How can small entrepreneurs adapt to streamselling?

Streamselling, or live-stream selling, is coming to dominate some e-commerce landscapes, particularly in China.

Streamselling is when a host demonstrates and sells products live, typically on a platform like Taobao, Instagram Live Shopping, or YouTube.

Traditional e-commerce has a low barrier to entry. All that is required is a professional looking website and order and payment processing tools, tools are readily available from companies like Shopify, Squarespace, and Wix. These platforms offer full e-commerce lifecycle management that takes little to no technical expertise to use. These platforms allow small companies and entrepreneurs to build and serve a customer base without significant upfront investment. Anyone, anywhere, can start selling online.

Streamselling has a significant barrier to entry. Streamselling requires well-trained and highly experienced hosts who are usually young and attractive. Streamselling also requires technical expertise as high quality live video and audio requires equipment and experience that are expensive services to hire. For most small companies and entrepreneurs, these barriers to entry are insurmountable.

When barriers to entry become insurmountable, it opens up the opportunity for agencies. These media companies operate as a middle-man between the company and the customer. Agencies have the technical expertise to produce high quality streamselling experiences and they have contracts with popular influencers to act as hosts. These media agencies are expensive and, as they own the relationship with ever larger consumer audiences and influencers, the agency has the power to push all risk to their customers. The agency can charge high up front fees, demand large inventory volumes, and make exorbitant commission on each sale. Regardless of the success of the streamselling session the agency will make a profit.

For most small e-commerce companies, this puts streamselling out of reach. If the popularity of streamselling in China is any indicator, the growth of streamselling may indeed kill the small e-commerce company.

Photo by Liza Summer: https://www.pexels.com/photo/faceless-smiling-lady-shooting-vlog-on-phone-while-demonstrating-dress-6347617/