This article is the second part of an FT series examining the future of retail
Tech entrepreneur Dan Dan Li has been waiting years for the smartphone generation to rediscover a venerable American pastime: the shopping channel.
The idea of selling products through video demonstrations dates back to the 1980s, when the Home Shopping Network and QVC first appeared on US television.
Fast forward to 2021 and live video has become a core feature of China’s biggest ecommerce apps such as Taobao Live, JD.com and Pinduoduo. Shopping is also becoming an integral part of China’s most popular social video apps, Kuaishou and Douyin, Bytedance’s Chinese version of TikTok.
Yet consumers in North America and Europe are often left with flat, static online stores that look more like miniaturised versions of their desktop websites.
“Almost everything else is mobile-first,” said Li, who lives and works in Hollywood. “Entertainment is mobile-first, social is mobile-first, but ecommerce is in the Stone Age.”
That is something Li hopes to change with her start-up PopShop Live, one of a new generation of mobile shopping apps that look to harness the smartphone’s most essential features — cameras and communication — for commerce.
Inspired by the rapid expansion of mobile commerce in China, new ventures including Popshop, Verishop, OOOOO and NTWRK are vying with the likes of Instagram and TikTok to redefine online retail for a new generation of consumers.
Imran Khan, a former banker and Snapchat executive, wants his US-based online retail start-up Verishop to become a “digital mall”.
Amazon is great for finding “convenience” items, he said, but for the fastest-growing categories in ecommerce, such as fashion, beauty and homeware, “people want to hear others’ opinion and understand the story of the product”.
In the UK, the app OOOOO is pitching itself as “QVC for the TikTok generation”, with dedicated video channels for handbags, cosmetics and perfume.
Popshop’s Li was spurred to reboot the shopping channel for the social-media era after attending South by Southwest in Austin in 2016. Festival goers were broadcasting events featuring the likes of Barack Obama through Snapchat and Twitter’s live-stream app Periscope.
She began work on pivoting what had been an app for trading second-hand items into a video-centric experience. But it would be several years before the idea of using a live, interactive feed would begin to catch on with American consumers.
“It took a while to figure out the product experience,” Li said. “Video by itself isn’t going to change shopping that much . . . We have a much stronger focus on entertainment and community.”
Today, retailers from New York’s Midtown Comics and Lee Lee’s Valise, which sells crystals and tarot cards, to Minnesota’s Mall of America, the biggest shopping mall in the US, schedule Popshop shows to exhibit their wares, answer questions from customers, give live performances or just chat with viewers.
Often they are shop owners who had to shut their doors to real-world customers during the past year, turning their empty stores into studios.
“I think Covid is helping a lot of people to better envision what the future will look like,” said Li.
In November, Popshop was valued at $100m in a funding round led by Benchmark, an early investor in Uber, Instagram and Snapchat. Time spent on retail apps globally increased by 30 per cent in 2020, according to App Annie, which tracks mobile usage.
Much of the renewed interest in live-streaming from investors, as well as big companies such as Facebook, is driven by a belief that shopping habits developed during coronavirus lockdowns will soon resemble China’s ecommerce apps the world over.
Their logic is that if Amazon delivers the basic necessities, start-ups or social networks offering video chats and the ability to shop virtually with friends will drive more recreational ecommerce — which Connie Chan of the venture firm Andreessen Horowitz has dubbed “shopatainment”.
Taobao Live has become one of the fastest-growing parts of Alibaba, generating over Rmb400bn ($62bn) in consumer spending during 2020, the Chinese ecommerce group has reported. Similar models have taken off in Japan, South Korea and south-east Asia, where a smartphone is many consumers’ first and only computing device.
But internet companies in the US and Europe are seen as lagging behind.
“Curated exploration is the future of mobile-social commerce, and right now the big companies in the US just aren’t good at it as they don’t have commerce chops,” said Steve Sarracino, founder of US-based Activant Capital, which specialises in ecommerce investment. “China is way ahead of us in this respect.”
Not everyone is convinced. Studying China for retail trends is “super interesting”, said Harley Finkelstein, president at Canadian ecommerce group Shopify, but it is not always clear which ideas will cross over to other markets. “I don’t know [yet] if live video is going to be one.”
Offering a capable mobile app has been “table stakes” among online retailers for years, Finkelstein said in an interview earlier this year. “We don’t necessarily have a team that’s called ‘mobile’ because it would be like us having a team called, like, ‘colour TV’,” he added.
Nonetheless, Americans still seem to prefer checking out on a larger screen. A study by Adobe late last year found that 39 per cent of US ecommerce spending was on smartphones, with the majority on laptops and other devices. A visit to a shopping site on laptops and PCs was twice as likely to convert into a sale as on smartphones, Adobe said.
The kinds of shopping apps that western consumers have adopted hitherto have tended to be more utility than entertainment. Shopify’s year-old app Shop tries to combine the two. More than 24m people use Shop every month, primarily to track parcel shipments from orders placed with Shopify stores.
But consumers can now also discover and buy new products at places they have shopped from before, without leaving the app.
“There’s a difference between buying and shopping,” said Finkelstein. “There are lots of places where a consumer can go to buy something, but I think consumers are showing that they actually want to shop: they want to find new brands and new products, they want to have an experience.”
For instance, Verishop’s “Shop Party” feature, which launched in December, allows small groups of friends to combine Zoom-style video chat with browsing its wares. It proved a hit when lockdowns prevented people from going shopping together in the real world.
Further, Verishop’s “shoppable” content feed, of videos posted by brands and handpicked influencers, is already driving 10 per cent of the products that users add to their virtual cart.
“Content inspiring people to buy things is a really new concept in the US,” Khan said. “All ecommerce [today] is search but you can’t find a story by searching.”
Until recently, venture capitalists in Silicon Valley have been reluctant to back new online retail concepts, outside specific verticals such as food delivery. “Nobody wanted to go up against Amazon,” Khan said.
Popshop’s Li also found that it took a pandemic, and a younger cohort of venture capitalists, to convince investors that the world needed a new approach to ecommerce.
Although adoption of live-streaming and video shopping apps remains small for now, that has not deterred two of the world’s largest social media groups from making a big push into ecommerce recently.
TikTok plans to roll out live-streamed shopping, where its influencers or “creators” push products to their millions of followers, and is introducing new features to allow brands to showcase product catalogues.
After Facebook added dedicated shopping tabs to its main app and Instagram, it recently announced plans to introduce creator-hosted shops. The company is building out a platform for retailers that Facebook executives say will soon extend to its other apps, Messenger and WhatsApp.
“It’s very early but we are seeing a lot of traction,” said Ashley Yuki, director of product management at Instagram.
As well as making product and retailer recommendations more personalised, adding shopping links to live videos is a big focus, she added. “People are looking to discover products from people that they trust — the people around them but also creators.”
Inspired by China’s all-in-one app WeChat, Facebook has for years sought to turn its various services into a “super app”.
George Lee, Facebook’s director of product management, concedes that the American and European shopping apps “continue to lag” their Asian rivals due to their heritage in desktop computing.
“The way that we're building our commerce infrastructure is that businesses can hopefully come on, quickly catalogue their products in our system, and we can surface those in a bunch of different ways that may not be traditionally western,” he said.
Shopify said last month that it has seen the number of shops selling through Facebook and Instagram, as well as total merchandise volumes on the social networks, both quadruple in the last year.
But after becoming habituated to shopping on PCs and laptops, it may take years more for American and European consumers to fully embrace the modern version of the Home Shopping Network.