Interviews, insight & analysis on digital media & marketing

Live shopping – will it be the rebirth of retail?

By Young Pham, Chief Strategy Officer, CI&T

The Covid-19 pandemic had caused the retail sector to experience the largest ever year on year fall in sales. Businesses of all maturity levels and sizes experienced redundencies, permanent store closures or the transition into a fully digital operation. However, it doesn’t all have to be bad news. The shift many businesses made to running digitally opens new doors and begs the question, is live shopping the future of retail?

As vaccination programmes across the globe progress rapidly, lockdown restrictions are being eased and we are seeing a transition into pre-pandemic times with brick-and-mortar retailers on the high street back open for business. Consumers have been flooding the stores which has seen retailers hitting record level sales. While retail sector leaders appreciate the surge in demand, its important to acknowledge that this surge doesn’t reflect how the retail industry has been transformed by the pandemic in the long term. Many sectors are still struggling and will not ‘return to normal’, so focusing on new ways to engage with customers – such as live shopping – will be key to survival. To understand what this looks like, we only need look to China as an example.

Enter: Live shopping

While social commerce is still relatively nascent in the UK, the industry had already had a foothold in China before the pandemic sent traditional retail into a downward spiral. In 2019, social commerce in China was valued at ¥1.675 trillion – that is almost £187 billion. Advanced social retail mediums including platforms like WeChat and Pinduoduo have continued to grow in popularity in recent years, especially under the restrictive period of the pandemic.

A key area driving this growth is live shopping, an updated version of telemarketing for the digital world. This new medium, valued at £45.4 billion in China in 2019, revolves around influencers and celebrities demonstrating and advertising products on live streams, encouraging viewers to buy the same product in real time. By engaging with viewers, answering specific questions live and enticing them with limited time offers, live shopping combines the best of social media and e-commerce in a more immersive experience.

Reliable product reviews

Following years of sustained economic growth and a burgeoning middle class, China is seeing an influx of people consuming new products and looking for the easiest way to do so. In a competitive and often daunting marketplace fraught with misleading or even fraudulent products, consumers rely on reviews to help them understand why they should buy a product over the ten alternatives one click away. Live shopping answers this need by providing the same information as 1,000 reviews from a spokesperson they already know and feel they can trust. Live shoppers get to see the latest products, the excitement of people talking about the product and to engage with others to see what they really think – all from their mobile phone. It’s the opposite of shopping by yourself.

The medium was already growing at an explosive rate in China and to a lesser extent globally before the pandemic shut down shopping centres and high streets. While shoppers in many countries are beginning to tentatively return to stores, this new phenomenon with both the convenience of e-commerce and interactivity of traditional shopping is not likely to disappear any time soon.

Keeping up with China

While live shopping certainly meets all the demands UK shoppers have at the moment, the speed at which it can be rolled out in this relatively new market is somewhat limited. The growth of the medium in China is built on the back of large uptake in well-developed media platforms with the capabilities to host livestreams and the in-built capabilities needed for interacting with viewers and letting them buy within the stream. Unfortunately, most popular social media platforms in the UK can’t compete with the standards of their Chinese counterparts when it comes to livestreaming and interactivity.

The key for the growth of this ecosystem is not just developing a channel that enables live shopping, for which there is ample existing technology but developing a platform with a large enough user base. An example of this already in action outside of China is Amazon Live – the e-commerce titan’s new branch into the channel. However, most retailers lack the scale and existing customer base to have their own proprietary live shopping stream, and therefore will need to rely on established platforms such as TikTok and Instagram. Time will tell how fast these platforms can adapt and impact on UK retail.

Born again retail

The ashes from fallen retail giants will lead help to regenerate an aging system that is in need of radical change. We are in the conception stages of a whole new generation of digital retail. And while there are still uncertainties around these new mediums and how retail can best tap into, the benefits of rebirth will greatly outweigh the challenges to come.