Will live-stream commerce drive dropshipping variants?

TJ Gamble recently posted a great video on privacy changes on the web and the potential impact to dropshipping. I found it an interesting video to start the year with. 

Personally I have been watching live streaming for commerce, massive in China but not so big at least in the US yet. COVID has driven more sales online, but there is a real problem that it is harder to understand what a product is before you purchase it if you avoid going to a physical store. Live streaming is one way to help fill this gap, especially when paired with interactive chat allowing audience questions to be answered live. “Could you show me the lining inside the pocket? Is it strong?”

Brands and merchants can launch their own online presence, but from my reading it appears that building a following is more successful with entertaining personalities. (Sigh, okay, I will stick to blog posts and software… and TJ!) Make the shopping a fun activity, an alternative to other TV shows: “Shoptainment.”

This model leads to a model of influencers – entertaining opinionated product experts who show a range of complementary products, rather than a brand or merchant only showing products they sell.

There are some big names now in China in the shoptainment area, but there is also the opposite taking off as tools are made available more widely. Farmers with a mobile phone can talk about their products, their farm, their lifestyle – showing how fruits or vegetables are harvested then shipping choice quality products to individual buyers. 

Smaller influencers may also be local. Avoid big transport overheads by only selling in a smaller area, or for food sales or similar where long distant shipping does not make sense. Not everyone needs or wants global reach.

As smaller influencers take off, that implies there will be more of them, an interesting scaling problem.

So how is this relevant to existing ecommerce merchants? I was thinking back on the dropship model for suppliers, and was wondering if it is also relevant with live streaming. Some influencers are building up their own brand names. They have their own product lines, allowing them to potentially take a greater share of the sale price. But can this work with smaller influencers too? Will they instead need other existing merchants to effectively become dropshippers so the influencer can focus on content creation, not shipping and logistics, but still have a seamless selling experience (also giving them insights into the shopping behaviors of their followers).

The alternative is still there of course, to have referrals to merchant websites directly. Shoppers buy from the merchant, not from the influencer’s facade. Drop an influencer code on a product page URL and it is pretty easy to reliably track where a lead came from.

I have also been hearing of the same cross site pattern with smaller merchants – one merchant may want to add complementary products to their own site that they do not sell, but use another merchant to fulfil it. Micro-marketplaces in effect. It makes a small merchant look bigger than they are.

There are all sorts of interesting challenges in this area, especially when you start talking about tax, merchant of record, shipment tracking, returns and so on. 

Live streaming has not taken off in the US like it has in countries such as China. But if it does take off, it will be interesting to see what new business models will evolve from it, such as whether all merchant sites will need to make it easier to seamlessly allow purchases from other sites. 

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