As Meta readies for its "year of efficiency," the company has announced today that it is closing the livestream shopping business on Instagram and follows a similar shutdown on Facebook. From March 16, 2023, onwards, the capacity to tag products will be unavailable on Instagram to the users who have been going live since 2020.

These developments bring to the fore problems that the U.S. market has faced in mainstreaming livestream shopping.

Already, the activity enjoys significant popularity in Asian markets. For example, back in China, apps like WeChat, Taobao Live, and Douyin (China's TikTok) have proven live shopping to be a popular and profitable endeavor. As the pandemic swept across the world, many U.S. businesses looked to jump on the live shopping bandwagon as well, looking to help boost their own online retail revenues. No time at all, pundits were calling live shopping the "future of e-commerce," as early traction from businesses such as TalkShopLive, NTWRK, Brandlive, Whatnot, and others in the space, along with adoption by big tech companies like Meta, Amazon, and YouTube.

But the pandemic had hidden the real story. When people were home, e-commerce sales skyrocketed, and online retail became through the roof. Now that the dust has settled and life is back to normal, though, analysts found out that U.S. consumers have not become live shoppers. According to one report, social commerce as a whole, including livestream shopping, only takes up around 5 percent of the total e-commerce sales in the U.S. last year, data from Insider Intelligence said.

Soon enough, the news came that TikTok, which had been touted as a future leader in live shopping, was dialing back its plans for live commerce in the U.S. and Europe, as many of those livestream tests were reporting zero sales. More recently, it's said to be exploring another attempt at live shopping, this time through partnership with TalkShopLive.

It has been really hard for Western markets to copy the success of China's live commerce. Just as it has been unable to produce an equivalent "super app" to compete with WeChat.

Meta claims that even as it is ending live shopping, it is still invested in shopping. 90% of users follow at least one business on the site.

Instead of forcing live commerce, it will now focus on advertising as one of the primary ways by which people learn about businesses and shop on Instagram, according to the company. These include using its automated tools, such as Shop ads and Advantage+ shopping campaigns aimed at helping to improve ad performance. The company will also invest in checkout, from which people can buy something with just a few taps through Instagram and Facebook Stories, Feed, or Reels.

Despite its promises, Instagram recently showed its plan to de-prioritize shopping on its app. In the last month, the social media giant made pretty considerable changes to its navigation bar, removing the Shop tab altogether and moving Reels off to the side. The moves were an effort to counter criticism by users of the aggressive push for Reels, driven by Instagram's desire to compete with TikTok. Last month, Instagram chief Adam Mosseri admitted the company had overdone video and would attempt to rebalance the mix of photos and videos it displays. The move away from live shopping may be at least partially related to that step back as well.

According to Instagram, "creators will still be able to go live on Instagram and invite people in, even host a Q&A". Businesses too, would set up shop and run one on the same social media platform in spite of closing down live shopping.