Video-first Commerce and Content-first Commerce

Making a case for content-first distribution for brands

Air-fryer, masticating juicer are some of the high-value purchases I made after coming across these gadgets on YouTube. The interesting fact is that none of the videos that triggered the purchase was really about the gadgets themselves. It was the content of the video that kept me hooked. It's not so much the video, the format. So what we can take-away is that content is the real enabler of commerce, not the video, the format. China is an interesting market in which the content x commerce is quite mature. We often read about farmers using TikTok to promote and sell their produce, merchandisers entertaining people to buy apparel etc. - read more this fantastic article by Connie Chan on video-first commerce and use-cases in China. What we see repeated through the article is the need for the videos to be "entertaining", boring will not make the sale. The core again is content.

Not to be left behind, we are witnessing some action in India too. Curiously the early players in this content x commerce intersection call themselves video-first. Why? Because the role of video on the platform is to build trust, improve conversion. Glance through some of the apps, and you will notice that they are no different from teleshopping on cable TV.

Contrasting teleshopping with video-first commerce

Cable TV subscribers in India have come across teleshopping channels or programs - remember Nazar Suraksha Kawach, Sandhi Sudha Oil, Secret Slimming formula and whatnot. The channels typically had hyper-active models, actors concocting stories to sell unheard of brands and products. The CTA was simple, either call the number on the screen for more information or to place an order - also viewers are presented with a range of weird incentives aimed at improving conversion. Sure, many people buy these things else, why would someone run such channels.

In the video-first commerce apps, we see more of the same but on mobile phones. But there are some differences as well.

What's identical?

  • The platforms manage the fulfilment of the products

  • Interact with the platform for product details

What's different?

  • The brands sold on the apps are good and known.

  • The video production is modular. In the teleshopping channel, the videos are produced by the channel (with models, actors, celebrities etc.) whereas on the apps they are created by freelancers or influencers remotely.

  • Payments are done securely and there is no wait period between payment and order processing - trust is higher

  • The app platform owns the customer relationship (integrated with the platform), unlike teleshopping in which the engagement is captured on purchase only.

  • The apps need to acquire users, whereas teleshopping users are captive (thanks to whichever channel is airing the shows)

I can bet that the savings from modularising content go towards user acquisition - in fact, a lot more is spent on customer acquisition. Also, is modularising the content an innovation? Not really.

So, what role does the video play in the video-first commerce apps? Acquisition, Engagement or Conversion? From what’s out in the market, videos are supposed to improve conversion rates - the objective is to build enough trust for the user to click 'buy'. Just “video for better conversion” ploy is not enough to to build a next-gen e-commerce platform. Let’s see if the current customers feel any differently. Below is a highly condensed summary of user comments on Google PlayStore profiles of video-first commerce apps:

  • Products are good, not fake, and the selection is good

  • Price, discounts and offers are attractive

  • Experience with payments, refunds and delivery is average at best - some happy, some unhappy customers

  • New features such as recommendations systems are quite interesting

What is our quick inference? for the customer these apps are similar to regular e-commerce app, there is no mention of video or improvement in trust thereof. So what’s new really? Customers do talk about good offers and discounts but we all know that’s not a sustainable strategy. What about fulfilment? The incumbent platforms are light years ahead in customer delight. So, where does this leave us? With no clear differentiator in customer acquisition or engagement, the argument for a video-first platform is weak at best.

Look at it another way: what is the user trigger to open any video-first app? Content or Search/Explore products, offers? Right now it appears to be search/explore, i.e. I am looking for a product what do you have to offer or do you have the product; telling me how to use the product is not really a concern. Who dominates the search/explore intent today? Amazon, Flipkart, Nykaa, Myntra, the existing platforms. The value proposition for a user is not clear either.

What we have in India is a commerce platform with a video/content wrapper, unlike in China where a successful content platform has a commerce wrapper. The content-led platforms use content to engage the users and commerce as a hook to retain and monetise.

What might work in the current format, i.e. commerce-first? Setting a good fulfilment network is great but some focus might help - choose a vertical and build expertise, become a go-to for a particular use-case, lifestyle.

