Live Shopping Apps Draw Parallels to Gambling Amidst Addiction Concerns

The burgeoning trend of live shopping, popularized in China through platforms like Douyin and Taobao, is making its way to the United States, with apps like Whatnot leading the charge. Whatnot features rapid-fire live auctions where users can bid on a wide variety of items, from trading cards and clothing to steaks, in auctions that can last from a few seconds to a minute. The app's design emphasizes speed and low friction, allowing users to swipe to place bids without a confirmation screen, leading to a potentially impulsive buying experience.

Retail reporter Hanna Krueger investigated the phenomenon for The Wall Street Journal, documenting how the app's design has led to compulsive behavior for some users. She detailed the experience of one user who reportedly spent over $1 million on the app, ultimately losing everything. Krueger described Whatnot as a blend of the Home Shopping Network, TikTok, and eBay, operating 24 hours a day with an ever-expanding range of product categories.

The "Break Format" and Its Pitfalls

A significant concern highlighted is the "break format," particularly prevalent in the trading card market, including sports and Pokémon cards. In this model, a valuable sealed pack of cards might be too expensive for an individual to purchase outright. Instead, sellers divide the pack's value into smaller, more accessible "slots" that multiple buyers can purchase. For example, a $10,000 pack might be offered with 10 slots at $1,000 each. The allure is the potential to recoup the investment or even profit significantly if a highly valuable card is revealed.

However, the reverse is also common, with buyers receiving cards worth far less than their purchased slot. Those who experience losses often report entering subsequent "breaks" in an attempt to recover their money, creating a cycle of problematic behavior. This dynamic, characterized by the thrill of potential high returns and the despair of losses, mirrors the psychological drivers associated with gambling.

Company Response and Safeguards

Whatnot CEO and cofounder Grant LaFontaine stated that internal data does not indicate addiction as a significant problem on the platform. When presented with cases like Sean Harding's, a finance manager who reportedly spent $1.3 million in four months on the app, the company has maintained that addiction is not a registered issue. Whatnot categorically rejects allegations that its app features gambling elements and declines to comment on pending litigation.

Despite these statements, Whatnot has introduced optional spending limits and watch time caps. The company attributes these measures to user feedback about spending more than intended, rather than to addiction concerns. Additional safeguards are reportedly in development, including alerts for rapid spending spikes and PIN-protected categories. Some of these features, like watch time caps, can be self-adjusted by the user. The app is also planning a birthday reconfirmation option to help prevent underage users from accessing the platform, a measure prompted by a colleague's daughter who reportedly spent over $5,000 in one night on Pokémon cards.

Broader Industry Trends

Whatnot is not alone in this space. Livestream shopping has gained traction in the U.S. in the post-pandemic era, with other major platforms also exploring similar models. TikTok Shop offers a comparable setup, and eBay is experimenting with live auction features. For trading card enthusiasts, Fanatics Live is another prominent platform for purchasing cards and participating in breaks.

These platforms often incorporate gamified elements, such as countdown clocks, and leverage parasocial relationships between sellers and buyers to enhance engagement. This can create a highly interactive and immersive environment that some users find addictive. The rapid growth and potential for problematic engagement on these live auction platforms indicate a evolving landscape in e-commerce that blurs the lines between shopping and gambling.