[VCommerce Digest] Rebound or Sink: What Retailers Must Know About Video Commerce in the Era of Zero-Contact
As “ZERO-CONTACT” has seeped into all aspects of our lives, COVID-19 has markedly changed even the way people do their shopping.
An increasing number of people are turning online to have goods delivered to their homes without any face-to-face interaction. Against this backdrop, it’s not surprising to see the e-commerce market booming despite the generally suffering economy under the pandemic. E-commerce companies such as Amazon.com (NASDAQ: AMZN) and Shopify (NYSE: SHOP) were the first to recover in a bearish market swamped by fears of decreased consumer spending and forecasted economic downfall.
So, then, what will happen when this crisis is over? Will we be returning to the pre-pandemic shopping routine afterward? The answer is probably no – too many consumers have now become used to the convenience of shopping online. With all likelihood, “zero contact shopping” is here to stay, and will take place as the new norm in many societies.
As a result of this fast-changing consumer behavior, the e-commerce market has plunged into an unprecedented wave of heated competition. E-commerce operators as well as brick-and-mortar companies are intensifying their efforts in the online realm to fortify their brand image and draw in customers against the competition.
With companies rushing to find new ways to engage customers and improve the overall customer journey, Video Commerce is gaining a new spotlight from both sides of the deal. While convenience has undoubtedly led people to online shopping, e-commerce has its limits: consumers are provided with very little product information and experience compared to in-store purchases. With these limitations in mind, Video Commerce seems to be the ideal platform that can overcome the constraints of online shopping, and possibly the new driving force behind e-commerce that service providers must become familiar with.
In this post, we will examine how Video Commerce is defined in the e-commerce industry, and evaluate whether this is a pervasive shift in a trend that companies must be ready to follow. We will also look at some detailed examples of how e-commerce platforms around the world are utilizing Video Commerce as successful channels for brand-consumer engagement.
What is Video Commerce?
So, what is this Video Commerce that e-commerce operators around the globe are so eager to adopt? Let’s try to define it in clear terms. Before writing this post, I was quite perplexed at the number of different definitions and similar terms being used for this concept when I searched on Google. So that there is no confusion over this terminology, I’m going to define Video Commerce in this post as “the practice of using video contents to promote and sell commercial products or services on the Internet.”
Then, what about the term “Live Commerce” that is frequently used as a synonym? How is it different from Video Commerce? Live Commerce shares the same purpose as Video Commerce in that it’s the “marketing and promotion of brand and product through video contents.” However, since it is confined to the use of “live streaming formats,” you can consider it to be a form of Video Commerce in a narrow sense. “Shoppable Video” is another phrase that is often used interchangeably with Video Commerce. However, as you can assume from its name, this is a type of content or more specifically, “video that includes the links to the product page within the video or accompanying text.” I hope this explanation clears up any confusion you might have had over these similar but different terminologies.
Will Video Commerce become a new paradigm?
- The factual evidence behind why video is becoming the new norm
Video has truly become the greatest influencer on the Internet, with video content expected to consume 80% of Internet traffic by 2020. Then, is it safe to say that Video Commerce, which leverages video content for shopping, will be a lasting trend instead of a temporary, soon-to-pass tactic adopted by some brands? Let’s look at some more data to determine which is true.
Since 2018, global e-commerce platforms have reported strong revenue and conversion rates from the use of Video Commerce. In September 2019, Amazon.com revealed that its conversion rate for customers who watched its live video was 3.6 times that of its non-video customers. Another example of a global e-commerce operator reaping success is Taobao, which announced that its highest conversion rate for live streaming in 2018 was as high as 32%. These numbers are astonishing considering that the conversion rates for emerging e-commerce websites on an average stay at 1-2%, and even for large-scale e-commerce enterprises at 8-9%.
Video Commerce is also permeating social media. In a survey by YouTube in 2019, 90% of users answered that the video-sharing platform helped them discover new products. Another favorite platform of Generation Z, Instagram, reported that 62% of its 50 million users using its short video sharing feature, “Stories,” came to know about a new brand or gained interest in a product by watcing videos on these topics. With branded video content on Facebook showing a remarkable growth of 258% year on year in 2017 and video functions such as Stories being continuously introduced to a growing number of services, video content consumption on social networking platforms is steeply rising.
The intensely competitive Korean e-commerce market is no exception from this changing landscape. The rising trend can be indirectly confirmed by the rapid growth of Korea’s live streaming service market, which is higher than the annual average growth rate of 46.4% in the entire Asian market (Research & Markets). Companies that own their online brand stores, including the major Korean social commerce operator TMON, are aggressively launching new services that incorporate video content. The success story of a mobile shopping platform by a widely used messenger app recording its highest daily trading volume within just 40 minutes of live video broadcasting certainly captured the industry’s attention.
As seen from these examples from companies around the globe, Video Commerce is producing tangible business results such as a higher conversion rate, not to mention generating a new source of revenue. Then what are the qualities that make Video Commerce so effective as a tool for e-commerce?
The answers to this question can be found in the strengths that the video as a medium has: it’s highly shareable, loaded with multiple layers of information, and provides the real-time interaction that consumers desperately need while shopping online. So, let’s look at the video’s first winning element, shareability. Video is shared 12 times more than text feeds on Facebook, and over 10 million users are showing social reactions per week on YouTube. So, it’s only natural that not only e-commerce platforms but also social media advertisements are shifting their focus to video content because shareability is the fundamental driving force behind social platforms. All in all, there is no other medium as powerful as a video that makes people want to click and share.
