‘Social Commerce’ is Gaining Traction

Social Commerce means shopping directly in social networks. The social aspect of shopping has and will continue to be an essential part of commerce in China. “The line between social media and e-commerce is increasingly becoming blurred. The sheer amount of time spent by people, especially younger generations, on social media apps has positioned social commerce as the indisputable market breakout trend for e-commerce in the coming years” (source: Forbes). Its estimated that 95% of all e-commerce activity in China is done through mobile. Moreover, social commerce needs a mobile-first approach, which is critical for succeeding with e-commerce in China. The customer journey starts and ends on the smartphone. If we look into the popular categories on social commerce platforms we find that Apparel and bags were the most popular content to look for.

Apparel and bags were the most popular content to look for on social commerce platforms in China as of April 2019 (source: Statista).

38.6 percent of respondents were most interested in apparel and bags, while home products came second.

Another interesting fact about social commerce: By 2023, social commerce will account for a fifth of all online sales in China, according to Business of Fashion.

Popular social commerce platforms in China you’ll want to pay attention to:

Here's How to Use WeChat Mini Programs – Thatsmags.com
Mini programs in Wechat – sub-applications within Wechat.

WeChat – Chinas super-app that connects commerce with social media. WeChat has over 1,1 billion active monthly users (Source: Statista, 2019), and keeps growing. WeChat is owned by Tencent, and has developed its own ecosystem where they merge online and offline channels by leveraging the Wechat functionalities. In my previous article about the power of marketplaces: https://digovation.com/2020/05/13/the-power-of-marketplaces-in-china/, we explored how marketplaces can offer an end-to-end frictionless user experience due to the development of digital ecosystem. WeChat has its own ecosystem where they build so called “mini-programs” into their app. Mini programs are mini-shops that can be accessed in WeChat without the need to leave the app. Furthermore, you can complete the purchase in Wechat using Wechat Pay, their own integrated payment method. You are able to interact with your friends, access product reviews, communicate with customer service and complete your shopping, all in one app.

Pinduoduo, a company that translates to “together, more savings, more fun”, is a group buying app to get a better deal on your products. Pinduoduo is one of the fastest growing e-commerce platforms in Chinas history, and has made it to the list of China’s five largest internet companies. The platform has now reached 585.2 million active buyers – those that made at least one purchase on the platform during the year (source: CNBC). Pinduoduo is a real contender in the e-commerce universe in China, among the big tech giants Alibaba and JD.com. Their collective buying-based business model integrates the social aspect in the shopping experience. You can choose to buy a product by yourself, or you can invite your friends or family, to receive a discount. You can receive up to 90% discount on an item depending on how many people you have on your “shopping-team”. Bulk purchasing directly from the manufacturer allows them to charge a lower price on the item. This model has had a lot of success in lower-tier cities where discounts and coupons are a “driving-force” in consumers motivation to shop. Gamification on Pinduoduo has been an essential part of heir massive success, where people are enticed with interacting games to engage on the platform.

Xiaohongshu – is a social commerce platform focusing on content-sharing, targeting mainly young females who like to discover and buy luxury, fashion and beauty products from overseas. Xiaohongshu was launched in 2013, initially as a content sharing platform (similar to Instagram and Pinterest in the West), where Chinese people shared their shopping experience and recommendations abroad. The consumer base grew, parallell with overseas travel became more evident, due to the growing middle-class. Later on, Xiaohongshu introduced cross-border e-commerce on their platform focusing on luxury, fashion and beauty products. They have also started beta testing their own livestreaming.

Source picture: Unsplash, Kon Karampelas

Douyin / Tik Tok – Douyin/Tik Tok is owned by Bytedance. Douyin is the Chinese version and Tik Tok is the international version of their short-form video app. Tik Tok was the most downloaded app over a period of 6 months in 2018. To date, the app has reached more than 2 billion downloads (source: Techcrunch).

Douyin/Tik Tok is a short-video sharing app that is especially popular among the Generation Z. Tik Tok started to test social commerce capabilities last year where you can add shoppable URL to videos. TikTok’s mission is “to capture and present the world’s creativity, knowledge, and precious life moments, directly from the mobile phone. Tik Tok, owned by ByteDance, is leveraging AI to engage with the consumers by showing personalized content. Recently, Bytedance announced their new big hire – by appointing Keven Mayer, previous streaming chief in Disney, to lead Bytedance next phase. He will become CEO of Tik Tok, and COO of the parent company Bytedance.

A reason why social commerce is gaining traction in China is because of China’s Gen Z consumers, who account for 13 percent of household spending, more than four times that of their U.S. peers. They increasingly buy through social media, according to Bloomberg. Social Commerce is also starting to gain momentum in the West. Social networks such as Facebook and Instagram are accelerating their focus on ecommerce. Latest news from Facebook, is their launch of “shops”, on both Facebook and Instagram. “Facebook Shops make it easy for businesses to set up a single online store for customers to access on both Facebook and Instagram.” Facebook is also exploring e-commerce using their messenger app and Facebook Live to complete a purchase. Many companies have been showcasing products on Facebook Live, and soon they will be able to tag products from their product catalog before they go live, so consumers can buy directly at the bottom of the Facebook Live video in real time.

Commerce in China is much more than just shopping. It’s an interactive, social and entertaining experience. In my previous post about livestreaming –https://digovation.com/2020/05/11/livestreaming-is-going-global/ , we explored the power of video sharing – it is creating trust and transparency and “what you see is what you get”. The social commerce platforms are incorporating social elements in the shopping experience to interact with the consumers.

The merge between e-commerce and social media is a result of a changing consumer behaviour where consumers tend to browse and discover their products on social platforms, rather than searching for a specific product. This discovery based approach is becoming the “new way” of shopping, confirming the importance of a content-driven and highly personalized shopping experience. Consumers in the West, especially generation Z, are also spending more time on social media, browsing and discovering. Facebook, Instagram and Snapchat are all experimenting with e-commerce. This is just the beginning of social commerce and a merge between shopping, entertainment and social media will become more evident in the years to come.

Sources:

https://www.forbes.com/sites/jiawertz/2019/06/25/inevitable-rise-of-social-commerce/#1f37b24a3031

https://www.cnbc.com/2020/04/22/what-is-pinduoduo-chinese-ecommerce-rival-to-alibaba.html

https://www.statista.com/statistics/1058749/china-trending-content-on-social-ecommerce-platforms/

https://www.statista.com/statistics/255778/number-of-active-wechat-messenger-accounts/

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