Understanding the Potential of Live Commerce

Live commerce is on the rise in Southeast Asia and it’s time brands start paying attention. Here are some statistics to consider: the TikTok Shop GMV for 2022 was USD 4.5 million. In independent analysis of data from logistics partners, we saw that while the sales from ecommerce was stable, live commerce sales is growing by 200-300% month on month. So what is live commerce and why has it got people hooked? 

Live commerce is where influencers sell to their followers over livestream. It’s an engaging environment, where buyers are in conversation, live with the seller. From a business standpoint, live commerce is a highly cost-effective form of marketing as compared to traditional digital marketing on Google or Facebook. Nowadays, you have to fight for a spot on the latter platforms, bidding with other players, and the conversion rate isn’t guaranteed. There are also scams or faulty ads on Facebook and Google that generate fake clicks. 

On the flipside, with live commerce you know how many followers an influencer has, and that provides a certain guarantee of ROI. We also see followers being loyal to live sellers, not only wanting to buy the products they’re selling, but also to show their support to the influencers. And the data is fascinating: influencers with 10k followers on average are able to make USD 30,000 per month from live selling. Bigger celebrities might be able to reach USD 400,000 in just 40 minutes of live selling. This goes to show that not only are live sessions engaging, they also tend to have an addictive quality that keeps the audience hooked. 

It’s important to note that with live commerce, the audience is committed to an influencer/seller more than a platform. So in a sense, live commerce isn’t platform dependent – most will follow a seller across various platforms. And as a result, brands can now focus on building loyalty with one person – the seller – instead of 100,000 people. If you build loyalty with the seller, their 100,000 strong audience will follow too. So in that sense, it’s a lot more cost-effective for brands. 

In Southeast Asia, live commerce is becoming increasingly popular. Just 10 years ago, the environment was very new, with low adoption from buyers and sellers. Now, however, most brands are looking to claim their piece of the live commerce pie. Even without doing a deep dive into the data, you’ll see that the number of live sellers on TikTok or Facebook Live is increasing consistently. 

The average consumer hasn’t built up their habit of online shopping yet, so there’s a lot of room for many more players to join in. They don’t, for instance, have the habit of only going to Shoppee to buy something – they might sometimes choose to shop at Lazada or Amazon. As long as these platforms have the product they need at a reasonable price, every platform receives roughly the same attention. However, live commerce is all about personalized interactions, as we will explore shortly. The GMV from TikTok Shop is growing faster than anyone could expect right now, and it’s time we take notice.

The Difference Between Ecommerce and Live Commerce

Ecommerce tends to be fairly value driven. People tend to shop on ecommerce platforms for items that are cheap, for example household items such as toothpaste or detergent. For these items, consumers tend to look for the highest value products for the lowest price. 

On the other hand, for live commerce, consumers are looking for quality. With disposable income steadily increasing in Southeast Asia, people are more willing to spend on medium/high-tier, quality products. 

Live commerce gives you the chance to hear from real people about the product you’re buying. It’s somewhat similar to a traditional retail environment, where if you’re buying a high-value product like a TV or fridge, you speak to a salesperson with the expertise to help you make the best decision. Today, not everyone has the time to do in-depth research into every purchase they need to make, and that’s where live commerce comes in. You have sellers or influencers who have already built trust with their audience talking about the product, introducing its features and benefits, and telling people why it’s worth their money. 

When we launched in the Philippines, we were surprised to see that some people skip work to watch their favorite influencers selling live, despite the fact that they weren’t planning to buy anything. This points to the natural desire for interaction on a human level. If you think about it, in an ecommerce situation, this interaction is missing. You go to a website and click ‘Buy’ and there it ends – you’d only interact with the store if you had an issue with the product or your order. With live commerce, sellers have conversations with buyers. They don’t refer to themselves as buyers and sellers, but rather by name, as if they were friends. The experience of purchasing a product is more personal and less transactional with live commerce. You’re able to send messages, ask questions, and talk to the person you’re buying from. 

Understanding User Behavior

FOMO – fear of missing out – is a key aspect of live commerce that brands and sellers tap into. It’s building up the sense that this is your only chance to get this item at this price. This occurs primarily in two ways. First, the seller makes this clear in how they’re positioning their products. Second, the way people see other buyers responding to the sale. In live commerce, orders are captured by comments on the stream, so as you can imagine, an influx of hundreds of comments on a product can contribute to FOMO that helps expedite the sale. 

FOMO can also lead to impulse buys. Two things happen with impulse purchases: either you’re happy with the product, or you feel regret for buying it. With live commerce, the effects of the latter are mitigated, as you know that your purchase has also gone towards supporting an influencer or seller you like. 

