How the rapid growth of live shopping could signal a shift in the holiday retail landscape

While live shopping may not significantly impact retail sales this holiday season, its rapid growth signals a coming shift in the e-commerce landscape, says one McMaster expert.

Ruhai Wu, an associate professor of marketing at the DeGroote School of Business, says live shopping — when brands sell products through live-streamed video and viewers shop in real time — provides a compelling blend of e-commerce and entertainment.

“It’s transforming the traditional online shopping experience, turning it into a real-time event where sellers showcase products, answer questions, and entertain viewers,” explains Wu. “It mimics the personal touch of in-store shopping while offering the convenience of online shopping.”

The livestream commerce market is gaining momentum, and quickly — from $20 billion in 2022 to $32 billion in 2023.

And it’s projected to reach $55 billion by 2026.

Below, Wu shares his insight on the future of live shopping, and what its growth means for the retail landscape as a whole:

Do you think live shopping will be a big factor in holiday shopping?  

Live shopping is growing rapidly in North America but still represents a small fraction of the e-commerce market — about two per cent of e-commerce and 0.3 per cent of total retail sales.  

For perspective, 2024 holiday shopping in the U.S. is expected to generate between $900 billion and $1 trillion, with approximately $300 billion through online channels.

In contrast, the total annual U.S. sales from livestream shopping are unlikely to exceed $45 billion.

What do you think is the appeal of live shopping?   

Live shopping merges the merits of online and in-person shopping, allowing real-time interaction between buyers and retailers.  

This format offers the convenience of shopping from anywhere at any time, with the added benefit of direct product demonstrations and peer interaction in the livestream.  

Retailers are often influencers who play a key role in driving sales through their personality and influence.   

Consequently, livestream shopping typically achieves much higher conversion rates. While a well-performing e-tailing (or electronic retailing) website usually sees conversion rates of about one per cent to five per cent, livestream shows hosted by popular influencers can often reach conversion rates of 20 to 30 per cent.

Are there any risks?  

Impulse buying is more prevalent in live shopping.  Consumers had better keep a vigilant eye on their credit card balances.  

For businesses, any inappropriate behaviour or a scandal related to influencers, if it happens, could cause an unexpected but profound impact on the brand they represent. 

Is this where shopping and e-commerce is heading?  What does this do to more traditional retailers?  

Yes, I believe livestream shopping will become a significant component of e-commerce and the whole retailing industry.    

Similar to how traditional retailers adopted online channels in the past two decades, we can expect them to integrate live shopping options gradually.  

This trend is already visible in China, where local stores, such as bakeries and fashion stores, use live streams to showcase and sell products online from their locations, blending traditional and digital sales strategies effectively. 

More and more businesses are embracing affiliate marketing and recruiting influencers to sell products on livestream or short video channels.  

Many new platforms like Whatnot, Ease Stream, vClerk, ShopShops, etc., are emerging alongside traditional platforms like TikTok, Meta and Amazon.