October 12, 2021
By Aubrie Pagano. This Op-ed originally appeared in Glossy
Live is nothing new. “Saturday Night Live” is one of the most successful shows of all time. It’s aired live for 45 years and is broadcasted in over 200 countries. Its alumni are unmistakable, grossing over $70 billion at the box office. So, what is the secret to its successful sauce? I would argue that “SNL” is a well-oiled comedy machine, with 1) a time-tested content formula consisting of practiced sketch comedy and 2) an incredible scouting apparatus for talent. (Lorne Michaels famously spotted Chevy Chase waiting in line for a movie and asked him to audition.) On top of the machine itself, the spontaneity of the show is exciting and engaging. There’s an element of suspense in the live format — of “anything can happen live” — executed with finesse by talented improv actors from the likes of Second City and LA’s Groundlings.
One could argue the same goes for live commerce. Similar to “SNL,” success for live commerce lies in a few key ingredients:
Let’s dive deeper into each of these in this post.
Put simply, live commerce is any live video distribution channel that seeks to “recreate, replace or reimagine the energy of in-person shopping,” according to Vogue Business. This includes video shopping through 1-to-1 appointments with stylists, as well as 1-to-many broadcasts with hosts encouraging impulse purchases of hard-to-get items at hard-to-beat prices. Live commerce is huge internationally. In China, two-thirds of consumers have bought products via livestreams by platforms like JD.com, Pinduoduo, Duoyin and TaoBao, the latter of which did $61 billion in live commerce transactions in 2020 alone. Set to approach $300 billion this year, China’s live commerce market is growing exponentially, with the largest categories being snacks, apparel, and skin care.
The U.S. has been slower to adopt live commerce, transacting some $11 billion this year. For one, U.S. consumers aren’t nearly as used to shopping from mobile devices as their Asian counterparts.
Well put by Bertelsmann Digital Media Investments in a recent report, “China’s primary business model for internet companies has historically been transactional, whereas U.S. companies have relied on ads. As a result, media formats in the U.S. have tended to skew towards long-form video and images, as advertising was more difficult to crack in live formats. In China, however, livestreaming evolved much earlier, given user’s ability and willingness to pay directly for influencer content, as well as the payment integrations/infrastructure to do this seamlessly. As U.S. media shifts towards business models outside of advertising (commerce, tipping, subscription), livestreaming becomes a more interesting and revenue-generating segment. In addition, with more commerce and entertainment consumption shifting online due to the Covid-19 pandemic, familiarity with streaming and viewership has followed.”
All this being true, macro tailwinds are propelling the internet toward more synchronicity, or live media. Platforms including Twitch, Clubhouse, Instagram and OnlyFans offer communities and, especially for younger audiences, live shared experiences built on engagement, gamification and social interaction. As a growing number of marketing dollars are moving toward influencer marketing and streaming, it is only a matter of time before consumer appetite for live commerce ramps in the U.S.
Investors believe this also. There have already been some big bets in the space, including investments in PopShop, WhatNot, NTWRK and ShopShops. VC funding in the space totals over $133 million, with a bulk of those dollars coming into the ecosystem in the last 18 months. Deals include:
Let’s revisit our “SNL”-themed best practices to understand how brands, creators and marketplaces can deliver superior shoppable entertainment.
Just like any other medium, live commerce is only as good as its underlying content. And just like “SNL,” which developed a playbook for great sketch comedy, winners in live commerce need to deliver exceptional content for the live medium. There are a few themes to delivering great live content:
A recruitment system for hiring and training hosts
Just like on HSN and QVC, the host drives the tempo and sell-through of the show. If you’ve ever filmed on one of these channels (which I perhaps, unfortunately, have!) you know that the hosts have two audio streams, one in each ear. One voice tells them which camera to look into, and the other is feeding them information about which SKU to push more, what has sold out, etc. It’s actually really impressive how well they maneuver the time on television with a smile, and it goes to show that a well-trained and likable host can make all the difference. It is no different in a mobile livestream context.
As mentioned before, what made “SNL” so much fun to watch was the improvisation of the entertainment, as well as the “anything can happen” excitement that naturally occurred. It takes effort to achieve that effortless improvisation, and planning.
As discussed, there has been significant funding into the live commerce vertical to date, with companies spanning many industries and sellers. That said, there are still areas of opportunity in live commerce. I identify a few below:
Product categories that have yet to break out:
Tech enablement for brands to host live commerce:
Aubrie Pagano is a general partner at Alpaca VC investing in consumer and next-gen commerce. If you’re an amazing founder working in this space, you can DM Aubrie here.
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