How Fed Rate Cuts Are Supercharging Video Commerce (And Why Your Brand Needs to Cash In Now)

When the Federal Reserve cut interest rates by 50% (!) in September and another 25% in November, most people thought about cheaper loans, lower mortgage payments, and businesses borrowing to expand. 

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But what does that have to do with video commerce? 

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Actually, a lot more than you’d expect! 

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Turns out, the ripple effect of those rate cuts stretches far beyond Wall Street – it’s playing a huge role in shaping how, when, and why people shop online, and video commerce is right in the middle of the action.
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Here’s how the Fed’s moves to slash interest rates are helping to fuel the explosion of video commerce and why your brand needs to ride this wave, NOW!

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1. Extra Cash, More Fun Spending

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Lower interest rates mean one thing for consumers: more money in their pockets. 

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With cheaper loans, lower credit card payments, and easier financing options, people feel empowered by their spending potential. And when people feel good about their finances, they’re more inclined to shop.

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But today's consumers aren't just buying more – they're seeking immersive, entertaining shopping experiences. This is where video commerce comes in. It's not just about selling products; it's about creating personalized journeys that captivate and convert. 

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In fact, 89% of marketers report positive ROI from personalized campaigns, and video commerce platforms are leading the charge by combining the power of shoppable videos with e-commerce, offering consumers the ability to purchase directly from content they find engaging and informative. According to McKinsey, 76% of consumers are more likely to buy from brands that personalize their experiences.

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The global personalization software market, a key player in enabling these tailored shopping experiences, was valued at $943 million in 2022 and is expected to surge to $2.7 billion by 2027. This points to significant investment in the technology driving the evolution of video commerce. As these platforms continue to innovate, leveraging first-party data and advanced analytics will be crucial in meeting the growing demand for customized, interactive shopping experiences that transcend traditional e-commerce.

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2. Brands Are Investing Big in Video Commerce

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With interest rates low, brands are jumping on the chance to invest in growth—and video commerce is the hot ticket. Why? Because traditional e-commerce isn’t cutting it anymore. Brands know they need to stand out, and video commerce offers the perfect mix of engagement, real-time interaction, and entertainment to do just that.

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Lower borrowing costs give businesses the green light to go all-in on building slick, interactive video platforms that get people buying on the spot. Whether it’s partnering with influencers for live shopping events or integrating shoppable videos directly into social feeds, brands are capitalizing on this moment to supercharge their digital strategies.

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L’Oréal, for example, has seen remarkable success with e-commerce, with 27% of its global sales coming from online channels in 2023, alongside 9.5% net growth. In the SAPMENA region, where a young, digitally savvy population dominates, L’Oréal's innovative digital strategies have paid off significantly – resulting in 50 million interactions with its Beauty Tech services and a twofold increase in conversion rates. A key contributor to this success is L’Oréal’s use of Firework’s video solutions, which enable immersive, shoppable video content that resonates with their audience and drives higher conversions. 

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3. When the Economy’s Up, So Is the Spending Vibe

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When the economy’s looking good – thanks to lower rates – people feel optimistic. That translates into confidence to spend more freely, especially on non-essentials. No one’s penny-pinching when interest rates are low. People are treating themselves to things that make them feel good, and video commerce hits the sweet spot of “fun meets functionality.”

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Video shopping is designed to spark excitement. Whether it’s a clearance sale in a livestream or an influencer unboxing the latest product, it triggers that emotional connection and FOMO that gets consumers to hit “buy now.” 

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In fact, a ConsumerWise survey from McKinsey reveals that 36% of U.S. consumers plan to splurge on apparel in the coming months. Gen Z, in particular, ranks apparel as the top category for making “more expensive purchases than normal,” with beauty and personal-care items also seeing a surge among high-income Gen Z women.

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In this upbeat economic climate, video commerce becomes not just a way to shop but a way to indulge in the experience itself.

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4. Real-Time Shopping for a Real-Time World

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Low interest rates have businesses on the move, and in a world where things happen fast, video commerce is the perfect fit. Consumers love the real-time aspect of video commerce - the ability to ask questions, engage with hosts, and make snap buying decisions on the spot. It’s interactive, it’s immersive, and it’s instant.

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Lower rates mean businesses are ready to invest in the tools and technology that can deliver that real-time experience. And for brands, video commerce offers a direct line to consumers’ wallets, where a well-timed flash sale or limited-time offer can turn casual viewers into buyers in a matter of seconds.

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5. Convenience Is King

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In a world where time is everything, video commerce nails the convenience factor. Shoppers no longer want to jump from platform to platform – they want to be entertained, discover products, and make purchases seamlessly. With shoppable videos, consumers can see a product, love it, and buy it in one click. No friction, no extra steps – just instant gratification.

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Convenience is king for today’s consumers. In fact, 76% say it’s their top priority when selecting a retailer, and 81% are specifically looking for a frictionless, cross-device e-commerce experience. As the Fed keeps interest rates low and people feel good about spending, brands that prioritize seamless shopping experiences are capitalizing on an audience ready to spend but demanding both efficiency and fun.

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Moreover, more than 90% of shoppers begin their product search on a marketplace, and 76% have made impulse purchases via social channels due to the ease of purchase. Offering flexible, convenient payment options is another critical factor, with nearly nine in ten consumers saying it speeds up their decision-making process and encourages them to spend more. 

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Video commerce meets all these consumer demands. Brands offering this streamlined, immersive experience are tapping into a highly engaged, ready-to-spend audience, all while ensuring that shopping is as entertaining as it is effortless.

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Conclusion: Ready for the Video Commerce Revolution?

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The Fed’s interest rate cuts are creating a perfect storm for the rise of video commerce. As consumers spend more freely and brands double down on digital-first strategies, video shopping is taking off. It’s fast, fun, and interactive – everything today’s shoppers are looking for.

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Don’t miss out on the action!

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Join Firework - the leading video commerce solutions - to turn your brand into a real-time shopping powerhouse. Want to be where your customers are, engaging them in ways that drive sales? Let Firework show you how to level up your e-commerce game and ride the wave of video commerce success. Get started today!