Unless you're from China or are particularly attuned to Chinese culture and retail behaviors, you've probably entered this article wondering what exactly shopatainment is. Coined by Andreesen Horotwitz's Connie Chan in her recent article Shopatainment: Video Shopping as Entertainment, it refers to the phenomenon of turning the retail experience into a full-blown video production. As defined by Chan, shopatainment is when sellers leverage video over photos to sell products, and where buyers browse seller videos as if they're switching TV stations, looking for entertainment. While already a massive industry in China, shopatainment has yet to take a firm grasp on the United States market, but entrepreneurs Gurps Rai and Christopher Kelly are looking to change that with their shoppable streaming platform, droppTV.
According to Chan, while utility and necessity are seen as the primary motivation for shopping within the United States, China has already caught on to another economic driver: shopping as a form of entertainment. Shopping has the ability to evoke joy, comfort, validation, and even stress relief, which is what makes it not only something that is done out of utility or necessity, but increasingly entertainment as well. Recognizing this, a livestream ecommerce industry has been developing rapidly in China, currently totaling $137 billion a year. In the United States, digital ad spend for the entirety of 2020 came in $2 million under that of what China spent on their video ecommerce market alone at $135 billion, to give you a clear picture of the scale at which this movement has already grown. As indicated by the amount of spend that is being made in the industry, selling via video commerce within the country is not as simple as setting up your camera in your bedroom and rolling. In fact, its programming is professional-grade in its quality, with scripts, high-end lighting, rented wardrobes and sets, production managers, sound editors, and professional makeup artists.
Although early examples of shopatainment in the United States have been trialed, for the most part they have lacked the high production value that can be seen in their Eastern counterparts. However, for Gurps Rai, the brainchild and chief executive officer of droppTV, he has recognized the growing importance the role of entertainment plays in retail. Launched just this past year, droppTV is a video ecommerce marketplace which uses proprietary artificial intelligence, machine learning, and computer vision algorithms to recognize products in video content and tag them in real-time. Recognizing that a vital aspect of shopatainment is the ability to keep viewers engaged and prevent them from feeling "sold to", they developed the technology to allow consumers to purchase items within the filmic flow of video in a single Tap without disrupting or redirecting the viewer in any way. Chief Financial Officer of droppTV Chris Kelly has noted the value a seamless shopatainment experience can bring, saying "fashion influences every touchpoint of our lives, and droppTV makes entertainment synonymous with shopping...For consumers, the power to purchase while being entertained is game-changing, for merchants 'commerce as a service' through droppTV's Marketplace will be critical"."
The reason Chinese retailers have made such a heavy investment in video ecommerce is because it has been backed up by consumer trends. They are increasingly searching for both authenticity and relatability when deciding how they will spend their money, especially those who belong to Generation Z. Whether it be an environmental or social cause consumers are looking to buy with purpose, and a sense of emotional connection is an increasingly important aspect of that. Think about the experience of a live concert versus listening to an album on Spotify. With today's crystal clear sound mixing, you are not attending because you want to hear a better quality version of the songs you love. Instead, it's the chance to see and interact with the musicians that draws you to a performance over a playlist, learning more about them in between the songs that makes you feel connected to them, and more likely to want to support them.
Rai has also caught onto this trend, which is why the first phase of droppTV's initial consumer rollout has been dedicated to music videos. According to Rai, "music videos are very unique as they are at the intersection of culture, art, music, and fashion, and were the obvious choice for the first large-scale application of our technology." In addition to these attributes, the interactive nature of the platform helps artists and fans discover and connect with each other on a deeper level, just as in China they use personalities to create brand loyalty. DroppTV also has the ability to benefit up-and-coming musicians, as the business model allows for the artists to receive 100% of the profits from the sales of their merch. Playing off of the buzz and hype that accompanies both music video releases and streetwear new arrivals - known as a "drop" - Rai recognized that millions of people within the United States were already creating video content around music but weren't doing anything to monetize it. Per the YouTube model, if one were to release a music video on their website it would have to generate thousands of views before it could start earning money, whereas releasing a video on droppTV not only creates a unique "shopatainment" experience for the consumers, but also helps musicians and artists by giving them a platform through which they can connect with their following and earn income. In the short time droppTV has been launched artist have averaged a phenomenal $500 per one thousand views. On traditional ad supported platforms artist make circa $10-$20 per thousand views.
Additionally, the concept of live video ecommerce is one that requires a certain amount of hype in order to be successful. Rather than relying on developing a niche group of like-minded shoppers, for shopatainment the more purchases of a product the higher the conversion rate, relying on the traditional concept of supply and demand. Knowing a product is in high demand makes it appear more desirable, and consumers feel more trust and confidence in purchasing a product if it is drawing a crowd. Have you ever purchased a product on Amazon just because it was the one with the most reviews? The psychology behind that decision similarly applies to shopatainment: the larger volume of people who back a product, the more trust you have in it. In dropp's case leveraging the fashion industries 'drop' model consumers come into the shopping experience wanting and anticipating the products which makes for an even more efficient consumer funnel.
Through video ecommerce, merchandise can be sold based on perceived value, which means it has the potential to be especially effective for products that are exclusive or difficult to find elsewhere. For droppTV's initial roll out, this means capitalizing on the streetwear model of selling popularized by Supreme, in which limited editions create demand. By doing exclusive brand collaborations that are only available via their platform, droppTV follows the shopatainment trend of creating hype and exclusivity around a product. In addition to this, buyers will be purchasing directly from the artists they know and love, meaning they already have a degree of trust in them and the product they are selling.
Nobody could have anticipated Covid-19 or the coronavirus pandemic that would see traditional brick-and-mortar locations forced to shutter for extended periods of time, but as a result retailers have had to search for new methods in which to sell to customers. However, Gurps Rai identified early that the lines between shopping and entertainment were becoming increasingly blurred, and sought to create a seamless way to employ that trend. Those who are looking to be forward-thinking in their marketing and advertising should take a leaf out of droppTV's book, and look to ways they can implement shopatainment into their own strategies, because this isn't a trend, this is the future.