedule, on their own Taobao pages (similar to business pages on Facebook). Users can comment and even suggest products they want for future sessions without leaving the Taobao app. Stores and influencers may give out coupons to followers who leave comments on the post to increase engagement. This practice makes the ecommerce app work as a social media platform because it facilitates communication between businesses and customers. This integration of ecommerce and social media apps hasn't shown up in the US yet; in China, it may be due to a culture of using one app for many different functionalities (like was the case with WeChat).

TV Shopping Channels

Livestream ecommerce may remind us also of TV shopping channels. Before the internet era, TV shopping allowed customers to see products up close and buy items without heading to a store.

Modern TV shopping channels have adopted web-related technologies to improve appeal and ease of buying. For instance, on QVC’s website or mobile app, people can “watch and shop:” live broadcasts of the TV program are available, and viewers can purchase the products presented right away. 

Modern TV shopping channels are similar to livestream ecommerce in the following ways:

• They are a form of entertainment: People shop to kill time. 
• They create a sense of urgency and conformity: Discounts are time-sensitive, products are advertised as in scarce supply.   
• They show the products in a lively way, with additional details and instructions

However, livestream ecommerce isn’t just the online version of TV shopping. Its social features and the diversity of products make it unique and attract a larger audience.

• Livestream ecommerce is more interactive than TV shopping. During a livestream session, people can comment, ask questions, see reviews from returning users in real-time. Gamification design is used to encourage users to stay in the channel longer. In contrast, the interaction between customers and a TV host is minimal and could be irrelevant to the current product: the host may read a tweet occasionally but will not be able to answer customers’ questions immediately. The customer-host interaction is not part of the program.  
• Livestream sessions present a wider variety of products and services. Since the cost of starting a livestream session is meager (theoretically, the only requirement is a phone), individuals and brands can sell any type of product, from books to baby clothes, from fish to furniture. Services such as Botox, massages, and healthy meal plans can also be featured. TV shopping is more cost-intensive, and companies may have to weigh whether they could make profits from promoting certain items. Thus, one may be able to find almost any type of product on a livestream, whereas the selection will be a lot more limited on a shopping channel. (This is the difference between broadcasting which excels at reaching a mass audience with broad tastes and narrowcasting which exploits the Internet’s ability to reach a niche audience with specialized tastes.)
• Livestream sessions are less polished than TV shopping channels and feel more authentic. Livestream hosts’ presentations feel more improvised and ad-hoc, as the hosts may respond to viewers’ requests. Sometimes, the product’s drawbacks would also been shown. As a result, livestreams feel more trustworthy, as the hosts are not just showcasing perfect products.
• Livestream sessions feel intimate and personal because of the high interactivity. For some users, livestream sessions are like a favorite TV show — they return to them again and again. Hosts know their loyal followers, greet them every time, and ask them for suggestions for future events. Users feel they have a say on what it’s shown and build social connections with the hosts. 
• Some celebrities, like actors, actresses, and even CEOs, will promote specific brands, thusincreasing the brand’s reach (through the halo effect) to their fans (usually Millennials or Generation Z), who will be eager watch them live. 
• When the livestream host is less well-known, users feel unsure about the trustworthiness of the promoted products. TV shopping channels are typically owned by big companies, but livestreams can be created by small businesses and random individuals.  Users have to trust the host. One middle-aged study participant pointed out, “Days ago, I bought an air-conditioner during a livestream event presented by the CEO of Gree Electric. I know the quality of products is guaranteed by her. If it was a random influencer that I don’t know and she has no relations with the products, I would be more cautious. There isn’t any third-party guarantee for livestreaming on TikTok, unlike on Taobao.” [The latter has a dedicated customer-service team and there is a money-back guarantee when people pay with AliPay.]

Influencer Reviews vs. Livestream Ecommerce 

Another similar concept, more familiar to Western audiences, is the (video or text-based) review posted by an influencer on social media or blogs. Like livestreams, reviews contain detailed and subjective explanations not included on official websites, offer a fresh third-party perspective for customers, and ultimately promote the brand. They also can generate trust-related concerns: does the influencer favor a particular brand or product because she received an incentive for her recommendation? Customers have to follow their instincts and conduct their own research.

