Video app sees livestreaming as a way to enhance commerce effort
(Bloomberg) — A woman in an ash-blond wavy wig bounces robotically, smiling and slightly out of breath, in front of a green-screened image of a bedroom room lit by pink fluorescent lights. Thousands of people are watching her on their phones via TikTok live when a small cartoon hot dog flashes up on the side of the screen.
“Thank you for the glizzy. Bing bong,” Crystal Alana Bennett says to the fan who had just spent the equivalent of 7 cents to send her a virtual frankfurter, known as a “glizzy” in internet speak, prompting her sing-song acknowledgment of the gift. She goes back to bobbing up and down before shouting, “It’s corn!” over and over— enough times to match the corn cobs sent her way in quick succession by another fan.
Bennett is acting like a non-playable character, or NPC, the name for the figures you run into in video games that only have a few, predetermined lines of dialog. That day, about 15,000 people tuned in to watch her stream live on ByteDance Ltd.’s popular video app TikTok – nearly enough to pack the Barclays Center in Brooklyn. In video games, NPCs’ limited actions can make them boring. But when a human like Bennett plays that role on a livestream, people on TikTok are transfixed and quick to open their pocketbooks.
While these streams are curious and weird, they’re also the biggest live video trend to hit TikTok in the US. Glizzies and corn don’t seem like serious business, but every creator like Bennett gets TikTok a little bit closer to realizing what could be a massive opportunity to replicate its multibillion-dollar Asian livestream commerce operation in the coveted US market. TikTok’s biggest rivals have been unable to make livestream video widely popular in America, but this latest trend is persuading more of the app’s users to “go live.”
TikTok has emerged as a social commerce juggernaut, expecting to sell $20 billion in merchandise through its media platform this year — four times the amount in 2021, Bloomberg has reported. The vast majority of those sales come from its Southeast Asian markets, where the core of TikTok’s Shop retail strategy is to use creators on live video.
Bennett can make about $700 an hour from viewer gifts since she started getting into NPC form daily since mid-July, she said in an interview. “It’s kind of like an SNL or an In Living Color skit,” she said. “I’m just constantly laughing and constantly keeping up with the gifts, and I think that’s why people enjoy my live.”
Expanding TikTok Shop to the app’s global markets is a priority at “one of the highest levels in the company right now,” according to a person familiar with the strategy who asked not to be identified discussing internal priorities. But cracking the US market for livestream commerce will mean succeeding where its biggest competitors have failed. Meta Platforms Inc.’s Instagram killed the ability for users to tag products in livestreams in March. Google’s YouTube and Amazon.com Inc. have offered similar experiences, but they haven’t taken off at scale.
“TikTok is really trying to make live video happen with the understanding that it’s incredibly challenging to change consumer behavior, and that livestream commerce just isn’t a thing in the US yet,” said Insider Intelligence principal analyst Jasmine Enberg.
Im trying to get into Harvard… What like its hard????? #ailive #crystalalana90 #live #ai
♬ original sound – Crystal Alana
TikTok chose the UK as its early testing ground for livestream commerce in Western markets, with predictable results. Events were plagued with low sales and sparse attendance, the Financial Times reported last year. The company didn’t respond to requests for comment.
As it set its sights on the US, management decided that instead of focusing on livestream commerce first, it would split its strategy, people familiar with the matter said. TikTok would create a commerce operation that could rival Amazon, while also providing incentives for users to spend more time on live.
Internally, TikTok calls its shopping effort “community commerce,” one of the people said. It’s meant to build on the success of its trademark video feed that’s intensely tailored to the individual interests of its 1 billion-plus users. The personalization has helped create a wide array of groups on the app that people feel they are a part of — and whose specificity make them easy to target with products.
These communities, sometimes known by names appended with “-Tok,” often have their own inside jokes and recurring cast of contributors. There’s BookTok for avid readers who’ve also been known to mass comment on attractive hockey players’ accounts, as if they’re the protagonist of a romance novel. Or the private chefs of TikTok, which revolves around a group of chefs that work for elite clients each summer in the Hamptons.
Read More: TikTok Threat to Amazon Emerges With $20 Billion Shopping Pilot
When TikTok launched Shop US in a limited capacity in November and expanded earlier this year, the goal was to seamlessly weave the shopping experience into those groups without it looking as overt as an ad. A BookToker may see another user showing off their favorite reading light, while a foodie may see a chef feature a go-to fry pan. Now, those videos — including the pre-recorded ones that make up the majority of a user’s feed — will have product tags and the ability for people to make purchases.
The company aims to build a full marketplace, so users can eventually add products from multiple merchants into their cart and check out at the same time, according to an executive who asked not to be identified discussing internal strategy. TikTok is also handling payment processing for merchants and will manage communication with shoppers after a purchase, one person said. That means the entire purchasing experience would exist inside the app.
Those commerce features are familiar to Americans who routinely find and buy products on their smartphones. At the same time, TikTok has been trying to manufacture interest in that unfamiliar exercise — watching livestreams. In February, the app rolled out a program called “Go LIVE, Make Money,” to provide an incentive for popular creators to livestream and encourage viewers to send them virtual gifts. Stream for more than an hour, convince other users to join you on the screen and amass enough gifts, and get a performance bonus from the company. In September, TikTok is airing a music competition live where the winner will earn a digital reward that can also be withdrawn for cash.
The NPC trend is notable because it wasn’t set up by TikTok. It became a hit because people were genuinely interested in it. That organic popularity is “incredibly important because if you think back to the origins of TikTok shopping and TikTok commerce, it happened organically,” Insider Intelligence’s Enberg said.
TikTok has already established itself as a place culture is happening, and that includes what’s cool when it comes to makeup, fashion and other consumer trends. Products featured in viral videos frequently sell out. Videos with the hashtag, #TikTokMadeMeBuyIt (shorthand for “I saw something on TikTok, so I bought it”) have more than 56 billion views. Most of those views predate TikTok Shop, leaving users to purchase products elsewhere and TikTok without a cut.
“If they’re able to replicate some of that in this new format in live video, it could really help garner much more attention and usage of that format,” Enberg said.
Still, merging shopping and livestream video in the US won’t be easy. TikTok is contending with US government scrutiny that began years ago over its ownership by a Chinese tech company, and multiple bills that could ban the app sit in Congress. TikTok’s US commerce business announced a management shake-up earlier this week. General manager Sandie Hawkins is departing, the Information reported, and the company hired Nicolas Le Bourgeois, a longtime Amazon commerce director, and Marni Levine, a former commerce operations leader at Meta and EBay Inc.
And when it comes to livestream video, one trend won’t be enough to help TikTok succeed. It still needs to convince a flock of popular live creators that they should be hawking goods, in addition to captivating their audiences.
Take Jon Moss, one of those creators that’s made big money from being an NPC on live. In one recent 21-hour stream, he raked in $10,000 from gifts, he said in an interview. That day, he was acting like a unique brand of angry NPC who drags viewers with insults – and fans loved it.
A comedian at heart, Moss is an ideal creator to help TikTok make live video popular, but he’s still not convinced that he should cross over into commerce. “Me personally, I’m not the type of person – I don’t like to sell stuff to people,” he said.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.