Tech giants like YouTube embrace livestream shopping

Tech giants like YouTube embrace livestream shopping

When I think of livestream shopping, I can’t help but imagine QVC in the 1990s — a cable TV segment where the camera’s fixed on a woman with a game show smile as she lifts a toaster with both hands. But that image, as iconic as it is, is being massively re-imagined by e-commerce giants, including YouTube (GOOG, GOOGL).

The company has decided it’s time to harness that “dynamic that already exists,” said David Katz, YouTube’s vice president of shopping. People have been and will continue to use YouTube to seek reviews for (and ultimately buy) consumer products, from baby gear to makeup, and YouTube is seeking to streamline that experience, he added.

“A big part of why we’re doing shopping is to take experiences that are already happening organically, make them better and more natural,” he told Yahoo Finance.

Livestream shopping is a strategy where, on live video, a host — often an influencer of some kind — discusses a product, while shoppers can engage with that host directly. E-commerce giants Alibaba (BABA) and Amazon (AMZN) are notable players in the space, and Google-owned YouTube is looking to join their ranks.

As a category, livestream shopping is way bigger than you probably think. In 2021, livestream shopping sales hit $363.26 billion in China, and $36.09 billion in the U.S. YouTube, long known as a leader in video-on-demand (VOD), has always been a platform where people look for product reviews. Whether it’s cookware, makeup, or gardening supplies, it’s all on YouTube.

Cristine Rotenberg — a creator whose channel Simply Not Logical has almost 2.75 million subscribers — is among YouTube’s earliest livestream shopping partners. In so many ways, she was a natural fit, as livestreaming itself has become a key part of her channel and her business.

“While I started on YouTube in strictly nail art tutorials with no voiceover and didn’t reveal my face at first, my content has evolved into many different forms since I first uploaded a video in 2014,” she told Yahoo Finance. “In the last year, my focus has been on increasing the ways I can interact with my audience… On a livestream… I get to paint nails and answer questions from my audience in real-time, react to community content, bake things in the kitchen, play video games, and generally share what’s going on in my life, all while interacting directly with my audience through the live chat.”

Tech giants like YouTube embrace livestream shopping

Cristine Rotenberg’s channel Simply Not Logical has almost 2.75 million subscribers. Image: Cristine Rotenberg

Rotenberg is also an entrepreneur who frequently features her nail polish line, Holo Taco, on her channel. The creator-entrepreneur path that Rotenberg’s on is now well-established and, to that end, livestream shopping could be a key component moving forward for both YouTube creators’ channels and their businesses beyond YouTube.

“The line between creator, social influencer, seller, and entrepreneur gets blurrier by the day which is actually a good thing,” said Katz.

So far, in launching its livestream shopping features, YouTube has tapped some of the biggest names in social media. For instance, YouTube celebrity MrBeast, chef Gordon Ramsay, and makeup blogger Manny MUA, among others, all took part in YouTube’s Holiday Stream and Shop in November. However, YouTube won’t necessarily restrict who can run a shoppable livestream, according to Katz.

“It’s early days, but I think the ethos of YouTube is to be open,” he said. “I think our expectation is that we’re going to try to make this as easy and flexible as possible, and allow many creators to take a shot at it. Viewers, as they do, will tell us who’s good at it.”

Livestream shopping can be a win-win

YouTube’s move into livestream shopping has a few underlying drivers. The first is feedback. The company kept hearing that, when it came to buying something off YouTube, there was just way too much friction.

“One piece of feedback that we hear is [that shopping on YouTube] should be easier,” Katz told Yahoo Finance. “That really is our opportunity, I think that we can make this easier for creators, we can make it easier for viewers. Shopping gives people another great thing to do with YouTube.”

The kicker was, despite the friction, people want to buy things on YouTube, Katz added. Among YouTube users, almost 90% say they trust creators’ recommendations and 70% say they bought something because it was featured on YouTube, according to a study conducted by YouTube, Publicis, and TalkShoppe. Accordingly, a successful livestream shopping experience is a win-win, said Katz.

“We want to make the shopping experience better because it’s a fairly clunky, awkward experience right now,” he told Yahoo Finance. “It’s not a great experience for the viewer. It’s not a great experience for the creator, and YouTube obviously doesn’t get to play a role economically.”

Big-name competitors

YouTube will come up against some hefty competition as it wades further into livestream shopping. Katz says that livestream shopping is “an interesting opportunity because it’s become so big in China.”

Alibaba and Amazon have each been operating their own livestream shopping businesses for years. Alibaba’s Taobao Live, launched in 2016, is likely livestream shopping’s biggest name worldwide. A China Internet report issued by Citi in February revealed that 97% of those surveyed (3,000 adults in China over the age of 18) had used Taobao Live, and that it’s accordingly the “leading preferred shopping marketplace for the large majority of users” in China’s massive livestream shopping market.

A livestreaming session by Dong Dong, a virtual idol promoting the Beijing 2022 Winter Olympics, is seen on Alibaba's e-commerce app Taobao displayed on a mobile phone in this illustration picture taken February 10, 2022. REUTERS/Florence Lo/Illustration

A livestreaming session on Alibaba’s Taobao app promoting the Beijing 2022 Winter Olympics. REUTERS/Florence Lo/Illustration

In 2021, Taobao Live generated $77 billion in gross merchandise volume, an Alibaba spokesperson told Yahoo Finance, adding that a huge part of that number is the loyalty livestream shopping seems to inspire.

“We’ve seen how livestreaming significantly enhanced customer loyalty and engagement on the company’s platforms, which drives more frequent purchases and higher average spend,” the spokesperson said. “Some of the most loyal users tuned into livestreams six times per day, and that group placed an average of more than 10 orders per month, translating to roughly RMB 1,500 (US$230) in monthly spending.”

Meanwhile, Amazon, which launched Amazon Live in 2016, has prominently utilized livestream shopping in its biggest event of the year, Prime Day. Though any category can be suited to livestream shopping events, categories like fashion and beauty are particularly “well-suited” to the medium, an Amazon spokesperson told Yahoo Finance.

“They are trend-driven categories, where people have very specific tastes, and want advice and recommendations,” the spokesperson said. “These categories are also experiential categories — when we shop for beauty products or clothing in a store, we try on the jeans. We feel the fabrics. We test the lipstick. And that just isn’t really possible when you’re shopping online. But livestreams can help you do that.”

The U.S. market still has a ways to go before livestream shopping is anywhere near the norm it is in China. For YouTube and Rotenberg, though, the possibilities are substantial as the logistics of buying and selling products on YouTube grow more seamless.

“I can feature a particular nail polish or product I’m referencing in a tutorial, a new collection box that has just launched, or a specific nail art tool at the top of the live chat,” Rotenberg told Yahoo Finance. “Viewers can then click directly into the pinned item and be taken to the actual product listing… while my livestream continues to play! If I’m painting my nails purple and someone asks what shade it is, I can pin that specific nail polish in the chat in a really organic way that isn’t overtly advertising.”

Allie Garfinkle is a senior tech reporter at Yahoo Finance. Find her on twitter @agarfinks.

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