Video commerce, in its simplest form, means using videos to promote and sell products online. The global video commerce market is expected to reach $2.8 trillion by 2028, up from $527 billion in 2022, and is quickly growing into one of the core channels for e-commerce sales.
Since 2020, video commerce has had an interesting journey. A rapid emergence on Chinese social media channels expanded to experimentation on Western social media platforms.
Video commerce is the use of video for online marketing and sales. It has different formats, from shoppable videos to livestream shopping.
Shoppable videos are a video experience where viewers can instantly access product information. This can be through product carousels overlaid on the video or through clickable hotspots that reveal additional product details. Shoppable video technologies can be applied to any video, from short-form social content to ad campaign videos and long-form videos.
Livestream shopping or live commerce, is a modern version of home shopping on TV that blends entertainment and shopping. A live stream video is combined with interactive elements, including real-time comments, reactions, polls and shoppable products.
The first livestream shopping events in China began around 2016, however this format didn’t really take off until 2020, when consumers were confined to their homes during the pandemic.
Chinese livestream shopping events are typically influencer or key opinion leader (KOL) led, fast-paced, and involve regular time-limited special offers. The streams also feature giveaways, prizes and polls to drive up engagement, often with lots of back-and-forth between the streamer and the shoppers.
The high adoption rate is driven by nearly every major Chinese e-commerce and social platform participating in live commerce, including Alibaba’s Tmall and Taobao, JD.com, Pinduoduo, WeChat, Douyin (TikTok’s sister app in China) and Kuaishou.
The future of shopping is entertainment. It's not enough to have an online storefront – brands must do more. Consumers today are looking for novel, immersive, and entertaining shopping experiences.
The history of video commerce in Western markets contrasts sharply with its rapid growth in China.
In the West, simple shoppable videos for on-demand content have been available on major social media platforms since 2018, fueling social commerce.
TikTok initially launched a livestream shopping site in the UK in 2021, but the format wasn’t well received by UK consumers, with some streams resulting in zero sales. TikTok’s internal operational challenges didn’t help.
One reason behind livestream shopping’s slower growth in the West is online shopping behavior. Western consumers aren’t yet fully comfortable with entering their credit-card information into social media apps and making purchases directly from a social media platform.
They also prefer to purchase products directly from a brand’s e-commerce site, a retailer or a marketplace, even if they initially found the product on a social media platform.
TikTok also launched live commerce in the US in 2023 and is now broadening its video commerce strategy by testing a new feature that would make all videos shoppable on TikTok.
Gen Z consumers are beginning to flex their economic muscles, bringing different perspectives and expectations than previous generations. Brands need to adapt.
Brands’ own e-commerce sites became the perfect alternative channel for hosting livestream shopping events.
This trend took hold across smaller online stores all the way to major retail giants like Amazon and Walmart, which have built dedicated sections on their e-commerce sites that act as content hubs. Amazon Live Prime Day in 2022 amassed more than 100 million views and Walmart is moving towards its goal of generating $200 billion from live commerce in the next five years.
Presenters are often brand employees with deep product knowledge. The sales style has less pressure without heavy time-sensitive discounts, and focuses more on providing insights with a longer term view on conversions.
This is a sharp contrast to the Chinese approach of influencers selling random products to consumers, who end up purchasing products at a steep discount, under time pressure, and then returning the items. The average return rate of livestream shopping in China is 30%-50% higher than that of traditional e-commerce.
For brands, this isn’t a viable, long-term strategy: they spend a lot on the influencers, sell discounted items at a very low margin, and carry the cost of high return rates.
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Looking ahead, video commerce is poised to become an integral part of an online shopping experience on social media platforms as well as globally across e-commerce sites and marketplaces.
While the purpose of the channels can vary across markets, video commerce on social media looks to be better suited for brand awareness and audience building, whereas shoppable video experiences on e-commerce sites are better for conversions.
Ninety-six percent of marketers already view video as an important part of their strategy. With technologies that enable easy adoption of video commerce on e-commerce sites, this trend is fast becoming one of the key pillars of online sales.
