As Meta gears up for its “year of efficiency,” the company announced today that it’s exiting the livestream shopping business on Instagram, following a similar shutdown on Facebook. As of March 16, 2023, Instagram users will no longer be able to tag products while live streaming – a capability that has been generally available to US businesses and creators since 2020.
The changes highlight the difficulties the US market has had in making livestream shopping successful.
The activity is already booming in Asian markets, including China, where apps such as WeChat, Taobao Live, and Douyin (China’s TikTok) have proven live shopping to be a popular and profitable venture. As the pandemic raged around the world, many American companies also wanted to embrace live shopping to boost their own online retail revenues. It didn’t take long for experts to call live shopping the “future of e-commerce,” citing the early traction companies like TalkShopLive, NTWRK, Brandlive, and others in the space that they had gained, in addition to adoption by major tech companies like Meta, Amazon and YouTube.
But the pandemic had clouded the true picture. While consumers stayed at home, online retail boomed and e-commerce sales skyrocketed. However, when the dust settled and things returned to normal, analysts found that US consumers had not embraced live shopping. A report noted that social commerce as a whole, including livestream shopping, made up only about 5% of total US e-commerce sales last year, according to data from Insider Intelligence.
News soon came that TikTok, which had been heralded as a potential live shopping leader, was scaling back its live commerce plans in the US and Europe as many live stream tests yielded zero sales. (More recently, it’s said to be exploring another attempt at live shopping, this time in partnership with TalkShopLive.)
It seems that the different cultures and digital habits of Western markets have made it difficult to replicate China’s live commerce success, just as it has failed to produce an equivalent “super app” that could compete with WeChat .
Meta claims that even though it is ending live shopping, it is still investing in shopping as 90% of users follow at least one company on the site.
But instead of driving live commerce, it will now focus on advertising as one of the main ways people discover businesses and shop on Instagram. This includes using its automated tools like Shop ads and Advantage+ shopping campaigns aimed at helping improve ad performance, it says. The company will also continue to invest in checkout, where people can buy a product via Instagram and Facebook Stories, Feed or Reels with just a few taps.
Despite its promises, Instagram has recently revealed that it plans to deprioritize shopping on its app. Last month it made a rather significant change to the navigation, completely removing the Shop tab and moving roles to the side. The changes were an attempt to address growing user criticism of the aggressive Reels push that stemmed from Instagram’s competition with TikTok. Recently, Instagram head Adam Mosseri admitted that the company had pushed too much video and would try to rebalance the number of photos and videos shown. It is likely that the demise of live shopping is at least partly related to this downturn as well.
However, Instagram says creators can still go live on Instagram and invite guests and host Q&As. Businesses will still set up and run a store on Instagram after live shopping closes.