Exploiting The Rise In Social Commerce
Over the past two years, coping with the pandemic and its complications has put renewed emphasis on the need for people to find new ways of making personal connections, and interactions with leading brands and other institutions. The internet has become an essential medium for consumers around the world -- both for its value in making instant personal contacts, and as a platform for buying things and conducting business.
In 2020, there was a 15.5% year-on-year growth in retail eCommerce sales in Asia Pacific. In Southeast Asia alone, the online commerce market achieved a value of US$62 billion, over a third of which was generated by new shoppers.
One of the biggest growth areas in this regard has been the rise of social commerce: the ability to seek out products and experiences, interact directly with their creators, share insights and commentary, and make direct purchases -- all on the same social media platform.
As one of the youngest and largest communities in the world, Southeast Asia has been the biggest market for social commerce, and this condition is expected to continue. In 2021 as many as 40 million people across Singapore, Malaysia, Indonesia, the Philippines, Vietnam, and Thailand came online for the first time, bringing the total number of internet users in those six countries to over 440 million people, of which 80% made an online purchase at least once. In China, social e-commerce now accounts for over 13% of all online sales.
iKala recently published a report titled ‘Riding the Pandemic Wave & Beyond’ which surveyed 1600 social shoppers and more than 23,600 social sellers across Thailand, Malaysia, the Philippines, and Singapore to identify emerging trends in the region’s social commerce space. According to its findings, social commerce (78%) has overtaken traditional brick-and-mortar retail (35%) to become the second most preferred shopping channel in the region, second only to eCommerce platforms (91%).
For consumers in Asia Pacific, blending commerce with social provides a natural extension of what platforms like WeChat and Tik Tok already offer: a chance to reach out and connect with like-minded people and brands with similar values, share thoughts and product suggestions with family and friends, exercise the collective power of groups in negotiating discounts or deals, and make purchases or orders without leaving the familiar confines of the social space.
By weaving commercial transactions into the fabric of daily life while creating a sense of community and connection, social commerce is creating opportunities for people to act as consumers, content creators, vendors, and influencers. With around 3.5 billion people (over 44% of the world’s population) using social media, it’s a phenomenal growth industry. Figures from Accenture Research suggest that social commerce will be a $1.2 trillion market by 2025. Some of the key trends to keep an eye out for include live video shopping advice, immersing customers via video sharing, and influencer live-streaming.
This $1.2 trillion projection will account for 16.7% of the $7 trillion eCommerce total spend. China will remain the most advanced market both in size and maturity, with the highest growth being seen in developing markets such as India and Brazil. Within this time period, social commerce will grow three times faster than traditional eCommerce on a compound annual basis.
For retailers, social commerce is providing opportunities to create lively, engaging, and imaginative experiences and interactions that excite the passions of consumers, provoke their interest, and stimulate the need to comment and share.
How China and APAC are Leading The Way
According to Insider Intelligence’s Social Commerce 2021 report, social commerce will be a key source of eCommerce growth in the US -- with China, or more specifically, the WeChat platform, providing a road map for this innovation.
In essence, WeChat acts as a one-stop-shop for eCommerce, enabling merchants to house virtual storefronts on the platform. Using the platform to convey brand messages both socially and digitally, many international brands are using WeChat as a point of entry into the Chinese fashion community. Brands like Prada and Dior are using features like WeChat Mini Programs for online selling, brand services, and VIP customer management. Livestreaming from the runway shows of major brands during fashion week has become a popular offering over the past few years. A WeChat feature called Online Showroom allows brands to invite social media users and fans to take a virtual front-row seat at their shows.
According to a recent report from Essence Global, almost 80% of consumers in China purchased items on social media last year. Singapore, India, and Indonesia followed with 50%, 49% and 48%, respectively. Notably in India, digitally connected citizens spend an average of three hours per day online. And social commerce startups made $554 million in 2021 -- a seven fold increase from the previous year, and the highest ever since 2015, according to data sourced from Venture Intelligence.
[Image source: Venture Intelligence]
However, replicating the success of social commerce in Asia Pacific on a global scale may not be so straightforward. As Sanjay Roy, General Manager, SEA, PUMA Sports observes: “We are starting to explore alternative channels like WhatsApp and Instagram. I know there are tons of solutions out there but I haven't come across a solution that is scalable at a global level. Being a solution available to one country, a small sector or a particular region doesn’t cut it out for an MNC. We want to take on a solution, which can be rolled out, successfully, to multiple countries. We haven't yet found enterprise-level solutions to some of these challenges. And so, we're looking at ‘social commerce’ as the answer. But the solution providers are either too small or too niche.”