However, in-depth video reviews (such as those produced by professional YouTube tech reviewer Marques Brownlee) differ from livestream ecommerce because they are typically longer, more thorough, and informational.  Additionally, in video reviews, the interaction between the promoter and the audience is unidirectional, and the communication is asynchronous — the influencer may choose to answer certain questions posted as comments by the audience after publishing the content, but they don't have an obligation to do so. Also, since the recommendations don't happen in real-time, any offers or discounts will not be time-sensitive. 

People may refer to these reviews as resources when they research a purchase but won’t necessarily buy right away. Thus, compared with livestreams, it can be more difficult to track back revenue and estimate the ROI of creating such reviews.  

Takeaways

Livestream ecommerce allows brands to showcase their products in detail, answer users’ questions in real-time, maintain user engagement, and encourage impulse purchases. What can designers and service providers learn from this new interaction channel? 

Is Livestream Ecommerce Right for Your Brand?

Follow these steps to determine the priority of this potential channel:

Investigate the need for livestreams and whether your audience is likely to engage with it. Do you have a regular presence or a solid group of followers on social platforms such as TikTok, Facebook, or Instagram? What do your customers think about livestreaming? Do product videos, expert reviews, or webinars affect their purchase decisions? Use these metrics together with behavioral and attitudinal data to estimate the need for livestreams. Experiment with a few pilot livestream events and see how it goes.

Estimate the short- and long-term cost of livestreaming. If you have little presence on social media and most of your sales come from your website, think twice before creating a new channel from scratch. Building a channel is one thing; maintaining a channel in the long run and eventually making the channel profitable is another. Do you need to build a separate team for this channel? Can you alter an existing team's focus to try it out?

Look at your competitors. Have they started to explore this area? How are their experiments going? Keeping an eye on your competitors doesn’t mean that you need to copy their actions directly. Watching users’ reactions to their livestream events can help your decision-making process.

Create a High-Quality Livestream-Ecommerce Experience

If you decide to start a livestream channel, follow these high-level tips to maximize effectiveness.

Interact with your followers and establish social attachment. Livestream ecommerce is a highly interactive channel. A livestream session isn’t only about promoting your products but also about fostering and maintaining long-term relationships with your customers. They can later advocate for your business. (And since building a loyal base takes time, you can’t just experiment with livestreaming for a few weeks and then abandon it.)

Use time-sensitive offers and giveaways to increase engagement. When users come to a new channel, they are uncertain about what to expect. Immediate rewards such as coupons or other time-sensitive offers give them reasons to stay there longer, explore what you have to offer, and even place orders.

Ensure a seamless omnichannel experience. Ease of purchase is crucial for the success of a livestream session. Viewers should be able to effortlessly make purchases directly from the live streams. Linking the products to their product-detail pages and offering one-click payment options can reduce the number of steps at checkout.

Adhere to your brand image but be nimble and accommodate your viewers’ profiles. The livestream audience may be slightly different than the bulk of your audience; make sure you speak the right language as you interact with it.  

Listen to the feedback and iterate. New channels are new adventures for businesses; setbacks and mistakes are inevitable during the preliminary stage. Actively ask for feedback from followers attending the livestream sessions. Learn what they want and iterate on your livestream structure and content.  

Learn from Livestream Ecommerce Without Adopting It

If you decide not to follow the trend and wait to see how it goes, there are still plenty of lessons to be learned from livestreaming, 

Users appreciate livestreaming because products are shown in various angles and usage scenarios. Even traditional ecommerce sites can consider richer ways of presenting products and services. Use videos that include closer and farther looks of the same product. Showcase the products in different contexts or worn by different people.  For example, on Nordstrom’s website, some product-detailed pages have short videos in which sales representatives show the product up close or pinpoint certain details. 

Offer convenient, real-time communication channels, such as live chats and store specialist appointments. During livestream sessions, personalized questions get answered by the host immediately; users don’t need to spend time investigating the specs and sizing information. Live chats help answer immediate personal questions, saving users' time and effort.

Consider your customers’ social needs. The social aspects of livestream sessions manifest in  two different ways: (1) the returning users offer social proof on the quality of the products, and (2) the host interactively answers questions and responds to requests from viewers. Businesses could cater to their customers’ social needs by showing customer reviews and answering the right questions on the product pages. Furthermore, they can investigate the social-media channels frequented by their loyal customers and foster a brand-centered community on those channels.