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Scaling video commerce – how the operating model is changing

This article talks through how the operating model of retail is the starting point in scaling video commerce, but by no means the end point. The retail operating model will now evolve quite quickly to adapt to the growth of video commerce.

A question that comes up frequently when discussing live video shopping – is whats involved in scaling video commerce? People who have trialed it can see the outcomes, however the perceived limitations of live, one to one video shopping are also clear. If you have a million people visiting your website a month, how are you going to meet that demand? We are at an early stage of the video commerce industry, so new operating models are just starting to present themselves. Those who find scale early, will have an advantage as the expected growth of live video shopping begins to take hold.

This article talks through how the operating model of retail is the starting point in scaling video commerce, but by no means the end point. Retail will now evolve quite quickly to adapt to the growth of video commerce. Its important to work through unifying both video commerce strategy and retail strategy to find the new scaling model.

woman in white robe sitting on white chair

What is video commerce and the components that make up the industry?

We have written a number of articles on what is Video commerce. Here, let’s quickly break down the video commerce into its components. We believe there are

  • One to many (non-live) – This is pre-recorded video distributed mass distribution platforms (facebook, youtube, instagram, amazon as well as a brands website). Influencers dominate this space, command the greatest reach, however well funded brands can also play in this space
  • One to many (live) – this is a live video, where people “tune in” to watch an “event”. All the large scale video distribution platforms also have live components these days (e.g. facebook live., Amazon are also in this game with Amazon live)
  • One to many (live to small groups) – Not too dissimilar to one to many live, but smaller, segmented groups are grouped together – where the needs of that group are catered to.
  • One to one (live) – a live one to one video call between a shopper and someone in retail. That someone in retail will be able to react directly to the needs of the shopper (and if they have Confer With immersion tools, will be able to respond directly to shopper needs). Prior to this, brands had to rely on branded zoom calls or whatsapp calls.

When you step back from these components of the industry, its becomes a little clearer about the roles of each of these components. One to many – has mass reach, and caters to all groups. One to one focusses on higher value customers and shoppers – as they expect their needs to be catered to directly. What is very clear, is that there is a funnel

Video commerce industry groupings

As shoppers engage with a brand via video, they move from awareness top of the funnel (all the while remaining anonymous), slowly revealing more about their needs as they begin to engage with a brand in live channels in the middle of the funnel – and finally expressing needs and engaging one to one at the bottom of the funnel.

So when choosing a video commerce provider, its important to determine at what stage of the customer journey you want to engage your customers. We would argue that brands need to examine a coherent strategy all the way up and down the video commerce funnel. Each stage has a role to play and each stage has an impact on your brand in different ways.

The legacy of live chat in live video commerce

Live Chat is a well established industry and established itself as an alternative, and potential cost saver to a call centre. Routine questions could be dealt with by someone in chat – and in revenue driving areas of eCommerce businesses – there was scale. “A chat operator in a call centre can talk to 6 people at once” – was the assumption in business cases to sign off the chat budget. This created large scale savings in call centres and justified using chat to support sales. Has this compromised how we go about scaling video commerce?

Interestingly, in search of greater efficiencies chat has gone down a bit of a rabbit hole with chat bots. All the investment in chat for years has been in this area. That will fill an important role in self service, however video commerce is not about self service. Video commerce is about a customer being highly engaged in a brand, to the point where, when they are ready – will engage face to face with an expert who can respond to their needs.

…..enter retail in all its interactive and immersive glory.

Why retail and one to one video shopping are linked

One to one video shopping involves the interaction between a product expert (most likely retail sales team members) and a shopper, who has shown enough interest in a product to talk to someone face to face. This sounds a lot like retail really. “I would like to buy a new bed. I’ll go to the bed store and ask someone in the store what the best bed is to buy”. One to one Video calls allow this to happen remotely. Coincidentally, the Confer With Immersion toolset gives the opportunity for customers to experience the product that is as close as possible to the physical experience of touching and feeling a product.

live video immersion images

When considering the operating model and how you go about scaling video commerce, the logical place to start it to consider retail experts as the resource most likley to be utilised. With Footfall in a difficult place currently, you have the opportunity to utilise an under-utilised resource. This can save the jobs (and the corporate knowledge) of some of your most knowledgable people in your product.

