The scale of live streaming e-commerce is in stark contrast between China and the United States: $514 billion VS $17 billion

Instagram, a social platform owned by US technology giant Meta, recently announced that from March 16, users will not be able to tag products during live broadcasts and will turn off the "live shopping" function. This is the second time that Meta has given up trying the e-commerce business for nearly three years after it closed its Facebook platform live shopping business last year. In the field of live streaming e-commerce, ByteDance, which relies on Douyin to harvest a lot of traffic in China, has not been able to replicate the success of the Chinese market in the United States through its overseas version of its short video social platform TikTok. According to the Financial Times, in July last year, TikTok announced that it had abandoned its expansion plans for live streaming e-commerce business in Europe and the United States. The successive defeats of the two major overseas live streaming social platforms also announced that the US live streaming e-commerce model was on the verge of "abortion".

Unlike the rise in China, what is the reason behind the accelerated decline of live streaming e-commerce in the United States in the past two years? Will there be a way out for live streaming e-commerce in Europe and the United States in the future?

$514 billion VS $17 billion

Live streaming e-commerce is in stark contrast between China and the United States. According to market research firm eMarketer, in 2022, China's live streaming e-commerce sales exceeded $514 billion and grew at a rate of 19%, accounting for more than 17% of all e-commerce sales in China. Different from the mainland's popular whole network, the consumer format of live streaming e-commerce has appeared in the United States. In 2022, the total sales of live streaming e-commerce in the United States will be about $17 billion, accounting for less than 2% of e-commerce sales in the United States. According to data released by the "Business Insider" website, the entire social e-commerce including live streaming e-commerce only accounts for about 5% of the total e-commerce sales in the United States.

While this model is widely popular in Asian markets, including China, many U.S. companies overestimate the profitability of live streaming. Different cultures and consumption habits in Western markets make it difficult to replicate the success of Chinese live streaming e-commerce.

Forbes magazine believes that "live streaming only" is one of the main reasons for the low acceptance of live streaming in the United States. In the North American market, TikTok can only complete the transaction by clicking on the shopping link in the live broadcast room and jumping to an independent shopping website, and cannot be completed within TikTok, which prevents the anchor from receiving sales dividends, affecting its revenue and enthusiasm. Another important difference between the U.S. market and the Chinese market is that most U.S. viewers are more interested in short videos than Chinese multi-hour live broadcasts, and it is difficult for the "TikTok generation" to spend an hour watching content.

According to a survey by research consultancy Coresight Research, nearly three-quarters of Chinese respondents said they had watched and purchased goods through live shopping, while more than two-thirds of Americans said they had never watched a live shopping. Alessandro Bogliari, co-founder and CEO of the Influencer/Influencer Marketing Factory in Miami, believes that this difference can be attributed to "a combination of technology and behavior." Boliari said that Chinese went to live shopping because of big discounts, "red envelope rain" events, etc. In contrast, most US platforms don't offer any strong promotions for live shopping events on the site, nor do they have enough good streamers.

"From the perspective of consumption habits, because the offline consumption scene in the United States is richer and more convenient, and the proportion of American brands building their own official websites is high, unlike China's small brands that rely more on e-commerce platforms, so the awareness and penetration rate of e-commerce in the United States is lower than that in China, and consumers and the market are not accustomed to using live streaming to dominate shopping." Hua Ying, a researcher at the National Institute of Opening up to the outside world and a professor at the School of Information at the University of International Business and Economics, told the Global Times reporter, "In addition, the high logistics cost and slow timeliness are not conducive to the development of the US live broadcast e-commerce model." ”

Social + shopping may be the way out

Although the live streaming model in the US market is gradually declining, market analysts generally believe that live streaming will still be one of the important development directions of their e-commerce in the future. According to the analysis of Forbes magazine, the cooperation between brands and social media stars to promote products may become the way out of live streaming e-commerce in the United States in the future, and social + shopping platforms represented by TikTok are also exploring ways to further popularize live shopping in the United States.

In March last year, TikTok partnered with fresh supermarket shopping app Instacart to let food bloggers create purchasable lists linked to recipe videos, TechCrunch reported. TikTok then also tested listing dedicated shopping directories as the core of products sold in its specific markets.

Compared to China's mature live shopping process, live shopping in the United States also hopes to attract audiences by adding entertainment such as live performances, chatting with consumers or playing games. For example, Whatnot, a California-based auction platform, allows people to bid on rare novelties, vintage clothing, etc.

Less than half of Gen Z adults and millennials in the U.S. are currently aware of live shopping, and 86 percent of consumers who participate in live shopping are satisfied with their experience. This means that the US market has huge growth potential. According to analysts, profits from live shopping in the United States are expected to reach $26 billion in 2023, an increase of $9 billion from 2022.

What is the point of reference

Although live streaming e-commerce has not yet formed a climate in the United States, some experts believe that from an objective point of view, US live streaming e-commerce is more stringent in terms of market supervision and shaping a fair competition environment, which also provides some reference for the standardized development of mainland live streaming e-commerce.

After checking the information, the Global Times reporter found that live streaming e-commerce has been developing for nearly seven years since 2016, and after experiencing barbaric growth, the outbreak of the whole network, comprehensive competition and rectification cooling-off period, it has now entered a period of normative maturity, developing in a healthier and more standardized direction, and problems such as tax evasion, false publicity, and commodity quality that appeared in the early stage are also being solved.

"With the practice exposing problems, the bubble has been washed away, and the policies and regulations to promote the development of norms have been introduced, the mainland live streaming e-commerce industry is gradually returning to rationality, from head anchors to decentralized all-ecological anchor groups." Hua Ying said, "The most important thing in the future is to do a good job in the service and supervision of the platform, and try to be decentralized when designing the push and traffic mechanism, cultivate the anchor ecology, achieve an even layout of the head, waist and tail, avoid the monopoly chaos that appeared in the past head anchors, and let more brand merchants join the industry and stimulate the vitality of the brand itself." For example, many time-honored brands have changed from the past 'high cold' state to interacting with consumers in live broadcasts, changing consumers' perception of domestic brands and making brands more cordial. ”

Zheng Ke, special correspondent of the Global Times in the United States

Global Times reporter Tao Zhen