Commentary
Video In E-Commerce Growing, Hungry For Leadership
- by Justin Foster , July 7, 2011
Stats abound; video's growth in e-commerce is undeniable. According to eMarketer's "Video for Ecommerce" report, 73% of US retailers featured video on product pages during Q4 2010, up from 55% during the same quarter in 2009. Last month, SundaySky shared in its Q1 2011 "State of Video in E-Commerce" report that the number of retailers who surpassed 1,000 videos on their websites increased by 10% from Q4 2010 to Q1 2011. Today, video commerce provider Liveclicker reported a 37% year-over-year growth in video views for retail sites running video for at least a year.
Yet despite the traction, major hurdles face the growth of video in this unfolding segment. Among them: lack of leadership or willingness to find and exploit a defining video commerce format.
In my experience, video programs among the Top 500 US Internet retailers tend to focus on sub-par 2-minute product videos, perhaps a smattering of how-to videos, or a few videos designed to drive awareness through broad reach. Investments range from "next to nothing" on the low end to $2 million per year on the high end. Such targeted moves allow early adopters to measure the effectiveness of video through the lens of site merchandising and limited reach online acquisition, yet pale in comparison to the ongoing flow of cash pouring into traditional shop-from-home TV models led by QVC and HSN.
Of course, there is a reason shop-from-home TV garners the lion's share of video shopping dollars. The model works. Yet a fragmenting media universe, cable TV's lack of interest in web video, changing consumer expectations, online/offline video convergence, and evidence proving the success of the multi-channel (TV+Web) video shopping model all point to huge opportunities currently being missed by the web's largest e-commerce sites.
At the 2010 Video Commerce Summit, HSN's Emery Skolfield shared that the lifetime value of a multi-channel HSN customer (TV+Web) was nearly twice the value of single-channel shoppers, ringing in at $1,250. Of course, salivating CMOs and e-commerce execs are likely to encounter a few problems on their quest to building multi-channel video glory. The strategy is expensive (since reach and loyalty are key issues), and well beyond the domain expertise of most retailers.
So most punt on the opportunity. That, in my view, is a mistake.
It is not sufficient for retailers to throw up a couple hundred (or even a couple thousand) product videos and expect video to deliver much more than a 20% incremental lift in web revenues. While such lift is surely welcome, now well documented in the industry, and likely to sustain the industry in its infant years, video commerce is destined to remain a small niche in retail until someone wakes up, realizes the potential of true multi-channel video shopping, and puts the company's money and attention into building out Video Commerce 2.0.
The signs all point to opportunity. Now all the industry needs is leadership.
I believe web video is very much the way forward and as someone who works within a web video company I know lots of companies are in high demand for web video on their sites to be able to boost their SEO and get there website to have good traffic and that web video does in fact increase the amount of time people spend on their website meaning they will more than likely make more money than they were.
Meaning web video is the way forward to up your profit as a growing business and to boost your websites SEO.
Thanks for your comment Jonathan. I believe, as you do, that web video is where the industry is headed. I am a huge believer in the power of video to enhance marketing & merch efforts, whether they be SEO, enhancing conversion, mobile video, etc. Like many that are considering diving into video commerce or who have already done so, these areas are critical.
The problem is that focusing on these things alone is not enough to turn video commerce into a huge industry (or a huge success) for retailers. To be sure, success is still possible with this focus. But the magnitude of success will never reach its full potential.
The e-commerce space, for better or for worse, is a numbers-driven direct marketing business. In some respects, this can be a good thing. Amazon has proven that that by focusing on technology it is possible to build a hugely successful online retail business. But I think on the whole of it the industry's hyper-focus on analysis and incrementalism blindsides it to some of the biggest and best opportunities for growth. Almost always these opportunities appear to come out of left field at the beginning, and appear too outlandish or risky to try by the vast majority of market participants. It's only years later, after everyone has already "seen the light," that the new paradigms are obvious and themselves the subject of hyper-incrementalism and analysis.
