What is social commerce and what should we learn from Asia?
The business of selling items in large volumes online through people’s social networks is known as social e-commerce. These networks can be virtual (smartphone app) or actual (with a group of friends and neighbors), or both. The aim is to encourage these groups to regularly make high-volume transactions rather than minor purchases through internet platforms. The distinction between e-commerce and social networks is commonly blurred in China. E-commerce marketplaces offer games, group buying, live streaming, and content-posting features, whereas social networks have extensive e-commerce capabilities. It’s a ruse concept that Asian businesses are taking full advantage of. Social commerce is a massive business in China, with revenues expected to reach $363 billion by 2021. Alibaba and Tencent, two technological platforms that have effectively incorporated social media, digital payment infrastructure, and product discovery into their platforms, have been significantly responsible for the spread. They now control 90% of the e-commerce market, 85% of the social media market, and 85% of China’s e-wallet/digital payment business.
Social Commerce is a social networking platform that provides an e-commerce experience. Facebook, Pinterest, and Instagram are some Western platforms with this functionality. However, none of the Western media have achieved the same levels of success as China. Although social commerce is still relatively young, it has begun to gain momentum in recent years. It’s become so popular recently that a recent survey by I research discovered that over 70% of respondents admitted to making purchases using social media!
In early 2019, Amazon, for example, created a service that allows influencers to promote items via live streams, assisting merchants in driving discovery. The business also released an app to help influencers to produce, capture, and manage live streams around the same time. In addition, Amazon began paying creators a percentage on purchases in mid-2020 and implementing a tiered system that rewarded the most active streamers with higher site placement. Likewise, media and entertainment organizations are progressively integrating acquisition and payment capabilities, either individually or via partnerships, in response to expanding possibilities. Shopify and TikTok, for example, have partnered to allow Shopify merchants to create shoppable video advertisements on TikTok. Meanwhile, Hulu is changing typical video commercials into prompts that will enable users to scan QR codes or receive push alerts on their devices. Early steps like these are likely to boost sales in the fast-growing social section of the US e-commerce business, which is estimated to reach $36 billion in 2021.
In the United States, social commerce is following in China’s footsteps, but the road to success will be different. Here’s how marketers in the United States may utilize China to model their social commerce initiatives, including Livestream shopping.
Pinduoduo, which launched in China in 2015, is widely regarded as the forerunner of the current group-buying model. More than the US retail behemoth Target, the corporation is worth $130 billion. Pinduoduo started by focusing on underserved customer areas in Chinese cities where mobile users weren’t spending much. The business connected them with underserved suppliers, such as farmers, whose previously unsuitable fresh meats and produced for direct consumer e-commerce sales. Small individual orders of such things would be expensive to pack and ship, especially with last-mile delivery to each dwelling.
Though similar in principle to TV shopping channels, live-streamed e-commerce has its features and attractiveness. There’s an ecosystem of giant firms employing arrays of studios to broadcast events that promote apparel, and cosmetic items, with hotspots in China and Korea. The hosts are chosen from a group of thousands of young people aspiring to be great influencers. The most successful accomplish mass personalization by combining their abilities and charm to sell large quantities to large virtual communities of followers.
Neither live e-commerce nor the group-buying model has reached the volume and complexity seen in Asia in the United States. One reason might be that marketing in the United States had already advanced to where old strategies were grafted onto new media: TV and print commercials turned into pop-up ads, and direct mail became email blasts. In contrast, several Asian nations witnessed a double jump. Their economies soared from low levels of affluence (due to a lack of mass marketing of consumer goods) to greater ones, and individuals went from being offline to extensive mobile use in months. As a result, there has never been a more fertile ground for developing new marketing strategies for a new era. China may be used as an example of integrating live streaming into social commerce tactics in the United States, such as using creators and influencers to increase engagement and sales.
For now, according to predictions, Facebook will be the most popular social commerce network in the United States in 2021, with 56.1 million purchasers. With 32.4 million users, Instagram is in the second position, followed by Pinterest with 13.9 million.
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