The length of a live session can go from the typical two hours to up to the record-breaking 18 consecutive hours. Live sessions commonly happen during lunch or dinner, or after dinner running late into the night. An influencer’s audience will usually have a record of when their seller is going live. They tend to follow their schedule and tune in, even if they don’t buy. The statistics show that a large percentage of viewers return to a live event, interacting and making comments, but won’t buy. Eventually, they’ll convert, since they’re watching the seller regularly. Sellers can also add ecommerce links for people to return to, so that if someone wants to buy from them at a later time, they can still do so. All this to say that there tends to be a high level of trust and interest that a buyer feels towards the seller. 

Choosing the Right Influencers

When choosing influencers to partner with for live commerce, focus primarily on having a clear understanding of their audience. Make sure that there is alignment between your brand and their audience, in terms of age, gender, and geography data for instance. 

Your choice of influencer can make or break the success of your live commerce efforts. Think about who you’d be comfortable representing your brand and being the face of your product, especially so with live commerce, as these individuals directly impact your sales. 

Live sellers each bring their own unique personality and style to how they sell. Some are comedic, others have a background or expertise in the types of products they sell. So if your brand wants to be associated with fun, you might choose to work with a comedic influencer. However, if you’re selling baby formula, you would benefit from a seller with a background in medicine to vouch for the benefits of your product from a health perspective. Similarly, some sellers target teens, while others might have a broader audience. Pick the influencer that makes most sense to what your brand’s objectives are. 

Currently, brands are approaching the big players in the live commerce scene, but the truth is that there are only a few live sellers with over a million followers out there. A popular live seller in Vietnam rejects a lot of live commerce opportunities with brands due to the nature of the products, but also her limited bandwidth. In the next few years, the new game will be finding medium to small scale influencers across every single social media platform, and harnessing their combined power to generate sales for your brand. It’s no longer going to be just about the biggest, hottest seller at the moment. 

And since this is a new and evolving space, there are no playbooks or best practices yet. Case in point: a popular influencer in Vietnam recently partnered with a higher-end cosmetic company to sell one of their products on TikTok Live. However, TikTok’s discount program ended up reducing the price of the product from $6 to 50 cents, which completely devalued the brand: what was meant to be viewed as a high-tier product was seen as a lower end one. So invest time and resources into tools that will help you analyze the seller’s audience to see if it’s right for your brand. This will give you about an 80% chance for success. Unexpected issues like platform discounts might still happen, but you can always figure out a solve for those as you go. 

Is Live Commerce Right for Your Brand?

90% of the audience on live commerce is female. The most successful products being sold on live commerce include cosmetics, luxury handbags, snacks, homeware, and vintage goods. But that’s not to say other types of products wouldn’t do well. Here’s an example. 

During Covid-19, an IoT company made an unexpected foray into live commerce, with great success. Stuck at home with nothing to do, the founder of an IoT device started going live, demonstrating how his products were used in his own home. With technology like IoT which many people don’t even know too much about, seeing how they operate in the real world is much more effective in driving interest than videos or websites. With live commerce, people could see how cool the IoT products were, ask questions, and this led to a surge in sales for the company. 

Live commerce is an impactful way to educate people on how your product works, how it can be used, and its unique features. This makes live events a great way to launch new products, campaigns, or kick off sales events. The FOMO element will get people in the door, as availing a once-in-a-lifetime opportunity is an attractive prospect. In short, any product can be sold through live commerce with the right influencer, angle, and offers. 

Live Selling Across Different Markets

TikTok Shop briefly launched in Europe, but wrapped up and chose to focus its resources in Southeast Asia. In China, live commerce has already reached a whole other level. However, a few metrics that I would use to track how successful live commerce will be in the US or Europe would be the amount of time people spend watching something, as well as disposable income. In the European market, for instance, the average person has more free time to watch a live event than someone in Southeast Asia, as working hours tend to be flexible and open. Ultimately, it will boil down to entertainment. If there are sellers/influencers who are entertaining enough, there will be an audience that’s willing to buy from them. 

Similarly with disposable income, the average person in the US or Europe has a significantly higher disposable income available to them, so they can focus on higher-tier products. A lot of brands in the US already have their own ecommerce store but also list their products on Amazon. Live commerce would be an added layer that these businesses could add to launch new products and drive engagement with their audiences. Eventually, as live commerce grows and gains traction globally, we’ll get to test these theories out.

1 It Shouldn’t Be a One-off Event

Have a long-term live commerce strategy and a way to drive repeated engagement with your consumers rather than a one-off event to launch a product. 

2 Choose the Right Influencers 

Audience should be your primary area of focus when choosing sellers to partner with. Choose influencers with a strong presence on social media – looking at the number and the quality of their followers. Make sure you’re getting data on their audience from reliable sources. 

3 Match SLA Quality of Ecommerce Platforms

If you have a live commerce channel where you sell on a regular basis, set up SLAs of how quickly you will deliver products that are sold. It’s important that you’re at least able to match the SLA quality of existing ecommerce platforms in order to succeed.