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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.
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:
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:
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:
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:
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.