August 16, 2022

  • Facebook has announced that it will be shutting down direct shopping by October.
  • Business owners are now testing other apps to continue tapping into the $25 billion market.
  • Creative economist Ryan Dirt said the move opened up space for other platforms to shine.

If there is one thing the pandemic has taught business owners, it is that adapting to unexpected changes is a critical skill for an entrepreneur.

So when Facebook recently announced that it will be shutting down its direct shopping features by October to focus on Reels, some early adopters were surprised but not defeated.

“I was shocked,” said Britney Reinbarger, founder of pink crown boutiqueA digital women’s clothing store. She told Insider that she started using direct shopping for her business in October 2020. But since she was interested in that, she quickly shifted her focus to the other sales and marketing channels she was testing.

Live shopping is a technology that combines shopping and entertainment, allowing sellers to speak directly to their audience and answer questions about their products. Pandemic-induced lockdowns have accelerated the rise of the trend in the United States, with Coresight Research The market value is estimated to be $25 billion by 2023.

But before suggesting that Meta’s decision is the beginning of the end of live shopping in the US, Ryan Detert, CEO of influencer marketing firm Influential, offers a more optimistic view: It’s the start of a new era, one in which the US can finally catch up in the China live streaming market. . Meanwhile, entrepreneurs can still use technology to tap into a booming market to build loyal customer bases.

“People know the game is a hundreds of billions dollar game — and they’re not going to give it up,” Dirt said. “Whether the platforms themselves provide the tools or third-party platforms, creators and brands will find ways to monetize these social media audiences.”

Move to other platforms

Dirt said Facebook wasn’t the only major company exploring direct shopping, so it makes sense that it will focus on features that are most likely to generate revenue in an uncertain economy swung by the recession.

When Insider reached out for comment, a representative for Facebook’s parent company Meta said, the company “has nothing to add other than the guidelines we provide at our site.” Help Center article. “

Live shopping has been popular in China for more than a decade, as the industry estimated to $305 billion last year, up from $63 billion in 2019, according to Coresight research. Dirt added that the US is three years behind China in the direct shopping game, which is evident not only in market capitalization but also in the slow growth of consumer sentiment.

“Consumers are going to act slower, whether it’s a big push from a social platform or from these individual businesses,” he said. “The bigger question must be, How can you give the proper fertile land to the West to offer what the East has been able to offer?”

Two charts comparing the market value of direct shopping in the US and China

Two charts show how the US online shopping market lags behind that in China by nearly three years.

Courtesy of Influential, McKinsey

In order for US consumers to catch up with buying levels in the Asia Pacific region, Dirt believes platforms like Facebook, Instagram and TikTok must be at the forefront of live shopping, live streaming, he said.

“Everyone has a market for creators now,” Dirt said. “They’re all going to start streaming, live shopping, and shoppable videos, and that’s where I think a lot of will live on in the next 18 months.”

While most Americans are not yet ready for direct shopping, some consumers have shown an invested interest in entertainment meets shopping. Reinbarger estimated that only 15% of its sales came from direct shopping but the real return on investment was the loyal customer base it built from hosting the weekly shows on Facebook.

“Being only online, we don’t really get one-to-one interaction with our customers,” she said, adding that direct shopping has built trust between shoppers and Pink Tag.

Kelley Cawley, a retailer, has noticed enough interest in her Facebook live shows that she doesn’t want to give up on the channel. In the past year, her daily deals increased her sales by 88%, she previously told Insider. It plans to continue making Facebook Live videos, while using another platform for product sales.

“Our ultimate goal is to choose an option for our business that is very easy for the customer to transition into,” Cooley said.

Direct shopping renaissance

Dirt said business owners have two options in this environment: They can continue to use social media platforms that host live shopping or use one of the many apps, such as TalkShopLive, CommentSold or Bambuser, that integrate with Shopify and give businesses more control over their data.

In fact, he believes that this is the time for direct shopping startups to shine.

“This will be a renaissance for them in the next six to 12 months,” Dirt added. “I wouldn’t be surprised if, at some point, some of the major platforms took over a few of them.”

Many business owners like Renbarger are already using other platforms. She recently started using Cartr, an app that connects her Shopify store to the videos she posts on Facebook.

“I’m really grateful we’re using Cartr,” she said. “We can still do direct shopping, but then we do TikTok and Reels as well.”

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