Livestream Selling Is ‘QVC on Steroids,’ and It Turned This Alabama Startup Into a Billion Dollar Business

July
7, 2021

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Mic Hensley won’t put on a dress. His fans would die for him to wear one when he livestreams to more than a million phones and Facebook pages while making sales for Pink Coconut, which sounds like a club but is actually a women’s clothing boutique he owns with his wife, Sheri, in Olive Branch, Miss. “I’ll put on a cardigan or a bunch of purses,” Hensley says, laughing. “But I try not to even do that very often because they just get pumped and want more.”

Though that’s not all they want more of. Livestream selling not only saved the Hensleys’ business from becoming a casualty of the pandemic; it has increased sales 20 to 30 percent every month, sending the Hensleys into a hiring frenzy that has now reached 48 employees and counting. “Once we started doing it,” says Mic, “everything just kind of shot to the moon.”

Widely referred to as QVC on steroids, livestream selling in the U.S. usually features a salesperson or an influencer, often in their living room (cords, tchotchkes, and pets in full view), demonstrating products and shooting the breeze with online shoppers in real-time video. Viewers can say hi or ask questions in comments that float across the screen, and the livestreamer responds to them personally. Meanwhile, everyone watches a bubble that displays the product’s dwindling availability until it sells out.

It’s already a craze in China, where livestream shopping sales will hit $300 billion this year, according to Coresight Research. (There, the video productions are more sophisticated and staged.) But the U.S. market has been pretty groggy, estimated to be only $6 billion in 2020. That may be about to change. Coresight, for one, predicts the market will more than quadruple by 2023 as the pandemic helps accelerate preexisting cultural shifts — especially since Facebook, Instagram, Amazon, Shopify, and TikTok have all ambled into the space in the past couple of years.

But none of these platforms is the one that catapulted Pink Coconut. The Hensleys and more than 6,000 other small businesses, mostly in fast fashion, partner with a little-known company called CommentSold, founded four years ago by a serial entrepreneur in Huntsville, Ala. Never in his wildest dreams — or, really, nightmares — did that guy, Brandon Kruse, think he’d be in the women’s clothing business. But here he is, a pioneer out in front of the tech giants, trying to operate “under the radar,” as he puts it, while generating a billion dollars in sales a year.

Livestream selling might just be the future of online shopping. “And not in five years,” predicts Suketu Gandhi, a partner at the global consulting firm Kearney. “It’s a two-year journey, thanks to a virus called COVID.” During the pandemic, we’ve all gotten even more used to spending hours on video — bingeing on Netflix, sweating on Peloton, or following influencers on TikTok. It’s not a big leap to shop that way, Gandhi argues. Plus, on the business side, the connection between digital advertising and actual sales has been slowly weakening. Add to that “the death of the cookie” — with browsers like Safari, Firefox, and Google pulling their support of the hidden bits of code that let advertisers follow our online activity and target us, plus Apple letting iPhone users disable personal data tracking — and brands may be scrambling for new ways to reach customers.

Not everyone believes livestream selling will be the solution. “We are trying to shoehorn the type of commerce that works in China into the U.S. market now, but it’s not like users are asking for it,” says Juozas Kaziukenas, CEO of Marketplace Pulse, an e-commerce research firm. “I think to most people, it feels like a very blatant sale.” It might work on a niche level, he says, but for anything at scale? “It’s an uphill battle.”

Still, it could be a rather lucrative climb. When a retailer hosts a livestream shopping event on its website, it can have conversion rates of 10 to 25 percent on average and even reach 40 percent, according to Ken Fenyo, president of research and advisory at Coresight, who says the conversion rates for digital ads are generally significantly lower. “People want to engage directly with the brand,” he says. “And for that entrepreneur or store associate, it’s a chance to come alive about their passion for what they’re selling in an interactive way.” That can add up to a lot, even for companies with little communities. “What’s amazing about our livestreaming clients,” says CommentSold’s Kruse, “is how small the audience is compared with how much revenue they do.”

