The global ecommerce boom of 2020 has completely changed our industry. In the U.S., all of the total retail sales growth for the year came via ecommerce, with consumers spending $861.12 billion online. Because such growth is typically expected to take two to three years and follows a gradual upgrade in both consumer demand and retailer capabilities, the breathless pace of change—prompted by the pandemic—has sparked much creative thinking.
To call last year challenging for retail would be an understatement. As circumstances changed overnight almost exactly a year ago, retailers were consumed by changing government directives and prioritizing health and safety—all in the face of complete uncertainty about the future. They dealt with all of this while solving burgeoning ecommerce logistics and finding ways to ship every type of product to consumers at their homes. With ecommerce growth expected to be sticky even after the world emerges from the pandemic, the next step in its evolution is making it easier for consumers to find and purchase the right product. Consumers are increasingly demanding more convenient and more personalized access to product and a completely seamless experience, irrespective of where and how they make the purchase. And while consumers were forgiving of inventory issues, shipping delays, and other missteps in 2020, they will be much less understanding post-crisis.
The need for retailers to step up in this area has become even more of an imperative in times of severe competition and low margins. Product discovery is especially hard in ecommerce, where touchpoints with the customer can often be impersonal and the concept of “endless aisle” can be overwhelming for the consumer.
One market that is much more evolved when it comes to ecommerce is China, where online sales penetration had been nearly twice than in the U.S. even before COVID-19 hit (Figure 1). While there are several lessons to be learned from the Chinese ecommerce evolution, one problem it tackles particularly well is providing consumers access to relevant product and searchability.
A large contributor to this is the hyper successful phenomenon of shoppable livestreams, which solve the problems of relevance, ease of access, and the ability to get an authentic review of and a better look and feel for the product in one fell swoop. It is not unheard of for popular livestreams in China to clock millions of dollars of sales in one session. While the trend had been on an upswing in the country for a couple of years, it became a lifeline during the pandemic as both brands and consumers flocked to it in the absence of in-person shopping. The country’s livestream selling industry is currently estimated at $66 billion, and the number of consumers watching livestreams grew 30 percent just in the nine months between March 2019 and June 2020.
In the current model in China, livestreams are a mix of entertainment and retail. They are generally hosted by influencers or employees who have expertise over the product and can demonstrate its features, and in some cases, even professional outfits that plan and execute the whole session for a brand. The audience, meanwhile, can make purchases while the stream is still on air without ever having to leave the app. The process is interactive, with consumers asking questions and getting answers in real time, and there can be a gamification element with additional discounts and gifts.
As they get squeezed by consumer expectations and a highly competitive market where it’s increasingly challenging to stand out among a sea of similarity, what can retailers in the U.S. and Europe learn from the Chinese livestreaming approach?
Add interactivity to customer touchpoints: One of the most effective features of livestream selling is the real-time interactivity between the consumer and the seller. One of the examples in which this is being replicated in the U.S. is on the platform Newness, which is linking beauty influencers with their audience through real-time conversations that prioritize candor and connection.
Get creative with marketing: Some luxury brands, such as Dior, have used livestreams to preview upcoming collections, while others run launches that make the product available as soon as it’s shown online. The idea of exclusivity can be an effective strategy. Nike successfully did this when it launched the LeBron 18 shoe on a Tencent livestream and also announced new exclusive colorways available only as mystery purchases for the Kyrie 7 line.
Flow all data into one dashboard: As searchability and product discovery becomes more of a differentiator, plugging all sources of data into one analytics system can help pull usable consumer insights. Ultimately, the goal is to be able to incorporate relevant consumer insights into all decisions, from product design to making buys all the way to branding and marketing.
As ecommerce continues to garner additional dollars and become much more significant strategically, enhancing consumer touchpoints will become a crucial differentiator for retailers. While livestreaming in other markets may never look like how it does in China, the broad lessons from the format apply globally: always focus on a two-way conversation with the consumer and don’t let anything get in the way of the path to purchase.