Editor’s note: Hadar Paz is CEO and co-founder of AI-powered chat solution firm Powerfront, Los Angeles.
The pandemic is continuing to impact retail, and all of us within the industry are aware the record-breaking number of small stores and even large chains that have collapsed.
One result of the pandemic that was hard to predict has been the effect lockdowns have had on returns – and how much it's costing retailers. Shoppers are set to return $101 billion worth of merchandise purchased during the holiday season, particularly due to the explosion in online shopping caused by pandemic closures. This explosion of online retail – folks shopping online daily and often in a frenzy – makes it harder for customers to find and confirm exactly what they are looking for, resulting in an exponential increase in returns.
This already cost retailers a whopping $550 billion in 2020, making the issue challenging to overcome. To cut costs, Amazon, Target, Walmart and more have announced that, in some circumstances, they are letting customers keep their holiday returns while issuing a refund.
One of the technologies that could be critical to this “returns apocalypse” is livestreaming. This is already very big in China, where half a billion people use it to shop from the comfort of their homes. The technology involves shop owners, retailers and brand ambassadors (including influencers) showing an audience how to use the product, highlighting elements in detail and taking live questions. Brands like Gap and Louis Vuitton have incorporated video streaming into their strategies in the Chinese market. Facebook has launched live shopping, and online giants Alibaba and Amazon have created streaming options for sellers.
Video and livestreaming have the potential to change online retail in 2021 and have been predicted to be true groundbreakers. Customers have a direct experience with the product they are studying, and are able to gather detailed information and have their questions answered by experts. The experience is an upgrade from the typical online click-and-buy process.
I have monitored the new technology in China, as well as its introduction into the American market, and have picked up on a few key learnings:
1. Video translates.
Livestreaming retail has turned into a $66 billion industry in China, with even the Chinese government calling it a “new engine” in e-commerce and promoting it as a solution to the unemployment that COVID-19 created. Video shopping just works. For our luxury partners, video technology has increased conversion rates of purchases to 40%, as well as a 300% increase in average order value. When mixed with other services, our partners saw their net promoter score increase by 400%.
2. Humanizing customers goes a long way.
Your average website click-and-buy experience is one dimensional and devoid of human contact. Customers are looking for human connection. This psychological need is likely the reason brands like Peloton and Mirror are booming – through tech hardware, they manufacture the live experience of connecting to another person in a fitness class. Duplicating this and letting customers connect live with sales people or brand ambassadors who are talking to them directly goes a long way in making them feel human. Video capabilities allow sales associates to demonstrate features and products via one-way or two-way video calls and even allow them to flag VIP customers.
3. It can turbocharge influencer strategy.
Brands utilizing video shopping in China are able to leverage their partnerships with influencers. Even farmers have become viral video shopping stars. Live shopping gives brands the capacity to take influencer marketing to the next level. Video allows brands to take their content strategies from photos and short clips to video experiences for their customers where the primary purpose of video is to push product.
4. Video shopping is entertainment.
China’s geographic sprawl may have sparked interest in livestream shopping events. People who can’t quickly and easily access luxury shops, malls or other common forms of entertainment can feel included and connected with a brand by watching. And during the pandemic, it has truly become a form of entertainment. The increase in viewership of “unboxing” and mall haul videos proves that consumers want to watch this type of content. Brands must regularly produce exciting, fresh video content.
5. It encourages people to buy from people.
In 2021, we’ll see a deeper connection form between the customer and the sales associate. Trends show that some customers still prefer the high-touch, hand-held customer service experience they used to find in retail stores. Video-assisted shopping allows customers to feel more personally connected with a brand, or even a specific sales advisor. We know that customers are more likely to return to purchase again if they’ve had a great experience, and less likely if their experience went sour, even if they love the product. This person-first selling will put personalization at the heart of every transaction. Smart retailers will encourage their salespeople to spend more time talking to shoppers to build rapport and foster relationships.
Changing the online shopping experience
The potential of video streaming is endless. The technology can save entire retail sectors and completely change the online shopping experience. It’s a powerful tool that may have helped save China’s economy, and it’s just getting started.