Secondly, video is an exceptional platform for information delivery. The human brain processes information on video 60,000 times faster than text. This means that video content can deliver significantly more layers of information about a brand or a product compared to text or image. Consumers can assess a product with more accuracy through the video that shows multiple features of the product as if they were looking at it in real life, while brands can include a diversity of information that they want to convey to the audience on the video. As a result, Video Commerce can alleviate consumers’ concerns over not being able to check the merchandise in person that were not satisfied by the limited information provided via text and image. Clearly, allowing customers to gain more detailed information about the product positively impacts consumers’ purchasing decisions.
The last advantage of video is its uniquely interactive communication. Traditionally, the communication channels where customers could discuss their desired products with merchandisers on e-commerce websites were generally confined to very few methods such as Q&A pages and customer service numbers. In clear contrast, live-streamed video can provide the answers instantly to any questions that consumers might have through live chats, helping them make decisions on the spot.
So, in light of these characteristics that make video content so special that is inarguably leading to a considerable improvement in conversion rate for e-commerce providers, we can conclude that Video Commerce indeed is a service that e-commerce service planners must consider using.
How global enterprises are using Video Commerce
- The 3 major methods and use cases
If you seek to utilize Video Commerce as a means to keep up with the consumer trend and maximize e-commerce performance, it will help to look at some of the Video Commerce services in the market by different types of usage. Let’s look at some examples of Video Commerce usage by global and Korean e-commerce platforms, categorized into three types by their format. The first method is embedding the Video Commerce function into the brand’s mobile applications and websites to enable live streaming and shoppable video exposure. Shilla Internet Duty Free, a leading duty-free retailer in Korea, runs a mobile shopping application for sales purposes. In October 2019, it launched a new live streaming service inside the app named “Shilla TV,” adding a new dimension of shopping experience for its users. On this service, customers can watch a live video of currently popular products in the duty-free store introduced by famous video creators, and easily purchase as they watch it. The video includes a chat overlay that enables consumers to talk to the sellers as the contents are being streamed. A unique feature of this live streaming service that differentiates it from any other duty-free competitors is that it is personalized to the needs of individual customers watching it.
(Source: Left-Shilla TV / Right-29CM)
Another example of an embedded Video Commerce service is the shoppable video introduced by fashion and lifestyle marketplace 29CM. The “29TV” launched in February 2020 allows brands to upload and stream 29 second-length videos on the 29CM mobile app and website. The trendy contents created by each brand showcase the features of the brand’s product and the look-and-feel of the brand’s style in 29 seconds that flat, 2D images could never manifest.
Users watching the 29TV can buy the products in the video by simply clicking the linked images to the product page. After its launch, 29TV soon became viral because of its snackable, flippable contents that resonated with the Millenials and Generation Z.
In these two cases, the companies incorporated the Video Commerce function into existing mobile or web applications. So, from the customers’ perspective, the shopping platforms would seem to have simply added a new feature. The difference between these two examples is that while Shilla TV focused on catching the customers’ interest through creators’ live broadcasts to increase product sales, 29TV blended in the videos created by each brand into the curated product information to enrich the user experience and drive sales.
(Source: AmazonLive)
Other e-commerce operators have created new applications designated for live streaming purposes. This approach has mainly been taken by e-commerce enterprises or retailers that have a host of individual sellers and partners to help small-to-medium-sized companies without sufficient resources boost their sales through live broadcasts. A prime example of this is the Amazon Live Creator app launched in 2019, where sellers can promote their products listed in Amazon.com via live streaming. Similarly, Korea’s major e-commerce platform TMON gained spotlight when it launched its live streaming application TMON Select for its sellers. The new application addresses the drawbacks of existing video content platforms, namely the scarcity of products introduced, and the low conversion rate despite the huge number of viewers, owing to the fact that most users pursue content only for fun. With TMON Select, sellers have a better chance of exposing and promoting their products to all TMON visitors without having to pay for advertisement.
The last practice of Video Commerce adoption is to capitalize on the video functions available on social networking platforms. Since social media with its extensive user base is optimized for exposure, it’s undoubtedly a commerce platform vital to all sellers from individuals to giant retailers. Brands can choose from a variety of video tactics to engage customers from a sponsored timeline to shoppable videos uploaded on the brand channel such as Stories that are displayed only for a set period of time or live stream video. The benefit of this method is that sellers can expose their contents to the vast pool of users on social media with no additional preparations other than contents creation. But the drawback to this easy-to-use format is also clear: this scheme leaves no room for customization and scalability since the services’ functions will be confined to only what the social media offers by default. This also means that the content’s format and the merchandiser’s ability to analyze customer data will be limited.
Coming next: How to prepare for a Video Commerce service launch
In this post, we explored the basic concept of Video Commerce, why this is a growing trend, and the three major methods of how companies are leveraging this service. In the following post, we will move on to find the answers to a very important question: “How should my company start a Video Commerce service?” The article will focus on the operational aspects and preparations that need to be made in order to launch a Video Commerce service, especially in regards to the technology and solution requirements that need to be considered by companies with no prior video experience.
If you want further information of video commerce, please visit MegazoneCloud video commerce page.
Written by Hyewon Ko,MegazoneCloud global digital BD