Live commerce gets an AI-powered reboot

What do Dolly Parton, Martha Stewart and Nicki Minaj have in common? All three have hosted live commerce events during the 2024 holiday season—on Walmart Live, Amazon Live and TikTok Shop Live, respectively.

Dolly helped shoppers find products from her kitchen and entertaining line at Walmart to “host their next festive gathering.” Martha shared her favorite Black Friday deals from Amazon for the home, bathroom and kitchen.  And Nicki drew millions of viewers to the TikTok Shop Live launch of her new company, Pink Friday Nails.

Nearly 40 years after the TV network QVC popularized the idea of shopping from the convenience of home, live shopping is back—with an AI-powered twist. As in the days of flashy jewelry and elastic waistbands, viewers can still identify an item they like and buy it right away. However, instead of calling a hotline from their landline to complete the purchase, live commerce—the fusion of livestreaming and shopping—occurs almost entirely online.

Online live commerce emerged in China, with the launch of Alibaba’s Taobao Live in 2016. Now, businesses including TikTok, Amazon, Walmart and the clothing resale platform Poshmark host live commerce events, which are getting an extra boost from AI.

In a livestreamed shopping event, shoppers can interact with the host and buy products in real time. In the background, AI analyzes customers’ behavior as they comment and ask questions, then sends customers promotions that are customized specifically for them. The business case is clear: live commerce can generate conversion rates that are up to ten times higher than conventional e-commerce, according to McKinsey.

“If you can define what’s most important to your core customer, then a livestream can speak to them in an easy, targeted and entertaining manner,” says Jane Cheung, a Global Research Leader for Consumer Industries at IBM’s Institute for Business Value (IBV).

Cheung gives the example of a parent searching for matching Christmas pajamas for the family. “The livestream can answer any questions they have immediately and tailor promotions to their exact preferences,” Cheung says.

Livestream events enable interaction on several levels. Shoppers can interact with a celebrity host they admire and trade reactions with other shoppers. Meanwhile, the AI system tracks viewer engagement metrics like comments, likes and shares to quickly determine which products are resonating the most. It can then feed that information back to hosts to tailor their remarks. AI-powered features can allow customers to virtually try on clothes, make-up or accessories during a livestream—while AI-powered chatbots can answer customer questions, provide product information and assist with payment.

“The draw of the livestream is a live person or spokesperson that people relate to,” says Cheung. “Talking about the product is more fun than scrolling on your phone for information.”

Live commerce is a transformative retail strategy because of its success in converting product discovery to a purchase, says Shantha Farris, a Sales and Commerce Offering Strategy Leader at IBM Consulting. The best livestream hosts “can connect with their audiences by coming across as authentically interested and invested in whatever product or service they are talking about,” she says.  “They can engage participants in an interactive mode, effortlessly transferring the product information which is critical to making a confident purchase.” 

Livestreams can be accessed both in store and online, and once the livestream is complete, shoppers can continue to get guidance from AI-powered assistants. “And now, with the capabilities enabled by generative AI, people can continue to interact with that livestreaming host long after the livestream event ends,” says Farris. AI chatbots continue to answer product questions and these chatbots are trained to respond in the style of a given host.

Live commerce powered by AI allows brands to deliver deeply personalized and engaging customer experiences, says Farris. AI systems interpret live comments, questions and emojis to gauge customer sentiment—identifying excitement, curiosity or hesitation—and correlate these insights with behavioral cues like clicks, hover actions and viewing duration to uncover individual preferences. These insights can then help drive the dynamic product recommendations that are displayed during the broadcast, creating an intuitive and interactive shopping journey.

AI’s multilingual capabilities further amplify the impact of live online shopping by translating viewer comments and questions into a given shopper's native language. Consequently, people can communicate in multiple languages during the same livestream and everybody understands what everybody else is saying, which enables brands to engage authentically with global audiences. While accuracy can vary with context or complexity, multi-lingual live commerce unlocks significant opportunities to foster stronger connections across diverse markets, says Farris.

Beyond the customer-facing benefits, AI can also drive operational excellence behind the scenes. By analyzing shopping trends, it can forecast demand, optimize inventory and minimize stockouts, though Farris says this is contingent on data quality and rapid adaptability. This dual capability—enhancing customer engagement, while streamlining operations—positions AI-powered live commerce as a potentially game-changing strategy for retailers looking to achieve sustainable growth, operational efficiency and long-term profitability, says Farris.

Enterprises in Asia-Pacific and Latin America have gained traction with live commerce in categories like fashion, beauty and electronics. Companies in North America, meanwhile, have had major successes in fitness, beauty and home decor, while European businesses have focused on luxury, fashion and sustainable goods.  Across all markets, we can expect enterprises to continue testing new live commerce use cases, says Farris. Farmers in China, for example, essentially became influencers during COVID, selling groceries during live commerce sessions.

There is, however, one benefit that seems to be consistent across product categories and geographies, Farris says: Livestreaming can make it simpler for a consumer to determine whether a product meets their needs.

“Regardless of the category,” says Farris, “live commerce makes it so much easier for a customer to fully understand a product so there are no surprises after the purchase. Instead, with very little effort, a consumer can become extremely informed about a product, while the friction that is often part of the buying experience is eliminated with generative AI-augmented live commerce.”