Industries
Retail
Omnichannel CX and Intelligent Innovation – The Future of Retail
Highlights
- Live commerce combines shopping and entertainment to offer an experience that is both entertaining and educative.
- It is estimated that by 2026, live commerce could account for 10-20% of all e-commerce sales.
- Live commerce, if done right, can lead to a scalable hybrid revenue stream.
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The rise of 'shopatainment'
Retailers are under pressure to make online shopping as social and fun as in-store experience.
Although online commerce has grown exponentially, studies show that without human assistance, customers are more likely to abandon shopping carts and walk away. This is because customers expect personal, intimate, and human interactions during online shopping. Further, with lockdowns and social distancing, consumers are looking for new ways to discover products, adding to the pressure on retailers to make online shopping as social and fun as in-store experience. Many retailers—from Walmart to Kohl’s—are experimenting with ‘live commerce’ to address this challenge. Retailers are also enthused by the growth prospects of live commerce. It is estimated that by 2026, live commerce could account for 10-20% of all e-commerce sales. The growth will be aided by the evolving AR/VR technology.
Gladly’s Customer Expectations Report, 2020.
Live commerce: The future of online shopping
Live commerce combines streaming videos and shoppable services, thus offering shoppers the freedom to shop from anywhere while still experiencing the joy of visiting a physical store.
It draws shoppers closer to products by mimicking the store experience. Some common live commerce formats are:
- Influencer streaming, where influencers/celebrities use their personal brand to sell products on social media/e-commerce websites to a larger audience (one-to-many); this is more suitable for fashion and beauty, lifestyle and home decor, and jewelry items
- One-to-one live video shopping, where a store assistant offers hyper-personalized experience; more suitable for electronics and gadgets and other high-value items
- Live interactions, where customers engage through real-time chats with hosts/store assistants/fellow viewers
- Real-life events, where customers shop during live events such as product launches, fashion shows, and retail holidays like Singles Day or Black Friday
As live commerce combines shopping and entertainment (shoptainment), the experience is entertaining and educative, increasing conversion rate and average order value.
According to Forbes, livestreams accounted for $6 billion in sales for Taobao in its 2020 annual global shopping festival, or twice the amount of the previous year. Though Kohl’s was an early adopter of live streaming in 2015 (the LC Lauren Conrad Runway show during the New York Fashion Week) and Amazon launched Amazon Live in 2019, US and European markets were slow in adopting live commerce. However, post pandemic, live streaming is gaining traction in western countries; in the US alone, it is expected to hit $25 billion by 2023.
A leading automobile company, for example, piloted live commerce during the pandemic to provide in-store experience by offering customers a 360-degree, real world-like view of cars using multiple cameras. Similarly, a European grocery retailer ran a pilot to allow customers in store to connect to a remote agent to have conversations around products like selecting a wine for an occasion. Walmart teamed up with TikTok to host a one-hour shoppable event, and Macy’s and Nordstrom kicked off livestream shopping across a variety of categories, including beauty, home, and apparel.
Solutions such as live video shopping can enable shoppers to schedule an appointment and connect to an associate in a nearby store for a face-to-face conversation, creating a genuine interaction between the shopper and the associate. With clienteling skills, store associates can build one-to-one relationship with customers at scale, increasing customer loyalty. Some retailers have created a virtual lobby to provide customer inputs on what they are looking for before connecting them to an associate or keep them engaged with canned videos to explore. While customers shop live, associates can help them visualize the products in 3D/AR, increasing the conversion rate.
Retailers cannot ignore live commerce
Live commerce could account for 10-20% of all e-commerce sales by 2026.
The benefits of live commerce are immense:
- Provides a phygital experience at customer’s convenience: Customers get the best of both worlds by having a conversation with an associate and, at the same time, visualizing products from home through AR/VR technology, which projects the product in 3D at full- scale and removes uncertainty from decision making. Retailers like Taobao and JD.com are enriching the live experience by adding AR and 3D animations.
- Enables contextualized customer experiences: As the live agent is aware of the store/shelf, the cross-sell and up-sell recommendations can be personalized for the customer and localized to the store, delivering contextualized customer experiences.
