A Salesman in Your Pocket

We want entertainment. We want consumption. And we want it now.

But entertainment rarely results in the type of material consumption we crave. Sure, QVC did its best to bring together the two worlds — but C-list celebrities acting moderately excited about a new cast iron skillet never truly quenched the thirst.

And consumption, whether the old-timey version which involved a physical visit to a brick-and-mortar store, or the new-fangled Shopify checkout flow, lacks excitement.

If there’s one thing I know for sure about the internet, it never wastes an opportunity to exploit our addictions. We are now at the precipice of a wave of “Shoppatainment” and nobody will be spared.

Parasocial relationships between social media users and their favorite influencers have been supplanting the natural role of the traditional celebrity in recent years, largely due to the unmitigated power and omnipresence of social media.

The celebrity spokesperson of yesterday came in the form of athletes (Michael Jordan for Nike… remember that time he grew a Hitler mustache and somehow increased the sales of Hanes?), models, (Cindy Crawford for Pepsi), and musicians (A Tribe Called Quest for Sprite).

But the proliferation of social media, democratization (sorry for using that word) of fame, and the comparatively low cost of social media influencers vs. world-famous celebrity, has changed the market in a major way.

Instagram scrollers may still idolize the most famous celebrities the same way they always have, but they never have felt so personally connected.

A study published in Acta Psychologica in October 2022 found that parasocial relationships in interactions between consumers and influencers are a highly effective tool to generate sales.

Keeping in mind this emotionally-charged revenue-generating advantage, the next step is for the market to dose the ecosystem with steroids… turning social media posts intended to drive sales into live events, which fuels the parasocial relationship and implicit trust to new heights.

My interest in this topic was piqued by this week’s announcement that Fanatics will begin live-streaming shopping for collectibles. I’d been aware of platforms like Whatnot, a live auction platform for selling everything from watches to comic books, as well as the industry known as card-breaking, which allows consumers to purchase a ‘spot’ in often expensive boxes of trading cards while they watch on-camera personalities open the box and reveal their cards.

What I failed to realize was the number of major brands in the U.S. that have already invested heavily in the concept. Amazon now has Amazon Live, Walmart has dipped its toe into the waters, and even our old friend QVC has gone mobile.

The domestic market has swelled from $5B in 2020 to $17B in 2022, with forecasts for 2026 predicting that number to triple to $55B.

That growth is astounding, but it pales in comparison to China’s. From $18B in 2018, forecasts predict 2023 to post nearly $730M. According to a report by Coresight Research, U.S. livestream shopping makes up just 2% of eCommerce, while that number is ~23% in China.

The reason behind this gulf in the development of the industry might be able to be chalked up to Alibaba’s early adoption of the phenomenon in 2016, when it opened its shopping arm Taobao — a moment McKinsey (gross) called “a new chapter in sales.”

Another potential driver is the intense Covid lockdowns that restricted Chinese consumers, a dynamic that could have expedited the trend to fill the gap of social interaction and, frankly, boredom.

This is a logical progression of our influencer-led culture, where infinite scale is free, trusted ambassadors are sky-high, and we require entertainment wherever we go.