Image Credit: Howard Rochelle with HR Elements

Had it not been for a repo man and an overbooked flight, Kruse would have a very different life at age 31. The repo man showed up when he was 12 to take the family car after his dad lost his job. Seeing that, for Kruse, was like being drop-kicked out of childhood. “I wanted to control my own destiny,” he remembers. He started his first business in high school. By the time he turned 21, he’d already sold DialMaxx, a telecom company, to MagicJack for $2.6 million plus a generous earn-out, and went on to launch startups that did data storage for genomic sequencing labs, built call alert systems for the State of Alabama, and various other things he could never explain at a party.

The overbooked flight, however, would change that. In 2012, Kruse agreed to do some telecom work for Mitt Romney’s presidential campaign. It meant teaming up with an old client who brought his assistant, Amanda Halpin, along for a visit to Huntsville. After five days of Halpin remaining oblivious to Kruse’s attempts at courtship, it was only because her flight back home was overbooked that she accepted his invitation to dinner, where over her ahi tuna salad at the bougiest steak house he could find, she finally caught on. A year and a half later, she moved to Huntsville to be with him.

By then Halpin had become an ER nurse, but she had a weirdly thriving side hustle selling clothes on Facebook. She would buy things she liked wholesale from vendors on FashionGo, where the minimum order was typically six. She’d keep one for herself and sell the other five pieces at an $8 or $10 markup — still way below the retail price. After some experimenting, she started having success with what’s now called “comment selling,” where she’d post photos of the clothes in her Facebook group and followers would comment “sold medium” (or whatever size they were). She called her online shop Discount Divas, and soon so many of her coworkers had become customers, she took over a bank of lockers in the ER that she turned into makeshift mailboxes for their orders.

One day in 2014, Halpin showed up at Kruse’s office to talk to him about growing Divas. He was working out of an old school building he’d converted into a startup incubator called Huntsville West. Halpin figured maybe she could be part of it.

Kruse couldn’t picture it. He was a telecom guy — Huntsville West was for tech startups. “Do you have anything else?” he asked her. “Because women’s clothes, that’s going to be tough for me to get behind. I mean, you’re literally going to be crushed by the big guys.”

“You think I can’t do it?” she shot back. “I will kill myself proving you wrong.”

“And she did,” says Kruse fondly. Halpin moved Discount Divas into an 80-square-foot closet in Huntsville West and hired her first employee for help invoicing, as well as a 16-year-old named Madeline Daye to come in part-time and put the clothes on hangers. As they got busier, one day Halpin took a striped dress with a tie around the waist to Daye and asked, “Can you try this on and make a video where you just talk about, like, how it fits and how it feels?” After that, she kept asking Daye to do more. “I literally hated it,” says Daye. “I would go home at night and cry.”

Halpin didn’t know that at the time. All she knew was that the videos slowly started to work: That the whole first year, she had made $8,000; now, sales jumped to $30,000 a month. “Boxes of product were coming out of the closet and kind of infiltrating the coworking space,” Kruse remembers. “If you see a company hustling and growing like that, it’s super motivating to be around.”

Kruse also noticed his girlfriend was up all night with her Google spreadsheets, trying to get a handle on who had paid, who hadn’t, and if they weren’t going to pay, who was next in line. He had always had a hard time passing up a problem he could solve (and he had fallen for her—there was that). “I kind of jumped into the entrepreneurial mode,” he says. “I was like: ‘Let me write a program for you.’ The joke is I’m still working on it.”

In April 2016, Kruse built an e-commerce system for Halpin and the two got married. Soon Discount Divas was doing $100,000 in sales a month — and Halpin, who changed her last name to Halpin-Kruse, quit nursing. Based on her success, in 2017 Kruse created a platform for multiple retailers and, in homage, called the company CommentSold. As Kruse thought about how to get other clients that year, Divas’ sales soared to $1 million a month.

“When I saw Discount Divas had an automated system, honey, I was on a detective spree trying to figure out where it came from,” says Lorie Beth Thomas, who had a shop called Kaley Jase Boutique in Windsor, N.C. (“the middle of nowhere,” as she puts it). She had been an ER nurse, too, and became one of CommentSold’s first clients.