- Improves store profitability: By utilizing lower footfall stores as ‘demo stores’ for live shopping, retailers can make them operationally sustainable and improve store profitability (four-wall margin).
- Reduces e-commerce returns: Nearly a third of all products purchased online are returned as customers do not get a feel of the product before purchase. It is estimated that by 2025, there will be 291.2 million online shoppers in the US. This could mean a very high number of returns. But, with a live video chat, customers can examine a product from multiple angles and make more informed purchase decisions, resulting in lower number of returns.
- Increases conversion rates and revenue: Live shopping brings to shoppers a sense of spatial immediacy—they feel they are experiencing the moment and not just interacting with a passive website or app. This increases the interest in the product, leading to greater purchases. In addition, the clienteling skill of sellers can facilitate upselling and cross-selling, increasing conversion rate and revenue. For example, a leading Indian electronics retailer registered 20x increase in online conversion than the pure-play e-commerce by offering live video shopping from stores.
- Provides a gateway for newer solutions: Retailers can show canned, shoppable videos by integrating them into the e-commerce web/app. Highlights of the live streams can be made into video clips and added to the product page. Other solutions like influencer streaming in the same link could increase revenue. For example, Amazon and Facebook are rolling out interactive video shopping features allowing brands and influencers to engage with shoppers in real-time. Best Buy offers its Geek Quad services online, fixing issues remotely by leveraging AR and visual guidance.
Framework to assess live commerce maturity
Given the enormous opportunities and benefits that live commerce offers, retailers should ensure technology readiness for delivering superlative customer experience.
The following table provides an assessment framework for retailers to benchmark technology readiness and improve their maturity level:
Framework to access live commerce maturity.
Make seamless live commerce a reality
Live commerce should allow customers to start and end their buying journey online—straight to purchase after the live video—without exiting the experience.
Live conferencing tools can be integrated into e-commerce websites and a separate tab can be provided for video calls on every product page for shoppers to get in touch with store associates and shop from home. Store associates can also demonstrate products and update customers of any in-store promotions to drive store footfall.
For a seamless live commerce:
- Choose the right platform to stream live video: Retailers' e-commerce websites can help control engagement and conversion data; social media such as Facebook, Instagram, and YouTube give more viewers and sales; and third-party live streaming websites and apps like TalkShopLive may offer good video delivery technology.
- Strengthen e-commerce website: Augment website performance with commerce capabilities (integrated point-of-sale system, inventory management, and shipment), cloud services, mobile-first progressive web app (PWA) technology, and 100% uptime. Payment gateways need to be integrated into social networks like Facebook and YouTube.
- Integrate robust e-commerce features: Live commerce app should have all the e-commerce features such as product pages with high-quality images, horizontal scrolling showcasing products highlighted in the video, cart management, and payment gateway.
- Plan properly: Use a proper lighting kit and a good camera for a professional live shopping session. Ensure there is reliable connectivity and greater bandwidth for uninterrupted and seamless experience. Also, as a precaution, provide the ability to switch from video to audio in case of low bandwidth.
- Leverage AR/VR technologies to boost selling: These technologies enable customers to visualize how products look in real life in their surroundings.
- Automate sales, support services: AI chatbot can resolve upto 80% of incoming chats, and store associates can focus on one-on-one personal service.
- Invest in newer payment options: Next-gen shoppers embrace pay-over-time models, rentals, and subscriptions.
- Train store associates: Provide them training on skills to nurture customers (video clienteling) and empower them with tools and data to provide real-time inventory visibility and 360-degree customer view.
- Leverage micro-influencers/product experts: This will help increase conversion rate. These days, brands turn their staff into influencers. For example, Walmart’s spotlight program encourages employees to share behind-the-scenes content on their personal social media accounts and rewards them for their influencer efforts.
Bridge the physical-digital divide
Live commerce can drive phygital experiences, making shopping exciting and immersive.
The pandemic has accelerated retailers’ shift to digital to solve the challenges caused by changing consumer preferences. With customers today open to newer and alternative ways of in-store shopping, live commerce can help seamlessly bridge the physical-digital divide. Retailers across the world have proven that live commerce, if done right, can lead to a scalable hybrid revenue stream.
