Rise of e-commerce live streaming: The next step in building consumer loyalty

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  Quantumrun Foresight
• October 11, 2023

Insight summary

Live streaming e-commerce is growing rapidly, offering a dynamic shopping experience by featuring real-time product demonstrations and viewer interactions. Originating on social media platforms, it has spread across various online services. The trend is appealing due to its real-time interactivity, wide reach, and creative promotions, but also raises concerns about impulsive buying and the credibility of hosts. Live streaming allows for direct consumer feedback and fosters authentic brand engagement, but complicates the relationship between brands and independent streamers. Wider implications include shifts in consumer behavior, increased competition in digital marketing, potential for more regulation, and environmental concerns.

Rise of e-commerce live streaming context

The widespread adoption of live streaming began with social media giants like Facebook and Instagram but has since extended to other popular platforms, such as YouTube, LinkedIn, Twitter, Tik Tok, and Twitch. The live streaming function has become so ubiquitous that new services like Streamyard have emerged to enable simultaneous streaming across multiple platforms.

According to a 2022 study published by the Atlantis Press, the emergence of live streaming commerce is rooted in three key features: real-time interactivity, broad reach, and innovative promotional techniques. However, this surge in popularity also brings about several challenges, with the most pressing being the possibility of impulsive and group-driven purchasing behaviors among consumers while watching live streams. Moreover, various incentives prompt consumers to make purchases during live streaming events.

The influence of the host's celebrity status generates a sense of blind trust among viewers. As a result, consumers rely on the host's recommendations and the reputation of the promoted products. Moreover, the appeal of discounted prices is often used as a marketing strategy during live streaming, with hosts frequently announcing that the goods being sold are the cheapest available online. This technique creates a perception of greater value for money while enabling sellers to profit without incurring high labor costs.

Disruptive impact

The true strength of live streaming lies in its capacity to capture the unfiltered emotions of an audience in real-time. Unlike conventional television advertising, live streaming fosters genuine interactions between consumers and brands, enabling them to obtain instantaneous feedback, create informal and intimate moments, and establish deeper connections with their target audiences. This medium helps brands develop a sense of authenticity in their engagement with consumers, which is a significant departure from traditional talk shows' scripted and formulaic nature.

Live streaming has also made broadcasting significantly more accessible, cost-effective, and fast. The low costs and minimal resources required to initiate a live stream have enabled almost anyone to get started. Additionally, it provides real-time metrics on viewership reactions, eliminating the need to rely on third-party services to determine whether the target audience has been reached. Tools are available to analyze fluctuations in viewership, enabling streamers to identify when retention is dropping or increasing.

However, this trend also redefines the relationship between independent live streamers and brands. It is common for streamers to hold sellers responsible for selling substandard products, while sellers often accuse streamers of falsifying viewer counts and sales figures. As a result, this conflict may create a new regulation for such partnerships since conventional contractual agreements may not be sufficient to resolve the issue effectively.

Implications of the rise of e-commerce live streaming

Wider implications of the rise of e-commerce live streaming may include: 

• More consumers are shifting their purchasing habits towards the convenience of online shopping, resulting in more closures of physical stores.
• A new channel for digital marketing, which could lead to an increase in advertising spending and competition among businesses.
• A need for more workers in content creation, marketing, logistics, and customer service.
• A significant change in consumer behavior and expectations, leading to a greater emphasis on personalized experiences and entertainment.
• A shift in supply chains as companies adjust to the demands of online shoppers.
• An increase in globalization, as businesses seek to reach customers in new markets and consumers have access to a wider range of global products.
• Increased demand for packaging materials and transportation, leading to a higher carbon footprint.
• A wealth of data on consumer behavior, which could be used to inform business decisions and marketing strategies.
• Policy discussions around data privacy, labor rights, and taxation, as governments seek to regulate the industry and protect consumers.

Questions to consider

• Have you ever watched an e-commerce live stream before? If so, what did you think of the experience? If not, would you be willing to give it a try?
• What types of products are better suited for live streaming?