This makes sense and has the advantage of protecting corporate knowledge of the business while the Covid 19 takes hold. There are important counterarguments to this as well though. Maybe footfall might not recover. Perhaps the staff inside retail stores already have plenty to do. This is a new skillset and requires training. All of these arguments suggest that the operating model will evolve. Particularly if you want to scale video commerce.

Evolving the retail operating model to account for video commerce

When you business case one to one live video shopping, it makes sense. The numbers are such that conversion and average order value improves to the extent that you can grow sales to become a new selling channel. A new channel brings the promise of new revenue, its true – but it also means there is work required to scale it. We believe there are 3 core components to the change in operating model.

1. Changing actors and existing roles

Utilising retail staff is a great starting point in live shopping. Retail experts know the product back to front, they are presentable, they are trained to sell and they are in the environment (the store) that facilitates the demonstration of the product. They head the list, but there are more:

  • Retail staff – highly trained product experts will always be the first considered for front line
  • Customer service teams – customer service teams are the next most logical candidates for live vide shopping. They have the product knowledge and customer service skills.
  • Founders, leadership and head office teams – the ultimate in remote customer closeness, it makes a lot of sense to have the head office teams talk to customers live online. What better way to understand the needs of customers than be on the coalface
  • Influencers and freelancers – Influencers have made a new industry out of selling a product. The most logical candidate for one to many, and the best one to one candidates can end up here too
who will help you in scaling video commerce?

2. Changing locations

Referencing back to the environment (the store) that facilitates the demonstration of the product in the first instance. It’s all highly convenient. When you unleash the volume seen in online, that convenience wears thin. There are a number of options where you can set up video commerce effectively. Here are some of the top candidates:

  • In retail stores and showrooms – the first, most logical place is inside the retail stores. This could be inside opening hours, or importantly outside of business hours
  • In the distribution centre – conveniently located close to stock, the distribution centre is ideal. Generally blessed with ample amounts of space, distribution centres are ideal for video shopping setups
  • Head office – there is often spare room in head office. Its also close to sales, marketing and retail planning teams. Close to the thinking of the business.
  • At home – Covid-19 induced lockdowns have given birth to the ‘new normal’ of working from home. If footfall is a problem for retail stores, surely retail staff can also work from home
  • In purpose built locations – new, retail grade fit-outs are now taking place in low rent areas, away from high footfall retail. This brings the cost of retail down considerably.

3. Automation

Automation is the catch cry of anyone in tech. We have seen the chat providers go down that rabbit hole. It can go too far and remove the human element from selling sometimes to be fair. Having said that, Automation scales things. The fact that multiple video conversations can be recorded and used for training, scripting of non-live video commerce cannot be ignored. Picture a scenario where you have a super sales person in live video shopping. They are using techniques that are inevitably different to the non-performers. When one to once live video shopping is operating at high frequency, the techniques honed on one to one can be used in one to many vide commerce. Automation will play a role here – and help unlock how consumers really react to your brand and your approaches in selling that brand to shoppers.

Pulling it all together – to scale video commerce

So how do we pull this all together? If it makes financial sense to do it, there are 4 things to take into account when considering the operating model:

  1. Video commerce is a new way to interact with a shopper. Retail is the starting point.
  2. Video commerce and the approaches to interact with customers impact consumers up and down the consideration funnel
  3. There is a different team make up and its likely compensation models will change
  4. Changing location – video retail can exist in the retail store, but also elsewhere – within the retail infrastructure already in place and new locations not traditionally considered.

Scaling video commerce is a clear possibility for those with the ambition and willingness to invest in the strategy development to make it a success.

Confer With

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