A toymaker half-jokingly said he plans to shut down his store to focus on Facebook Live sales

It has already been more than a year since Facebook Live was launched and the live streaming didn’t merely create a new feature for celebrities or journalists to engage with their fans or followers.

In Taiwan, for traditional retailers, it means a lot more. Despite the fact that much of their businesses is being disrupted by the digital age digital age (and most of them don’t know how to manage fan pages well), the easy-to-use feature of Facebook Live is exactly what they desperately need to reconnect their business to picky customers.

Facebook Live is actually assisting old-school entrepreneurs find a second summit in their business.

Game rules

Based on the way audiences purchase their items on Facebook Live, there are two strategies that have become increasingly popular among online sellers: a bidding system or direct purchases.

The bidding system works like it sounds. The audience participates in a live auction and the item gets delivered to the winning the bid.

Putting in a bid, due to the inherent limitation on Facebook live video, is done via the comment section, with numbers representing their bid. It is unprofessional as compared to real auction houses, but it allows anyone to join the auction regardless of the social status and income level.

More importantly, it evokes a memory — mostly within older millennials — of street auctioneers in traditional markets and night markets back in the day.

Direct purchase, on the other hand, means the audiencec can buy products at a fixed price without bidding. As good shows tend to be lively and detailed, it further encourages impulse purchases . More precisely, because some prospects might not be willing to join bidding process, this purchasing method provides them with an easier and faster avenue to make a purchases.

A mixed type of the both strategies is growing in popularity on Facebook Live and the same company can use both approaches depending on what kinds of product are being auctioned.

Product categories

Up until now, there typical shopping means a plethora of products are presented before the consumer’s eyes.

But today, anything from fashion and beauty products, to high-end furniture collections and luxury jewelry, can be sold through live streaming.

A fun quirk is the sale of high-class seafood and meat — such as hairy crabs and Angus rib-eye steak — becoming increasingly sought-after products (good for both the seller and the buyer).

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Broadly speaking, these products can be roughly classified into two categories based on profit margin.

High-profit-margin products, premium designer handbags, for example, are sold mainly in the means of bidding. Surprisingly, these luxury goods rarely end with zero bids due to the fact that most products are auctioned at an extremely affordable price. They can rapidly attracting thousands of online viewers to join the bidding.

Sometimes, the audience even asks for more additional bonus, such as free shipping and delicate packaging.

“We didn’t lose anything, even though those Rolex’s stainless steel watch and Prada’s leather handbags were sold only at half of its original price,” said an insider with the knowledge in running live streaming auction business who requested anonymity.

“We can easily break even by selling other less premium products. Also, the most important thing is both of our online and offline sales see tremendous growth in revenue thanks to Facebook’s live streaming.”

Low profit margin products, alternatively, are oftentimes where we see direct purchasing. The reason why is because the interactive experience brought by live streaming is why it is moving beyond traditional infomercials. Live streaming a products’ demo and unboxing taken to another level because the viewer can engage with the seller.

Within a short time, these live streaming sellers, usually ordinary and not famous, became the hottest star on social media platform, aggregating a huge number of loyal fans and followers in a blink of an eye.

Key elements to stand out

With the current climate of live streaming, it is possible to get lost in the noise. There are several indispensable elements to start an impactful and successful live shopping campaign.

Influencers, referring to online celebrities or experts in a certain field, play a paramount role in the live streaming process. Given the trust the public has in them and their positive and professional public image, their words carries enormous weight.

On top of that, their fame and popularity allow sellers to reach a very large audience across the online community, creating a striking synergy that contributes to a successful live streaming propaganda.

But what if a product sellers need to host campaign alone and be the mainstay because of limited budget?

They can still be successful by creating an appealing and vibrant experience. One of the most compelling examples is the reappearance of street auctioneers; this time, however, it appears on the stage of Facebook Live.

Traditional street auctioneers, with their hilarious strategies to entertain audiences (and dumbfounding skill in speech) are resurrecting the long-lost art of street auctioneering. This time, the street happens to be named Facebook Avenue.

Exclusive giveaways and limited-time offers, widely carried out in sales strategies, are another common but integral element. It not only relatively accelerates the process of live streaming, but significantly decreases the time spent on thinking whether buy or not.

