The CQ: Why Startups Will Accelerate Livestream Shopping
Social media giants can't seem to crack the code on livestream, but startups like ShopShops and Loupe are taking off.
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Buzzing at the Forerunner Office…
Startups Will Fill the Livestream Gap
By Eurie Kim, Partner
This week, TikTok reportedly scrapped plans to roll out its “TikTok Shop” livestream feature in the U.S. and Europe. The social media platform started with a pilot in the UK, showering influencers and brands with monetary incentives and subsidies to sell products via new QVC-esque shorts—but the feature fell flat. Many influencers dropped out of the project, and the livestream sales that did happen achieved poor results. “The market just isn’t there yet,” a TikTok exec told Financial Times. “General consumer awareness and adoption are still low and nascent.”
We’re not convinced that the market for livestream isn’t there, but perhaps social media platforms aren’t best equipped to meet the opportunity. Livestream is actually a huge, emerging category—booming in Asia, and projected to hit nearly $500B in sales this year—and every social media giant wants to find a foothold. Outside TikTok, YouTube and and Instagram are also working on similar social livestream offerings.
However, it remains to be seen if American consumers want shopping on their existing social platforms. Shopping requires a level of trust in a brand, which existing platforms have struggled to maintain with consumers. Roughly half of U.S. adults don’t want to shop via social media, saying they prefer to buy directly from the merchant (44%), don’t want to give their payment information to a platform (43%), and feel unsure if the product they see will represent the product that they get (33%). Facebook is the most trusted social platform on which to shop, but less than half of adults feel confident in their purchases from the site. Especially in recent years, the consumer has not been thrilled with how social platforms have handled their information. And from catfishing to ads for products that never arrive after purchase, these companies are plagued with trust issues.
Lingering problems create a gap for new livestream shopping startups to build trust with their consumer from the ground up—like Loupe for trading cards, and Whatnot as a community for collectors. These platforms can be niche, and often deeply understanding what their customers want from a livestream experience.
Livestream shopping platform ShopShops doesn’t rely on influencers to stream on its platform; instead, experienced sales reps called “hosts” are matched with brands and stores in locales across 30 countries (and growing). The team also deeply understands the segmented nature of the U.S. market. ShopShops customers love vintage, collectibles, and designer goods, and the experience centers around the best, most unique finds. As a result, ShopShops is generating incredible traction: Average daily watch time is greater than 30 minutes per user, 50%+ of buyers purchase again on ShopShops within 30 days, and average shopping frequency is 7+ orders per month. “By virtualizing the physical shopping experience, ShopShops is breaking down geographical boundaries for savvy customers and allowing them to shop—not just buy things—from the palm of their hand,” says Liyia Wu, ShopShops’ Founder & CEO.
We’re optimistic about the future of livestream—but we’re betting that emerging companies will be the ones to unlock new potential in this sector, not established social platforms.
This Week’s Top Consumer Insights
By Jenna Birch, Head of Content & Communications
With a robust job market, this could be the strangest recession on record. In all of the past 12 recessions since WWII, the jobless rate was never less than 6.1% and sometimes as high as 14.8%. Currently, the unemployment rate is just 3.6%, meaning consumers still have money to spend even if their dollars don’t go as far.
While millions of women lost their constitutional right to an abortion last month, President Biden signed an executive order this week to bolster those rights in any way possible. The order seeks to protect medication abortions, safeguard patient privacy, and support the legal options available to the providers giving abortions and the patients who want them.
Recent events have not been kind to shopping malls. After a brief rebound from pandemic lows this past spring, traffic to outlet malls in June suddenly declined by over 6%. Indoor malls have also failed to recover from the Covid shopping lull amid inflation pressures.
Will travelers get fed up with airlines and stop taking trips? After massive flight cancellations over Fourth of July weekend, the complaints pouring into U.S. airlines are up 300% YOY.
It’s hard to overstate how much social media users are falling for TikTok, as the platform experiences rapid growth. The average U.S. user spends 50% longer on the TikTok each day compared to Instagram, and revenues are expected to match YouTube in 2024 at $23 billion.
