As the COVID-19 pandemic spread worldwide in early 2020 and hampered brick-and-mortar businesses, online social retail emerged as a refreshing breakthrough.
Social commerce blends ecommerce and social media best practices as an exciting, lucrative evolution in retail marketing.
We look at global social commerce trends, China’s roaring social ecommerce market and what U.S. retailers can learn from successful market leaders.
A glimpse at why global social commerce is so powerful
Facebook’s 2020 launch of Instagram Shops directly aims at Amazon by blending ecommerce with the world’s biggest social media platform. Amid the COVID-19 crisis, the global social commerce market is estimated to increase at a soaring rate of 31.4%. Social commerce will continue to grow in 2021 as shoppers stick with digital habits and as both ecommerce and traditional retailers quickly adapt to the post-COVID-19 environment.
Why should your brand care about social commerce? Integrating ecommerce with social media is powerful. It enables consumers to search brands via social content and explore products they usually would not look for on an ecommerce platform. Social commerce applies to diverse shopping scenarios, ranging from product search, influencers and mobile pay. In addition, China’s wildly popular social media platform WeChat is heavily investing its ecommerce ambitions with the booming social commerce mini-program that attracts global brands ranging from Sephora and Nike to Gucci and Armani. WeChat mini-programs are lightweight sub-apps that brands use to gain speed to market and seamlessly sell within the bigger WeChat platform.
Social media platforms offer social features for brands and retailers to create interactive, shareable and immersive campaigns that help new product launches go viral. For instance, group-buying deals, online mini-games and interactive challenges can enrich the customer experience.
China’s roaring social ecommerce market
To date, China has led the world in the development of social commerce. eMarketer estimates that social commerce drives 13% of total retail ecommerce sales in China. China is the largest ecommerce market in the world. It is also the most exciting, exotic and fast-changing market globally, and its consumers are unique in their shopping behavior.
Social commerce is booming in China and the country’s ecommerce industry sees that as the new norm. Online consumers now expect brands to have a social commerce presence. Interestingly, social commerce mainly solves a primary challenge in Chinese digital commerce: sky-high user acquisition costs.
The costs of acquiring new customers on Alibaba and JD.com are 812 RMB ($123 U.S.) and 176 RMB ($26 U.S.), respectively. As such, brands in China have employed social commerce campaigns as a more affordable way to reach new customers.
This fast-growing social commerce market is expected to reach nearly $315.5 billion U.S. by the end of 2021. Group-buying and WeChat-based social commerce exceed 90% of the total market share for social commerce. The coronavirus pandemic increased the number of customers who have accepted social commerce as a new norm for shopping and integrated it into their daily lives.
With roughly 1.2 billion active monthly users, WeChat has been the leading platform for social commerce. WeChat mini-programs have been taking China’s ecommerce industry by storm. Brands can establish WeChat mini-program stores of their own and drive traffic through digital advertising, influencer marketing, and other creative social media marketing campaigns.
The new business model based on the WeChat ecology provides a broad range of “acquaintance” customer groups (including WeChat Moments and community advertising via WeChat Ads) and broad reach (like official account subscription messages, campaign pushing, one-to-one customer service interaction and content marketing,). By making marketing more targeted, relevant and effective, WeChat helps brands lower barriers to entry and drive private domain traffic.
Last April, WeChat hit a milestone by launching its new livestreaming feature. WeChat’s focus is on integrating livestreaming with its mini-programs rather than introducing livestreaming as a critical function. Ahead of Lunar New Year, an increasing number of upscale brands such as Balenciaga, Loewe, and Cartier are using WeChat mini-programs to target digital-savvy consumers with WeChat ads.
Another prime facilitator of social commerce in China is Little Red Book, specifically its content-sharing function and community. Little Red Book, also known as “Xiaohongshu” (小红书), is one of China’s largest and fastest-growing social commerce apps, which targets women under the age of 35. It is particularly popular with Generation Z, those born after 1995. The platform is designed to help users explore and purchase products, share recommendations, and provide useful reviews.
Little Red Book builds interaction with consumers through influencers, called key opinion leaders (KOLs), paired with detailed and lengthy blog-post type content focused on beauty and skincare products. The approach drives the demographic consumer profile of Little Red Book to skew more towards younger, urban consumers, namely millennials and Gen Z consumers in top-tier cities as the primary target audience. Some users will purchase products directly on Little Red Book, while others will only do research then hop over to another platform to buy. Either way, having a presence on this social media platform is a critical destination on the customer journey.
Little Red Book officially debuted the ecommerce livestreaming feature last March to determine its ambition to jump into social ecommerce. Brands that own an official store on Little Red Book can launch a livestreaming campaign to promote their products. When the anchor hosts the livestream session, the featured products pop up in cards to the viewers, and new viewers join the livestreaming event. All the viewers need to do is click “Go to buy” to find the products’ details and receive the merchant’s exclusive coupons. Notably, social commerce shortens the journey between product discovery and purchase.
Embracing pandemic-era innovation, Louis Vuitton was the first luxury brand to launch the livestreaming session on Little Red Book. The livestream earned positive engagement from viewers, attracting more than 152,000 views and brimming with many other comments. These impressive results could change the perception that high-end luxury houses still view social commerce or ecommerce with skepticism. Louis Vuitton’s purpose in launching a livestream campaign was to experiment with a new type of shopping experience to suit the constraints of the COVID-19 crisis, including shuttered malls and bored, homebound consumers.
Why U.S. retailers should care
WeChat and Little Red Book are prime examples of how social commerce, facilitated by “social” characteristics, is modernizing the traditional ecommerce industry by changing how retailers and customers interact with each other.
In the future, ecommerce will become a more interactive and pervasive aspect of Chinese social media. As U.S. and global retailers continue to struggle due to traffic slumps, soaring user acquisition costs, intense competition from the likes of Amazon, they need to adopt new ways of connecting with their end customers.
Infusing a social element into one’s ecommerce strategy could be just what they need to reinvigorate their online business. The way WeChat and Little Red Book have done this in China provides a practical example of how retailers can learn from successful campaigns.
- Global social commerce is an emerging trend
Social commerce is already prevalent in China. WeChat launched its new livestream feature to facilitate mini-program stores for brands to sell directly to its billion-plus digital-savvy user base. Louis Vuitton’s debut livestream campaign on social ecommerce platform Little Red Book tested a new shopping experience to suit pandemic constraints.
- Efficient, online product discovery
The social commerce content-sharing function plays the core role in connecting users with products, and merchants can access user traffic through ads or discount promotions. Having a presence on the social media platform WeChat is a critical destination of the customer journey.
- Livestreaming commerce
As more than a sales channel, livestreaming gives brands deep, direct, real-time communications with customers. Brand representatives can help customers select the most suitable products and use rewards to encourage viewers to share the livestream link with their friends and communities, extending the brand’s reach and reducing user acquisition costs.
Azoya assists retailers and brands as they expand into China via ecommerce.Favorite