The Live Commerce Playbook

Live Commerce is becoming a theme in the retail/e-commerce market hard and fast.

Live Shopping, Shoppable Video, and interactive Social Selling (via video) are key components of this market structure.

Broadly, this market can be encapsulated by the term ‘Social Commerce,’ whereby the social element creates the experience and the commerce element enables near-instant conversion.

Companies looking to deploy Live Commerce strategies need to design them with the following considerations:

Customer Segmentation
Engagement Drives Conversion
The Influencer Imperative
Platform Prototyping & Piloting
Budget, KPIs, Mid-Term Strategy
Campaign Examples

Customer Segmentation

Relative to Business Model Analytics, we know that typically 20% of customers will drive 80% of revenues towards specific SKUs or brands as a whole.

This typical outsized returns from reaching the right set of customers extends from mass market consumer brands right up to luxury brands.

In the case of luxury goods, there is a “prime” group of 5% of consumers who account for 40% of sales. Those prime consumers spend more than $43,000 on luxury goods each year, while the remaining 60% of sales come from consumers who spend less than $2,200 per year.
Luxury, CAC & The Next Farfetch

This matters because the content needs to be targeted to where the audience is most likely to see the message(s) and convert.

Evidence from China shows that there is a rotation in the market that is referred to as ‘flipping the funnel,’ where brands are discovering customers convert at a higher, more sustainable rate on their website rather than social channels.

This means that a brand needs to be careful about targeting their Live Commerce efforts on channels like TikTok and equivalent. These channels have an unprecedented ability to reach Generation Z, but they are also typically lower-priced goods and use discounts to reach scale.

Luxury brands and category leaders are more likely to invest into Live Shopping content and Shoppable Videos that sit on their website. There are countless new examples of this in the US market, including The Fresh Market, Dior, Walmart, and others.

Conversion rates are expected to be higher, and less discounting is expected on the brand’s website. In addition, the relationship with the customer is likely to be more solidified, leading to a higher probability of loyalty and repeat purchasing.

Defining the target audience in Live Commerce is different than advertising on platforms like Meta, Google, and TikTok because the content is not branded as ‘advertising’ in the same way.

Equally, the content is designed to convert and scale, so narrowing in on the desired customer segment(s) at the early stages is critical.

Engagement Drives Conversion

A lot of the hype right now around this market stems from an analysis of the Chinese market, where more than 15% of e-commerce transactions are driven by social-commerce platforms. This compares to only about 6% of equivalent activity in the United States.

The main components of the US-driven hype are the convergence of TikTok Shop and the Influencers , each of which can give brands the unprecedented ability to drive traffic and volume to their products.

But research out of the Chinese market shows how important the actual connection between the Host of a livestream is with their audience:

If a consumer trusts and is attached to a live streamer, they are about 78% more likely to believe in the reliability of the products promoted by that streamer
Live Shopping, Influencers & Conversion

Whether it be Live Shopping, which is a live experience, or Shoppable Video, which is repayable or shortened clips, the consumer needs to feel a connection to the brand(s).

Every company wants their advertising and media initiatives to convert customers, both new and existing, but the content needs to be fresh, inspiring, and engaging.

We see some brands reporting conversion rates of Live Shopping at 30%, or 10X higher than traditional eCommerce. The average conversion rate of a live event is 9%, but there are also a whole host of customers who will watch the ‘replays’ on other media channels that may also convert.

An analysis of this type of successful Live Shopping content across multiple brands and categories will show content that is:

hosted by a true ‘Live Seller,’ someone with knowledge and expertise in the product(s)
energy, enthusiasm, and the ability to engage with an audience
clearly prepared (scripted lines, professional setup) but feels somewhat spontaneous and conversational, leaving room for moments of connection with the audience

The Influencer Imperative

There are multiple, converging points of data to suggest that it is not the major celebrities who drive a lot of this type of social commerce for brands, but rather mid-tier or micro-influencers.

BuyWith, for example, focuses on the types of Influencers who have followings of around 20,000:

“We are not scouting specifically for big influencers because it’s not necessarily that they would be good at livestream shopping,”
Buywith CEO, Glossy

Other references from the Asian market allude to the emergence of the ‘micro or nano influencer’ who have smaller followings than 20,000, but deep connections to those specific communities.

When discussing influencers, it’s important to discuss the emergence of micro and nano influencers who both achieve 10X higher engagement than mega influencers
Business Today

In a Live Shopping scenario, the Influencer is typically a Live Seller who will be hosting a program that can span from 15 minutes all the way to several hours. One recent example from China was more than 6 hours.

