The Video-First Future of Ecommerce

Connie Chan and Avery Segal

In the future, we’re all going to be shopping on video apps like TikTok. Whether you’re buying instant noodles or high-end sweaters, it has become increasingly clear that short video clips are the future of ecommerce. Think of them as compulsively watchable commercials—with a direct link to buy.

In the US, the usual monetization system for video is limiting. On YouTube, the biggest online video platform, compensation is still largely driven through through ads. But for most creators, that amounts to a meager living: a 2018 report found that the top 3 percent of video creators accounted for nearly 90 percent of total views on YouTube. Even those who broke into that coveted top 3 percent were still only earning about $16,800 in ad revenue annually. 

Now, through the rise of short-form video content platforms like TikTok, Instagram, YouTube, and Pinterest, we are entering a new era of native ecommerce. Entrepreneurs ranging from farmers to indie craftspeople to clothing designers are able to reach shoppers directly through self-recorded video clips. Soon we will think of video apps as a platform not only for entertainment, but for retail.

This shift creates a huge opportunity for existing brands, solo creators, and upstarts. In this format, the cost of A/B testing is extremely low, meaning sellers benefit from instant feedback. As experimentation with ecommerce and video continues, brands will also harness the wisdom of the crowds in R&D.

The monetization of short video is already happening in Asia. On Taobao, China’s largest ecommerce platform, 42 percent of product pages already include short videos and live streaming is growing quickly. From January to August 2018, the company generated more than $15 billion in sales through livestreams, up nearly 400 percent over the year before. Thus, it’s no surprise that short video apps are the next frontier for ecommerce in the US, fueled by the rise of native shops and integrations with popular third-party platforms. (We’re likely to see more video being incorporated into Amazon’s product pages and other shopping pages, as well.) Here are some examples of how brands are leveraging short video entertainment apps for commerce in China.

Authentic farm to table

There’s a new subset of influencers in Chinese video apps: rural farmers. These farmers live-stream daily from their orchards, harnessing short video to show off the juiciness and rare varieties of their fruit. By selling directly to consumers instead of through grocers, farms can reach far more customers and earn more money. Meanwhile, viewers can support independent growers—meeting the face behind their fruit—and receive fresher produce than what’s available in local markets.

Ms. Feng, for instance, is a medium-sized fruit influencer in Sichuan province who broadcasts to 218K followers. Her orchard grows sugarcane and pomegranates, but she’s best known for “sugar heart” apples, named after the fruit’s heart-like appearance. This is not your ordinary supermarket apple.

Product testing in action

Seventy percent of Amazon shoppers never click past the first page of search results. That’s because the platform’s homogenized product listings—title, price, photo, and star rating—are built for search, not discovery. As a result, sales are more about SEO, less about finding new or innovative products.

By contrast, discovery-driven video platforms like Douyin (the Chinese version of TikTok) and Kwai have one simple rule for acquiring an audience: be entertaining. You might think that, sans search, the viral potential of everyday products like phone screen protectors would be low. Douyin proves that’s not the case: Rather than claiming to be the safest phone screen protector, why not show its durability with drop videos and unexpected use cases?

Fashion as entertainment

In the future, clothes shopping will be interactive. Instead of scrolling through static pictures or browsing by category, you can watch as a model tries on outfits in quick succession—every one of them purchasable. On Douyin, this is the status quo for fashion influencers, who might showcase five to 10 outfits in a single 15-second video. Shopping in this way is entertaining—more like watching a challenge than dutifully clicking through photos.

Click-to-buy unboxing

Unboxing videos, in which shoppers record themselves unpacking a recent purchase in real time, are huge on YouTube. Such content builds excitement—the grand reveal!—and capture the user’s genuine first impressions. The format also translates well to short video: it makes this otherwise unremarkable kitchen organizer kit seem covetable.

Showcasing the craft behind the product

It may sound counterintuitive in the era of cheap manufacturing and automation, but the market for handmade goods is booming. While most handmade goods platforms in the United States rely heavily on text and photos—the Etsy model—video is a far superior medium. The format not only illustrates the craftsmanship behind the merchandise, it gives customers the ability to interact with creators.

For most of his life, Wan Shishan made a meager income exporting traditional paper umbrellas to Japan. But when he made a Douyin account in April and posted his artistic process—the craft dates back more than 2,500 years—he made $15,000 in his first month. He now has more than 800K followers, and the following video has earned over 300K likes.

Food as a lifestyle brand

There are an infinite number of ways to sell products through short video. Now even ordinary food items can be showcased as lifestyle brands. For example, the following video for instant noodles (which almost has a TV-commercial feel to it) has received more than 230,000 likes and 5,000 shares.

Short-form tutorials

Tutorials have become staples in the beauty sphere, but they can also be a helpful tool for creators. The following seller films tutorials to promote his photography books, essentially using short video to build trust in his products. In snippets, he teaches viewers techniques to take great photos with their smartphones. Rather than displaying the product, these videos showcase the book’s value in action. Beyond basic book details, the product page gives potential buyers additional information as well, such as the table of contents and screenshots of WeChat user testimonials.

AI-driven impulse buys

Purchases on traditional ecommerce platforms rely on user intent—customers typically search for a product and select one of the top results. But Douyin’s use of AI drives impulse purchases of things users wouldn’t think to search for. One such item: this expandable grocery tote for $4. Payment credentials and shipping addresses are automatically saved in the app, making the experience more efficient and user-friendly than any infomercial.

The power of short video

In the US, advertising has long been the established monetization model for video creators. But as YouTubers duke it out for ad revenue, it’s becoming increasingly difficult for new influencers to make a living. As evidenced by Chinese platforms like Taobao, Kwai, and Douyin, video apps present a compelling alternative to monetize content, sell products, and reach viewers directly.

In the future, as more apps become super apps, “click to purchase” will be ubiquitous. But the potential of short video extends far beyond straightforward transactions into the marketing and discovery phase, showcasing craftsmanship, tutorials, and product tests, and more. A 2018 survey found that 85 percent of millennials in the US reported buying a product or service after watching a video. As video apps launch native shops and integrate with third-party platforms, that statistic is likely to rise.

Related reading:
Ecommerce as Video’s Killer App

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