The company grew quickly. Kruse charged clients a subscription fee (now between $49 and $149 a month) and also took
3 to 5 percent of their sales. But in 2018, a hiccup nearly tanked it all, and then provided a pivotal insight. CommentSold — which, again, at this point was nothing more than an e-commerce platform — was primarily facilitating sales on Facebook. But during Facebook’s broader investigation after the Cambridge Analytica scandal, of how outside parties were utilizing its data, the social network somehow blocked CommentSold from its system. “For a week, our customers’ revenue was down 80 percent,” says Kruse. “They have families to feed. They have mortgages. And they were very upset. It brought us to our knees.”

Kruse gathered his 25 employees and told them to drop everything and start calling and emailing everyone they could find at Facebook. He booked a ticket to San Francisco with dramatic visions in his head of even getting arrested in the company parking lot, if that’s what it took to get someone’s attention. Fortunately, his team found a random group chat with the email address of a Facebook employee, who got them back on.

That changed Kruse’s approach to business. He’d built a mobile app for CommentSold, but only a few people were using it. Now he tried to quickly roll it out to all the retailers so they could sell directly to customers. His clients would no longer be beholden to Facebook’s rules and unpredictabilities. He told them, “You own these consumers.”

The app proved to be a smart move, but things were about to radically transform. In 2018, that same year, Thomas, the boutique owner in North Carolina, pinged Kruse with what would be a pivotal message: “Hey, I just did a live video with CommentSold on Facebook.”

This confused Kruse, because the tool didn’t do live video. But Thomas, it turned out, had seen someone do livestream selling on social media, and she wanted to try it. So she managed to trick the system using CommentSold’s e-commerce platform to facilitate these sales. She suggested that Kruse might want to figure out how to make it easier.

Kruse knew livestream shopping was big in China, where influencers went in front of the camera for eight hours a day selling their favorite products from online malls. But would it work here? Who would actually watch a live video for even an hour and buy products?

Nevertheless, he developed a way for retailers to livestream on CommentSold to their Facebook fans, and Divas and Thomas’ shop started doing it. They would go live, say, every Thursday at 7 p.m. and for an hour or two, gab about their families, keto diet progress, the latest pet bird mishap, and how they loved the way this particular dress they were wearing draped and could be yours for $38—and by the way, there are only three left. They could see all the comments scrolling in (“How’s the sizing?” “Can you wash it in the machine?”) and answer right back. They’d also get an alert that, say, Sally was a new customer and Josie bought a lot, so they could call out, “Hey, Sally; welcome to the group” and “Oh, hi, Josie; good to see you again”—a feature Kruse added after realizing the one-to-one relationship was a key driver. They’d model one item after the other as people commented “Sold.” Sales blew up.

Image Credit: Howard Rochelle with HR Elements

As CommentSold’s livestreaming feature took off, Kruse often turned to his mentor, Jim Hudson, for advice. (The two met in 2012, when Kruse loved the energy of Hudson’s genomics-research business hub so much that he lied and pretended to be part of a biotech company so he could have his office there. “When Jim found out,” Kruse says, “he thought that was awesome.”) “Jim was great at nailing what has to change when you get to certain milestones,” says Kruse. “And that was invaluable to me because it’s so hard to see when you’re right in the middle of it.” Hudson asked Kruse how many employees he had. “When I said 15, he was like, ‘Oh, you’re getting close to my number,’ ” says Kruse. The number was 21: When you have that many employees, Hudson believes, you can no longer rely on everyone at your company to know everything. You must hire specialists. “And sure enough,” Kruse says, “at 21, I’m like, Even the people who were previously perfect in the role now are messing up.”

