Zoe Chew

March 30, 2022

Future of Online Shopping & E-commerce

⭐️ Premium Post

Issue #12

Live streaming e-commerce

China’s Taobao Live, Douyin, Kuaishou, Pinduoduo, JD.com, Mogujie & Meituan popularized live video shopping. Sellers present the products through “livestream selling”. Consumers can react, chat, and buy directly via in-app checkout in real-time. The e-commerce experience is immersive, transparent, and social.

In fact, live e-commerce is already a $60 billion market. China is dominating this rapid trend with $171 billion gross merchandise value (GMV) in 2020. This trend has exploded in other countries and companies are riding on this massive wave.

We’ll examine companies that are building for the future of online shopping—and unpack exciting opportunities where new players can capitalize and monetize.

Key trends

(1) E-commerce giants in the West are rolling out live shopping:

(2) Social networks are becoming a “social e-commerce” company:

(3) Rise of livestreamers millionaires:

  • Creators are making fortunes by streaming live shopping content.
  • Skincare and makeups are among the top-selling products.
  • Austin Li aka “Lipstick King” pre-sold US$1.9 billion on Alibaba’s Taobao ranging from Shiseido lotions to Apple AirPods. Li earns between $10 and $20 million/month (not a typo) from livestreaming. Li’s net worth is predicted to hit $15 billion by 2023.
  • Viya made $1.3 billion in transaction volume during the 11.11 Single's Day festival. As the “queen of livestreaming” in China, Viya sells cosmetics, houses, cars—even sold a rocket launch for $5.6 million. Viya ranks China’s 500 Richest List at US$1.4 billion net worth.

(4) Live shopping goes beyond the daily necessities category:

  • Live selling is going beyond CPG (consumer packaged goods) category, e.g. food, beverages, fashion, electronics, household products.
  • Whatnot offers live shopping and live auction for collectible goods such as Pokémon cards.
  • HapYak is building live shopping for the enterprise.

(5) Live shopping is entering the integration ecosystem:

  • New companies are helping merchants to embed real-time shopping features directly on their e-commerce sites.
  • Bambuser offers a live streaming add-on that converts
  • Smartzer live shopping plugin, fully integrated with Shopify stores

(6) Rise of group-buying e-commerce:

  • Group buying, collective buying, or social buying is an emerging e-commerce model in China.
  • A community leader will help a number of buyers purchase products in a large quantity to drive down the cost.
  • Pinduodo helps people shop together and get discounts.

Players by categories & niches

What problems do they solve?

  • Help creators run an e-commerce business. Setting up an online store requires tons of marketing effort to drive traffic to the site. Live shopping apps provide access to mobile-first shopping, a marketplace of buyers, payment tools, live stream tools, logistics, fulfillment, and delivery—in an all-in-one experience.
  • Help creators make money. Many creator-first live shopping apps like NTWRK are solving this problem. Specifically, they provide platforms for creators to create content, recommend products, build an audience, sell products, and monetize their followers.
  • Disintermediate from marketplaces. The cons of selling on e-commerce marketplaces: you don’t own the brand, analytics, customer data, and audience. Smartzer, Spin Live, InstaConnect, Channelize solve this problem by allowing you to integrate live stream features on your own e-commerce sites and become truly direct-to-consumers (D2C) without intermediaries.
  • Address niche market needs. Amazon’s live shopping caters to a broad range of product categories. Popshop Live is built for hipsters. Live.Market is built for the European market. Supergreat is built for beauty fans.
  • Help merchants increase engagement and conversions. Most B2B live video solutions are solving this problem. Bambuser and Livescale let you add live shopping on your websites.
  • Replicate in-person shopping/selling experience. Typical online shopping is passive and lacks the depth of interaction. Live selling allows buyers to ask questions directly to sellers (replicate salesperson), gauge interests from other buyers in real-time comments (replicate crowd observation in physical stores), and product detail annotation (replicate physical price tags).