Amazon will be offering Prime members an addition perk ahead of Prime Day next week: Grubhub+ membership will now be free for one year for Prime members, giving millions access to no-fee deliveries over $12.
Toyota sells its 200,000th electric vehicle this week, joining just two other car companies—Tesla and General Motors—at this milestone. This will also trigger a “phaseout” of the $7,500 tax incentive that consumers receive by purchasing an EV from Toyota.
Walmart is adding its InHome delivery service to Walmart+, meaning members can now get groceries delivered directly from the store to their fridge. The retailer is offering to locales, as well: Miami, Dallas, San Francisco, Tampa and Orlando, Austin, and San Jose Walmart+ members can now access InHome.
In other Walmart news, the retailer will not hold its rival event to Amazon’s Prime Day this year—because discounts are already steep enough, apparently. Alongside other major retailers like Target and Gap, Walmart is trying to clear warehouses of excess inventory, meaning deals will be going on for some time.
A simple guide to ‘buying low, selling high’ in this bear market—especially for consumers who are just getting into investing.
“In venture, SMBs used to be the category you wouldn’t want to touch with a 10-foot pole. They made decisions like bureaucracies and spent like consumers… What’s changed is not the attitude of the SMBs, but the way startups approach them. Forerunner was an early investor in Faire, which is a wholesale supplier for Main Street, USA businesses. They didn’t show up Day 1 and say, ‘Hey, we’re going to sell you a bunch of products, and if you don’t sell them, well, you’re on your own!’ No, they said, ‘A lot of these small businesses behave like consumers—and consumers have gotten used to the idea that if you buy something online and you don’t like it, you send it back and return it. And it is free.’ Faire’s initial hook was, ‘We’ll send you products we think you can sell in your store, but if they don’t sell through, send them back. We want to keep you as a customer.’ That was a very different, collaborative approach. They were leveraging Faire technology to figure out which products they thought would sell in that particular store—not to take advantage of that business, but to partner with the business. We are seeing more and more attitudes like this. Toast is a great example. Toast was selling into small restaurants that just got hammered with Covid and the behavior changes that happened almost overnight; they quickly revamped their product toward touchless ordering and delivery-friendliness. That is where the company went from kind of a grind, a hard SMB business, to something that was really opening doors to incremental revenue. That is when the business really took off. Restaurants are the ‘canary in the coal mine’ for SMB businesses—a little like how online travel adopted technology earlier than other sectors. We can look at restaurants to predict trends because they are high-frequency, people eat in many locations, and everyone eats three times a day. You can look at the evolution that has happened there and apply some of those proxies to other categories that are less tech-savvy, but have similar pain points to those businesses.”
—Brian O’Malley, Managing Partner at Forerunner, on The Consumer VC podcast, discussing how to bring technology to the SMB category and determine which categories are the next to modernize.
✨ Ask Forerunner ✨
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Kirsten talks to Erin Griffith at The New York Times about how VCs are “calming things down and cutting out the noise” as a necessary reaction to the funding boom in 2021 and the macroeconomic climate. Read here.
Brian joins host Mike Gelb on The Consumer VC podcast to share Forerunner’s view on a favorite theme: The Empowerment Economy. Take a listen here.
Fortune spotlights the stellar CEOs helming A-Frame’s brands: Kia Lowe (CEO of John Legend’s forthcoming skincare brand), Mia Meachem (CEO of KINLÓ), and Pamela Cholankeril (CEO of Proudly). Read here.
Work at a Portfolio Company
Senior Manager, Website, Birdies | Birdies is on a mission to empower, support and lift up all women through the products we make and the women we serve.
This role is for a strategic, tech-obsessed, ambitious and results-oriented leader to drive growth and optimizations of our e-commerce experience.
Creative Lead, Metafy | Metafy is working hard to innovate the ways in which expert performers monetize their talent.
This role is for some who makes online magic—viral, irreverent content.
Product Marking Associate, ShopShops | ShopShops is an interactive livestream shopping platform that enables a community of shoppers to connect with products, brands, stores, and passionate sellers across the globe.
This role will oversee the performance of ShopShops’ primary consumer properties, including the app’s Home Tab, App Store page, website, and mobile web experience.
There are ~1,174 other openings on our jobs site. Check ‘em out.