China’s social commerce sales hit US$672 billion in 2016 and continue upward momentum
An increasing amount of people are hopping online not just for information, but for social interaction. According to a study by Hootsuite and We Are Social, global social media usage increased 13% in 2017 alone.
With those numbers, social media applications and the retailers they advertise seem to have a captive audience – but the amount of purchases made via social media apps is the West doesn’t reflect this. According to a Pew Research study, roughly half of Americans have made a purchase using their mobile device, and only a small percentage of that group made a product purchase through a social platform.
As is the case with all things mobile, China is ahead of the curve. China’s online retail market is the largest in the world, and 71.6% of e-commerce transactions were made on mobile devices, according to a report by Fung Business Intelligence.
61% of Chinese consumers start their online shopping journey on Tmall
In addition to widespread use of mobile payment in brick-and-mortar stores, mobile food and grocery delivery, and new retail experiences that merge online and offline, a handful of platforms in China have successfully merged e-commerce and social media.
According to PricewaterhouseCoopers’ 2017 Total Retail report, 61% of Chinese consumers begin shopping by searching on Tmall, compared to 39% of Americans who begin online shopping via Amazon. In China, e-commerce platforms have created a user-friendly, attractive consumer space, making them the first stop for retail experiences rather than the final destination.
Social commerce is a signature blend of social media and e-commerce. While some companies in China market themselves as social commerce companies, such as Little Red Book, Dealmoon, and Look, the trend is more readily seen in traditional platforms adopting a hybrid approach. Media sites are opening their own online stores, and e-commerce sites are adding more editorial content.
Chinese consumers are a uniquely social market
Chinese consumers are highly mobile and highly social, making them a vast and unique market. They use mobile phones for every aspect of life and rely on social media platforms to discover brands and review products. The behavior of the younger generation is only pushing this trend forward. According to Anslysys, 89% of Chinese consumers born after 1990 will share their purchase experience online.
This same group is highly influenced by internet celebrities and wanghong market products and even develop their own brands. Increasingly often, they’re using live streaming video to sell products on social media platforms. WeChat now has a feature that allows for virtual product displays and portals to accompany live streaming presentations making it easier for consumers to buy.
Social commerce platforms reach both low-income and luxury shoppers
Pinduoduo and Taobao Tejia are two e-commerce platforms that mesh online shopping and social media. Started in 2015 by former Google engineer Huang Zheng, Pinduoduo offers deals on low-cost goods. The platform lets users share products on their social media accounts to unlock even greater discounts. In response to Pinduoduo’s success, Alibaba launched Pin, which lets users make bulk purchases of discounted items. Both platforms are popular with lower-income Chinese residing in third and fourth-tier cities.
Social commerce isn’t just for deal-seekers. According to KPMG, 45% of luxury shoppers in China purchased more than half their luxury goods online. An increasing amount of luxury brands have started selling on social media platforms to meet consumer demand, such as Chanel. The classic luxury brand started an Instagram account that aggregates media from fans, influencers, and celebrities that sport the label.
Little Red Book and LOOK make space for influencers and KOLs
Little Red Book, or Xiaohongshu, on the other hand, started off as a social commerce company. This young e-commerce community was founded in 2013 and boasts 60 million users. It’s a kind of Instagram Amazon twist, featuring scrollable user-generated media offering tips on the latest fashion trends, product reviews, and beauty tutorials. Little Red Book is specifically aimed at women ages 18-35 and leverages this social-savvy generation by blurring the lines between consumers and influencers.
LOOK is a Beijing-based startup that’s turning heads. After raising 30 million yuan in pre-A series funding, this platform combines content and one-click shopping creating the perfect launching point for China’s KOLs. LOOK lets these social marketing savvy celebrities monetize their operations, a feature that’s attracted Gogoboi, Freshboy, and Anny Fan. LOOK’s innovative strategy shows that where KOLs go, e-commerce companies will follow – western e-commerce luxury platforms Farfetch and Net-A-Porter have hopped onboard, in addition to 300 influencers and 150 brands.
Social commerce is just beginning. Brands and e-commerce platforms can stay on trend by creating predictive, prescriptive and personalized experiences for their consumers. They can do so by blending social media and shopping, tracking lifetime customer relationships, and using big data to target specific markets with content and products suited to their taste profiles.
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