What is Live Commerce that Unlocks D2C's Strengths? A New Way of Shopping Opened by Dialogue with Users

Live commerce is seeing increasing adoption across diverse sectors like apparel, cosmetics, and home appliances. It's particularly well-suited for D2C (Direct To Consumer) brands, which have gained significant attention in recent years. How does its approach to engaging users differ from shopping in physical stores or online? We explore the strengths created by combining D2C with live commerce and its future potential.

Live Commerce Can Strengthen the Bond Between D2C Brands and Users

Live commerce involves introducing products through live streaming on social media or dedicated platforms, directly selling and promoting to users. First, let's examine the current state of the live commerce market and its compatibility with D2C brands.

Current State of the Live Commerce Market

In China, where live commerce has surged ahead globally, collaborations between companies and influencers called KOLs (Key Opinion Leaders) can generate hundreds of millions in sales within hours. Since services began around 2016, the market size has continued to expand annually. In 2021, China's live commerce market is projected to reach 1.995 trillion yuan (approximately 33.915 trillion yen, 1 yuan = approx. 17 yen), a 90% increase from the previous year.

In Japan too, partly due to the impact of stay-at-home measures during the pandemic, the habit of watching video livestreams by celebrities followed on social media or favorite brands has become widespread. Live commerce is said to be gaining traction, particularly among younger generations.

Why Live Commerce is a Good Fit for D2C Brands

D2C refers to a business model where companies or individuals plan and manufacture products themselves, then sell them directly to users via e-commerce sites, bypassing wholesalers and retailers. Maximizing the use of social media for sales strategies and product development is also a key feature. Live commerce allows direct digital engagement with users, making it highly anticipated as a platform that can better leverage the strengths inherent to D2C brands.

Delivering the Brand's Philosophy and Product Stories

One crucial aspect for D2C brands is presenting their brand world online and fostering user empathy. It's about delivering not just the product itself, but also the "meaning" attached to it – the brand's vision and story – as part of its value.

Live commerce allows direct communication with users. It enables the effective delivery of information and brand worldview that photos and text alone cannot fully convey—such as "This product was born from this vision" or "We actually selected materials with environmental considerations in mind." This promotes an intuitive understanding of the product and can lead to quick purchase decisions.

Deepening connections with users through two-way communication

A major feature of live commerce is the real-time, two-way communication between companies and users through live streaming. Rather than brands unilaterally pushing products, users can ask questions and share opinions or impressions via comments. This fosters a sense of familiarity and trust toward the brand. Consequently, it deepens connections with users and enhances engagement.

Resolves pre-purchase concerns and questions

Many D2C brands deal in apparel and cosmetics. Since these products often come with high demand for "trying on sizes or testing usage before buying," such concerns can become barriers to online purchases. With live commerce, users can ask questions on the spot. Requests like "Could you spread it out to show the sizing?" "I'd like to see the back," or "What's the texture like?" This allows users to examine details as thoroughly as they would in a physical store. Resolving these frustrations and dissatisfactions with online shopping can significantly enhance the customer experience. Furthermore, since these interactions are shared with all viewers, it ultimately deepens product understanding for many users.

Influencers can help expand your fan base

For D2C brands, acquiring loyal fans who make repeat purchases is also key to success. Influencers are highly effective for gaining fans. By featuring influencers popular with the target demographic in live streams, the reach of their audience expands product awareness and grows the fanbase supporting the brand. Furthermore, it increases affection and trust toward the brand.

Approaching audiences with purchasing intent increases conversion rates

Most viewers of live streams are people who follow the brand's social media or already have an interest in the brand or its products. This means live commerce is a "push-type" approach that allows pinpoint targeting of products to an audience with a certain level of purchasing intent. Consequently, it offers a more reliable expectation of increased purchase rates.

Analyze customer data to inform product development and marketing

Live streaming provides various data points, such as user viewing history and purchase history. For D2C companies handling their own planning and manufacturing, this information becomes valuable data for product development and marketing.

Learning from Domestic and International Examples: Key Success Factors for D2C × Live Commerce

Here are examples of D2C brands that have successfully leveraged live commerce.

Skincare Brand

A skincare brand in the US conducts live streams using live streaming platforms. Popular models with millions of social media followers demonstrate the use of skincare products, effectively communicating their appeal and helping to build brand loyalty.

Women's Apparel Brand

A certain Japanese women's apparel brand, which has maintained strong sales even during the pandemic, streams on Instagram Live almost daily. By employing ordinary women with body types similar to their target audience as "livestreamers," they make it easier for viewers to visualize the fit and silhouette of the garments when worn.

Popular Furniture Brand

A domestic furniture brand expanding sales through D2C also holds regular live streams, detailing product features and user experience that photos alone cannot convey. By answering viewer questions and conversely asking viewers, "What color sofa would you like?", the brand gathers product needs. This two-way communication creates a sense of community participation for viewers.

The Future of Live Commerce Expands Through Connections with a Changing Society and New Technologies

Driven by stay-at-home demand during the pandemic, online shopping continues to grow. According to the "Fiscal Year 2020 Industrial Economy Research Project (Market Survey on Electronic Commerce)" released by the Ministry of Economy, Trade and Industry in July 2021, the B2C e-commerce market for physical goods exceeded ¥12 trillion in 2020 (a 21.71% year-on-year increase).

Furthermore, the rise of influential influencers has led to a growing number of people thinking, "I want to buy what they recommend rather than what companies advertise," indicating a shift in user motivations for selecting products. A survey conducted by Neo Marketing Inc. in August 2021 found that over 40% of 1,000 men and women aged 20-50 nationwide follow influencers on social media. Among them, approximately 20% have purchased products introduced by influencers, indicating that influencers exert a certain influence on consumer behavior. It is expected that live commerce will continue to expand through connections with influencers.

Furthermore, the spread of 5G will create an environment where many people can enjoy live streaming more comfortably via high-speed communication. Introducing products with high-definition video and linking with services like AR try-ons should make it possible to provide a shopping experience closer to visiting a physical store.

Linked to these societal shifts and technological advancements, the live commerce market holds significant potential for future growth.

Moreover, as society transitions from "product consumption" and "experience consumption" to an era of "meaningful consumption" emphasizing social contribution and sustainability, how effectively D2C brands can present their "vision" to resonate with users will become increasingly crucial. To achieve this, actively leveraging the latest digital technologies, including live commerce, to deepen communication with users and cultivate the brand and products alongside fans will be essential.

The D2C business is expected to become increasingly vibrant in the future, driven by the expansion of e-commerce usage and shifts in user awareness. To ensure steady business growth, leveraging digital technology is indispensable. Live commerce will be a powerful ally for D2C brands, serving as a communication tool to build co-creation relationships with users.