Platforms in India lead with commerce, not content

The popular content platforms in India, such as YouTube, TikTok(now banned) do not have commerce integrations. Facebook (FB), Instagram (IG) and Google are the only ones with commerce integration. Shopify integration with Facebook might changes things a bit in the future, but India is still a small DTC market. Moreover, without a good fulfilment layer, the Shopify-FB like integrations do not offer much value.

The reason content-led commerce works well in China is backwards/cross integration with e-commerce or fulfilment services. The super app playbook of Chinese giants. That's not the case in India. Every commerce platform has to build its fulfilment layer from scratch - this could explain in part of the reason why video-first apps lead with commerce and not content.

The recent ban on TikTok in India has opened a very small window for new short-format content-led platforms. If some of these video apps scale, then we might see a new content-led commerce models emerge in India. Content apps might consider commerce to be a much better monetisation strategy vs. pure advertisement. Of course it is necessary to build a partner network, and offer fulfilment as an API to brands and sellers. May be start with simple merchandising opportunities and build from that point.

Insurgent brands brands and content?

Contract manufacturing and e-commerce have worked well for the next generation of consumer brands, but it has also created a fertile ground for many lookalike brands. Shelf-life of original ideas and the first-mover advantage is dwindling fast. With an explosion of choice, shelves are becoming noisy, and purchase decisions are increasingly difficult.

One approach to beat lookalikes is to out-innovate them - launch new products, sub-categories every six months or so. Good but the launch approach brings along the risk of brand dilution. See what sticks may not work for long; there has to be a more sustainable way to engage and retain customers. So how can a brand stand out? How to build in some defensibility? The answer may not be just product or distribution alone, brands have to build intangible assets, build an audience for their narratives and engage. Building a community with a content hook might be an interesting play.

For the current crop of insurgent brands in India, content mostly means promotions - with an objective to improve discovery and acquire new customers. Look at this closely, the marketing playbook of insurgent is not different from the incumbent what’s different is the choice of content distribution digital vs. TV. Use of content to build a follower count on social media channels, garner likes means very little for the business in real terms. The insurgent brands should leverage content more strategically to not only to acquire but also to engage and retain. Is this possible? Yes.

Side Note: The content, community game of Indian insurgent brands is still in early stages. I’m sure categories such as baby care have WhatsApp groups, Facebook groups for new parents to share experiences, learn - sure there will be similar engagement in other categories too. Some brands have made a start and I will update this post in the future to share some good examples.

Thanks to the internet, social media people are congregating virtually, creating groups, forums based on their interests, habits, lifestyle etc. It's human nature to try and flock together, work in a herd - these groups are micro-markets online, many growing really fast. Take for instance people going gluten-free or natural food only. Look around the communities page on Facebook, Discord etc. Its amazing to see the interactions in the community. Brands should consider building communities around shared beliefs, ideas or a cause.

Of course, content-first commerce is not my original thought. Operators in the US such as Web Smith, 2PM have been talking about it for a while now. In his theory of Linear Commerce, Web asserts that brands of tomorrow will build an audience first, and build products later. Brands of tomorrow will start as media companies. Will this happen in India? Possible! Little Black Book (LBB) is one such platform which led with content and now getting into multi-category commerce. Will India see brands doing the same in future, lets wait and see.

Closing

Building a community is hard. But once built, a community can work wonders for a brand in the long run. Playbooks are yet to emerge, so expect a lot of experimentation. The current crop of the video-first commerce platform could be one such experiment in search of workable content-led commerce platform.

We are already deep into attention economy, and a brand needs to learn how to engage with customers on thoughts, beliefs, interests and lifestyle using the best possible platforms and media.

Edit [Oct 15]: Google plans to turn YouTube into major e-commerce hub like Amazon, Alibaba. YouTube preparing for content-led commerce moves. Early days, but expect this evolve and become much more potent commerce play for Google. Read some more on the topic on 2PM


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Coming Next: The concept of gateway products in launching an insurgent brand. Still building the idea.