Earlier in May 2023, Hong Kong-born actress Teresa Cheung similarly hosted a livestream on Xiaohongshu that was praised for being gentle and relaxing, attracting over 1 million viewers and exceeding 50 million RMB ( $7 Million USD) in gross merchandise volume. Cheung took her time introducing roughly 200 products — nearly six hours in fact — describing eyeshadow shades with Renaissance references, reading poetry, and addressing her viewers as “readers,” further cultivating a vibe of sophistication, culture, and learning.
Jing Daily

Dior’s Style Talk Live, by comparison, totalled a little over 20 minutes and had a format targeted towards American luxury consumers. In comparison to the above example from China, this program was hosted on Dior’s own website. The example was launched live, but can be viewed as a shoppable experience on replay.

In a Shoppable Video scenario, the Influencer is more often referred to as a UGC (User Generated Content) Creator who makes short clips to personify or exemplify the brand.

Live Shopping streams can be converted into Shoppable Video using any one of the possible platforms in this segment, and UGC Creators could easily be asked to go ‘live’ at any point.

Picking the right Influencers (or Hosts) for the situation at hand is imperative, but it needs to be done with the right set of customers in mind.

Platform Prototyping & Piloting

The above segmentation will necessarily inform what type of platform(s) to use to execute on the desired strategy.

Each Live Shopping or Shoppable Video platform will have a slightly different set of features, pricepoint, and in some cases business model.

As mentioned above, a platform like BuyWith will help the brands it works with to tap into the Creators/Influencers side of the market. Their business model is based on commissions made through the platform.

We looked at Bambuser in another post on Social Selling for retailers, which operates a Saas pricing model. Their focus is more on the multi-channel experience for brands who want to go live and link it to shoppable content.

Another example is Firework, who have an Enterprise product but are offering SMBs the ability to pilot the product for free at this current moment in history (early Q2 ’24). Their differentiating feature is a pseudo-Canva like “Creation Studio” to help brands create their own shoppable content, along with some AI features.

Each solution has a different pricepoint, value proposition, and extensibility; therefore, identifying the right platform is a critical step in the process.

There are dozens and dozens of other possible platforms that offer different permutations, including extensibility onto social media platforms like Facebook, Instagram, and others.

Brands who have big audiences on their social media networks will naturally seek to target their audiences there with this type of content, but as mentioned in the previous section, it isn’t the be-all and end-all to run Social Commerce as an exclusively social media strategy.

This is why some element of a Pilot is necessary.

Budget, KPIs, Mid-Term Strategy

At some point or another in any new Playbook or strategy being launched by a brand, money comes into the equation.

None of the above will be cheap to pilot, let alone scale.

It is also a non-linear model, filled with risks and potentially massive rewards. Category leaders will emerge from those who can successfully execute a Live Commerce strategy at scale in the mid-term.

Short-term, it is difficult to predict exactly how each initiative will work out.

Certainly, there are all the typical expectations around KPIs (Key Performance Indicators) relative to e-commerce and retail:

Engagement Rates
Conversion Rates
Returning Customers
Return Rates

It is expected that each % will be better than typical e-commerce, but the question will be, at what cost?

Some brands are investing millions and millions into their “Live Playbook,” while others are waiting to see how the market evolves.

The implications of being a ‘first mover’ versus a ‘fast follower’ are not yet fully apparent, but brands that nail the experience of Live Shopping and Shoppable Video will clearly get a leg-up on the competition going into the future.

‘The future’ is always indeterminate in some ways because we are more likely talking mid-term rather than short-term in this context.

Whereas a typical quarterly advertising budget can be deployed, quantified, and measured within a certain financial context in that same quarter, these types of Live Commerce initiatives will need to be analyzed over a longer time horizon (12 – 18 months).

But the expectations for ‘nailing the experience’ should be exponential from a ROI perspective, rather than linear. This is what we have seen in China and other Eastern markets where the Social Commerce market is more advanced.

Relatively unknown brands can come from nowhere and become category leaders. One livestream can become a nationally-trending event. The right type of shoppable content can turn a boring e-commerce brand into a sophisticated, trend setter overnight.

That’s why all this matters so much going forward. Where there are high risks, there are even higher rewards. But the uncertainty and ambiguity in between will leave many frustrated and unsure of who to turn to for answers.