Why livestream commerce is on the rise

Wharton’s Tom Robertson explains livestream commerce, one of the hottest trends in digital sales. There are great benefits to using the medium, but only if retailers can get it right.

Livestream commerce, in which brands sell their products to online audiences in real time, is one of the hottest trends in retail. The format is growing in popularity, accounting for $200 billion in sales in China and $11 billion in the United States in 2020. Those numbers are only expected to climb.

Person selling clothing and filming themselves holding up shirts on a smartphone.

“Livestream commerce is fast becoming a medium of choice,” says Thomas S. Robertson, a Wharton marketing professor and academic director of the Jay H. Baker Retailing Center.

In recent article, Robertson examines the rise of livestream commerce and offers guidance for companies that want to jump on the trend.

Many retail stores closed during the height of the pandemic and had to come up with new ways to sell merchandise. But Robertson doesn’t credit the COVID-19 pandemic alone for the uptick.

“I think it’s primarily the changing technology and changing generations. The pandemic would have been a stimulus, but it remains to be seen how long lasting that effect will be.”

Whether this is changing the business model for social media platforms that provide the channels for livestream commerce depends on the platform, says Robertson.TikTok has been so successful, and the challenge for Meta is that Facebook and Instagram weren’t designed as a short-form video experience. So, how do you compete with TikTok? Facebook said let’s give that to Reels and let Reels carry the banner to compete with TikTok. It’s changing the business model, for sure. Some platforms will be in better positions than others.”

For brands about to venture into livestream commerce, “I would start with the notion that there is no magic marketing bullet,” Robertson cautions. “This is part of your arsenal. You have to integrate livestream commerce with your other marketing strategies and tactics. How does it fit in?”

Read more at Knowledge at Wharton.