Business models

(1) Marketplace model:

Live stream commerce companies that innovate on top of e-commerce platforms typically monetize using a marketplace commissions model. Here’s the take rate across different platforms:

  • Amazon—charges per-item fee, referral fee, closing fee, and high-volume fee. For referral fee, 6% to 45% of the selling price (based on product category).
  • Walmart—no account setup fees, subscription fees, listing fees, monthly fees; charges only a referral fee (depending on the product category) typically between 6% to 15%. The con is they don’t provide internal fulfillment programs like Amazon.
  • Alibaba Tmall—takes 0.3-5% commissions
  • Lazada—charges initial deposit fees plus 1% to 4% from the sales you make, depending on product categories

(2) Transaction fees model:

Social networks that offer live shopping features as a native experience typically monetize checkout fees through the creators:

  • Facebook/Instagram Checkout. For a transaction that occurs through Instagram Live Shopping, sellers will be deducted a payout known as “selling fee”—which costs 5% per shipment or a flat fee of $0.40 for shipments of $8.00 or less (including PayPal fees).

(3) Subscription model:

Live streaming integration tools typically operate using the SaaS subscription model:

What’s the next big thing?

This section explores where the future of online shopping is heading, what new solutions will look like, where’s the market demand, and answers the “why now” questions (most important slide in your pitch deck!) for your investors:

  • Changing behaviors in discovering new brands. Influencer and creator economy has proven that people want to discover new brands loved by people they follow on TikTok, YouTube, Twitter—not necessarily celebrities, pro athletes, and major public figures. New solutions will help people to buy from people they trust.
  • Online shopping is becoming community-driven. People want to get together to discuss new products, compare pros and cons and make purchase decisions based on shared community opinions. For example, look at this podcast microphone discussion on Reddit. Community-based e-commerce solutions such as co-shopping, co-buying (Pinduodo), or co-browsing will emerge.
  • Live shopping will explode beyond consumer products. TikTok has proven that realtors, healthcare providers, educators & consultants use video-based social content to sell their services. Therefore, live shopping isn’t only for E-commerce; it has the potential to apply in the B2B space.
  • D2C (direct-to-consumer) enables user acquisition. It’s easier than ever before to acquire users for your live shopping solutions. You can bootstrap your initial user base by building on top of any existing D2C platforms such as Shopify (and other no-code website builder platforms) as a third-party integration and apps.
  • Culture commerce will emerge. Artists, creators, and personalities are driving the NFT’s economies. Collectors will become the new shoppers. Creators will become the new sellers. Live shopping that blends culture, commerce, FinTech, and community will become the e-commerce for the Web3 economy.
  • Ecommerce companies will become the next “super apps”. If you want to pursue the venture scale path (i.e. companies that can scale quickly and capture billions of market value), think about how you can become a “super app” that combines products/services, payment, social network, live streaming, savings, shopping in an all-in-one experience.
  • Gen Zers are shaping the future of e-commerce. Younger generations are digital natives: they use digital wallets (Cash App, Venmo, and Apple Pay), seek inspiration and role models on social media before making purchase decisions. They prioritize price factors, affordability, brand authenticity, and value alignment according to research. Gen-Z-focused companies will thrive.

Startup opportunities

  • B2B SaaS live shopping. Other than selling consumer products, there could be a way for shopping in real-time when buying B2B SaaS products. Presenters share live screencasts showing their favorite SaaS apps, use cases, product features, reviews, answering questions from viewers, or collaborating with SaaS companies in exchange for revenue share or affiliate income for each paying customer.
  • YourStack but shoppable. What if we can shop from someone’s curated list or even bookmarks of the best brands for skincare, laptop accessories, protein powder, etc. instead of blindly browsing on our own and doing our research? Curators could earn affiliate revenues and consumers can shop with confidence when buying from people who have used and loved the brands.
  • Convert video content into shoppable live video. Before live shopping, influencers and brands are already making YouTube videos to promote their products. There could be a way to turn existing recorded promo videos into “fake” live shoppable videos with overlay widgets that show product price, description, add to cart, and checkout from watching a promo video.
  • Embedded virtual scanning feature. Live shopping is great but hardly replicates the five senses in real-life shopping: touch, sight, smell, taste, hearing. A solution could be a plugin that enables live streamers to turn on “VR scanning” mode. Sellers can scan a product during a live stream, generate 3D views, toggle/navigate 360 degrees for a holistic demo experience, and annotate product details automatically in live mode (size, weight, feature).
  • Squadcast for mobile-first live streaming. Not everyone has the optimal microphone, smartphone camera, backdrop, gear, and lighting setup to run a successful livestream. A solution could be a “digital production studio” for live stream sellers. Provide robust recording features that turn ordinary live streams into “studio-grade” livestream production with built-in light enhancers, audio equalizers, noise cancellation, auto-captioning, language translation, and video filters.