Hudson’s next number was 75. This one was harder for Kruse to swallow. “Jim said, ‘At this point, you have to have a COO — you really need somebody to be the operational mind, so you can step back as the visionary,’” Kruse recalls. “I said, ‘But I love operating.’ And he’s like, ‘No, you don’t. You really love building.’ ”

Kruse felt like he was losing touch with his company, but he followed Hudson’s advice. The guy he hired as COO was Andy Smith, formerly cofounder and CEO of the workout company Daily Burn. They knew each other through the small Huntsville entrepreneur circle. At the time, Smith was taking a year off to play golf, and not getting any better at it. “I’ll be the first to admit, ‘Oh, man, I don’t really get excited about selling women’s clothes online,’ ” Smith says. “But what I liked was that there were no investors. And when I played with the tool, I thought it sucked — it was broken in so many ways. So I said, ‘This is just a great opportunity.’ ” With the operational details handled, Kruse was able to zero in on his customers to really start kitting out the platform. Soon his retailers could run their entire social e-commerce business on CommentSold, with human experts to guide them.

All the while, Kruse tried to keep the company under the radar. “We wanted to get big and make sure we built the right thing and stay ahead of everyone,” he says, “because someone could have raised a lot of money and definitely gotten to the market quicker.”

But staying invisible started getting harder. In 2019, Amazon enabled livestream selling for influencers and brands in its marketplace. Since then, Facebook and Instagram have begun experimenting with it, too, and Walmart is partnering with TikTok for one-off shopping events. Google is also dipping its toes in. Brands like Nordstrom and Estée Lauder are playing with the medium. And other independent apps and platforms, such as TalkShopLive, Bambuser, and ShopShops USA, are hitting the market. “Just since December, we’ve seen more than $100 million of capital flow into the space,” says Chris Erwin, founder of RockWater, a market research and strategy advisory firm.

The pandemic only upped the appeal. For CommentSold, gross merchandise value grew 150 percent in 2020. Of the more than 6,000 clients on the platform today, some 150 do more than $100,000 a month in sales; several do more than $1 million. Now Kruse plans to expand to other kinds of businesses.

“I mean, there’s no way this does not get hypercompetitive,” says Smith. “But that’s what keeps us up at night. We really want to win.”

This March, Kruse had something else to keep him awake: a three-month-old son named Camden. Divas did $2.7 million in sales that month. And Madeline Daye, the 16-year-old who cried over its first videos? She’s now its director of sales and one of the best livestream sellers in the business; she just bought her first house at age 22.

“Compared to my other companies, this is so cool,” Kruse says, “because I was just trying to solve the problem for one person: What do I need to build to help make your life easier?” That thinking still drives him, even at the scale CommentSold has achieved. It now has a Facebook group for its top 100 customers, where it posts designs for new features and asks for feedback. And Kruse just implemented a policy for his now 170 employees that requires everyone to spend a day per quarter doing things like onboarding calls and support strategy to make sure they know how the retailers operate.

People always ask when he’ll start a new company. “I do miss it in a weird kind of sadistic way — the pain,” Kruse admits, “because a startup is very exciting.” But his focus remains on solving problems for those in the CommentSold community. “The customers know what they need,” he says, “and you just have to listen to that pain and become obsessed with it.”

Image Credit: Howard Rochelle with HR Elements

Lights, Camera, Live!

Want to try boosting sales through livestream selling? You don’t need an influencer; you just need to get over your own awkwardness on camera. Here’s what CommentSold’s retailers have learned works.

Be consistent.

Think about livestreaming like it’s an old TV show: You want to build viewers’ habits of watching. Go live at least once a week, and do it on the same day and same time — say, Monday and Wednesday at 8 p.m.

Create FOMO.

You have to create a reason for people to tune in — and buy! It doesn’t have to be a discount or giveaways. Having new items each time is important, and limited amounts drive up sales.

Be yourself.

The more authentic you are, the better. “Don’t worry about having a set with cameras and multiple cut feeds and stuff like that,” says Kruse. “If anything, we’ve actually seen that perform worse because it almost feels like you’re being sold to.”

Get personal.

Make customers feel like they’re hanging out with friends and shopping. “We’ll see certain names and we’ll holler at them, like, ‘Oh, you’re here!’ ” says Lorie Beth Thomas, owner of the Kaley Jase Boutique in North Carolina. “It creates a community.”

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Livestream Selling Is ‘QVC on Steroids,’ and It Turned This Alabama Startup Into a Billion Dollar Business

Lights, Camera, Live!

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