People think, “I’ll kick myself later if I don’t buy it now”.

Last but not the least is the arrangement of ‘sleeping cells’ — people who remain active during the entire campaign and pretend to be an enthusiastic audience.

Outstanding and impressive as some of the live streaming performances are, the majority of campaign results don’t come out as strikingly as planned. Most streaming viewers are passive, timid, and are inclined not to be the first to put in a bid or start a conversation.

Consequently, this requires arrangements with spies, sleeping cells, invigorate the audience at the beginning of a live streaming session, avoiding occasional awkward silence that would kill sales.

The advantages

Physical cost reduction is a major advantage of Facebook Live streaming being one of the most decisive factors.

Live streaming costs the price of a phone (which, because phones are ubiquitous with modern life, is practically free). This means online sellers are able to live stream with their smartphone camera almost anywhere, as long as there is access to the internet.

Moreover, this advantage of convenience greatly reduces the barrier to entry for traditional physical store owners, who merely focus on offline sales, to show their online presence and create their own online community.

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Furthermore, leveraging live streaming well, especially on Facebook, gives followers a better understanding of a seller’s business. It helps build customer loyalty, and demonstrates the seller’s unique value proposition.

It is also reported that viewers spend more time on Facebook Live than any other type of Facebook content. Despite the fact that not every viewer would buy the products showcased, they may someday make their first purchase ultimately because of that Live video they happened to watch one day.

“It’s unbelievable that our sales revenue has almost doubled since the use of Facebook Live,” said a toy retailer in the interview, chuckling to himself.

“Live streaming is such a powerful platform that I’m even considering shut down my physical store and focus on Live streaming auction.“

He continued to share that the biggest reason why he loves Facebook Live so much is that there exists no temporal and spatial restrictions.

Issues

While the use of live streaming in selling product seems like a fantastic idea, there actually exist issues regarding tax, fraudulence and potential shopping disputes.

Tax evasion is one of the frequently reported issues. Thanks to the lack of a payment gateway on Facebook Live and the fact that most transactions are carried out behind the scenes, conducting a tax investigation become a thorny problem for the taxation bureau.

In addition, the incomplete regulatory system leaves a grey area for people that can be seized upon by people with bad intentions. The administrative unit has not come up with a better solution and can only rely on the taxpayer volunteering to file their tax returns.

Similarly, fraudulence, occasionally appears on live streaming shopping. The emergence of knockoff and counterfeit items — luxury goods in particular — shows no signs of stopping due to tempting profit margins and advanced manufacturing techniques that make unauthorized products look extremely genuine.

Customers may fall into a trap easily when coming across a fake product on auction at an irresistible price. Most importantly, buyers don’t realise the truth until the deception is disclosed.

The appearance of shopping disputes, additionally, is an inherent defect in Facebook Live selling.

Although Facebook launched a new feature allowing users to transfer money on Messenger in 2015, this payment system is not open in most places globally.

The underlying imperfection forces retailer to turn to traditional payment methods, such as cash on delivery and bank transfer service, which can cause shopping headaches because the transaction is not completed immediately.

Customers may regret their purchase and refuse to finish the payment, causing problems.

Other existing players

Apart from Facebook Live, there are two other local live streaming platforms, LIVEhouse and Funoo, that are popular in Taiwan and are targeting different segments of client respectively.

LIVEhouse, founded in 2013, is the largest local live streaming platform in terms of scale. It offers unique products like studio rental with filming equipment and consultation services.

Currently, they tried to expand their presence in the live auction by cooperating with one of the most famous jewelry appraisers, A Bang Shih, in Taiwan. Even though the performance was not revealed, their ambition toward live streaming shopping is obvious.

Funoo, another Taiwan-based live streaming platform, was officially launched in this April. In comparison with Facebook Live and LIVEhouse, Funoo is the first platform aimed at providing a one-stop service for clients by integrating a payment gateway, logistical system, and other necessary services.

So far, they have built a partnership with several large corporations, actively holding public lectures to build brand awareness.

Future

While the development of live streaming shopping moves forward, the entire industry is still fragmented and under formation.

We are not sure whether it is just a short-term fad or revolutionary progress but, live streaming shopping will undoubtedly spark another fierce battle in retailing.

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