I think nowhere in e-commerce is there a bigger missed opportunity than video. I go back to the HSN stat re: lifetime value of multi-channel shoppers watching video on TV+web being double that of either web or TV alone. Most retailers have never done video of ANY kind prior to maybe 2 or 3 years ago (max) and are only slowly starting to roll out, usually with some product videos to place on product detail pages, perhaps some how-to's in a video gallery, and maybe some more entertaining/awareness/branding vids for YouTube, or even traditional TV spots. That's great. I applaud these retailers. They are our clients. We wouldn't have a business without them. And I am happy for their early successes with video.
But all of these efforts, they're all just "one-offs" - minor supplements to the client's core business. That much is obvious in today's video commerce landscape. How many e-commerce retailers can you think of that you immediately associate with video retailing? I can think of just a handful. ShopNBC, HSN, QVC, JewelryTV, Shopping Channel, etc (by the way, these are the same names I would have given 3 years ago when we started Liveclicker, which, to me, is a little surprising, a little sad, but also exciting because I know the potential remains for the e-commerce businesses that eventually decide to "show up" for the party).
The traditional TV retailers understood the power of video and built sizable businesses. Video was not just a supplement to the core business. It WAS the core business. Shop-from-home TV is a model that worked because these early pioneers discovered the right video format. They learned how to sell through video and make it scale. The formula became obvious and that's when competitors started popping up.
I believe there is a similar format for video that will emerge as the dominant one in the next generation of video commerce. It might be something like http://tv.shopnbc.com/, it might be something different. What I do know is that compared to the TV retailers that had to invest vast sums of money to build reach and brand awareness through video, with web video the hurdles are infinitely lower. Video is cheaper to produce and distribute than ever before. To build a "TV" channel one needs to just launch a site or page (yes, I know it's more involved, but I'm speaking in relative terms). The point is that barriers have never been lower, and the skies ahead so blue.
Yet all the industry seems to care about is how to increment the existing core business by 15% on this or that product page, or drive up SEO visits by 30% here or there.
Don't get me wrong, these things are important. But they're all incremental, built off of existing e-commerce paradigms. Video commerce is still small, but some retailer out there is going to be willing to move beyond the latest incremental improvement and rock the market with a radical and new bold approach. That retailer will become massively successful and won't just use video to increment the core business. They'll build an entirely new line of business and bring e-commerce to the next level.
I wish I knew the answer to how this will be done. For now, I'll continue talking about how video improves conversion, drives SEO, engages users on Facebook, and the merits of YouTube as a search engine. These things are important to the industry today. I think we'd all be kidding ourselves though if we thought these incremental improvements will be the ones to define video commerce as an industry ad infinitum.
Hi Justin, Jonathan,
I'll start with a disclaimer - I'm the social media manager for http://treepodia.com, we're an ecommerce video company that specializes in providing video coverage for large vendors (olay.com, build.com ,ice.com and others)
In my opinion there's no reason video in ecommerce should be analogous to commercial activity via TV or any other medium for that matter. We don't expect cnn.com to offer any sort of parallel to watching CNN on TV, and why would we? Each medium is a unique platform consumed in its own particular fashion.
I'll admit I'm taking an easy out by hesitating on predictions but I will venture this much. As you stated video in ecommerce is at the moment a numbers game. The faster you have lots of videos up and syndicated, the better because the reality is that simply adding videos to product pages increases conversions (amazingly this is true even when customers DON'T WATCH THEM - see reference: http://www.reelseo.com/videos-sell-products-watch).
Most vendors are still at the point where they can benefit from taking ANY action, simply because they've taken NONE yet.
I think most vendors will be very challenged to get better bang for their buck than what they'll get from automated services like our own, but I'm very happy to hear/read a case study that offers other evidence...
: )
Cheers,
Mike
Cheers,
Mike
@treepodia