China is a powerhouse of social commerce. Essentially, social commerce uses social media platforms to promote and sell products or services. The integration of sales in naturally, highly-trafficked platforms means that there is a wider base of consumers from all walks of life. Global sales revenues for social commerce will be around $1.6 trillion within the next three years.
In China, it accounted for more than 13% of the total e-commerce sales in 2021. However, while social commerce has gained a secure foothold in China and the east, it is still to be fully integrated with the west. The stage is already set for the global growth of social commerce, and it is projected to grow at 29% annually from 2020 to 2028.
Western countries have a distinct lack of social commerce, and it is still taking hold there. However, due to the pandemic, the roots of social commerce are firmly rooted now, with effects lasting for years to come. So, what can your brand learn from the future of social commerce in China? Here’s 5 lessons for you to know:
1. Direct to Consumers: the driving force for social commerce
DTC or direct to consumers, is a business model that is intrinsically linked with social commerce. DTC brands bypass traditional practices like middle-men and are more efficient when it comes to the buying process. Social commerce plays an important part in the DTC model as it allows the consumer to buy from the brand directly through a social media platform.
74% of consumers are actually basing their purchase decisions on what they see on their social media accounts, so the DTC model is really lucrative and cost-effective compared to other models. To take advantage of this, brands need to focus on data communication and more innovative platforms for personalised communication. They can leverage big data insights to make their approach to consumers more personalised.
2. Rise of the KOC
KOCs or Key Opinion Consumers are just simple and ordinary consumers who make live streams, short videos, and micro-blogs. While they have a respectable amount of followers, these KOCs are not celebrities and can easily have the common person relate to them more than KOLs. This means that in the view of consumers, KOCs are more honest and are more focused on reviewing products more objectively than KOLs that are probably paid to leave a good review.
At the community-level, KOCs drive social commerce by leaving honest reviews of a product. To address the rise of the KOCs, brands must integrate them into their marketing plan and ask them to review their products honestly. It will also help if brands improve the quality of their product so that word-of-mouth spreads positively.
3. Acceleration towards digital experiences
The digital age has brought with it technological developments that advanced the business world. According to eMarketer, brick-and-mortar sales in China have decreased by 18.6% in 2020 and will only further increase. The pandemic is the #1 catalyst in ramping up the development of digital experiences for e-commerce, and now, consumer behaviour is increasingly going digital. Brands, therefore must invest in more digital experiences and events, such as AR, VR, and Metaverse applications for their products. Streamlined logistics and pain-free processes online are also key in retaining customers.
4. Gamification is key
Within the digital world, 23% of Gen Z Chinese report playing the majority of the week (4 out of 7 days). About 17% of these Gen Z consumers play daily, so with an increasing percentage of people spending more time on their phones to play given the pandemic, gamification of e-commerce is a trend that is captivating them. It is estimated that by 2026, the Chinese gamification market will reach $38.7 billion USD. This is a fivefold increase in the industry’s worth in 2019 (7.1 billion USD).
With this trend, it is therefore prudent for brands to create engaging and gamified content on their social platforms. Mini-programs in WeChat are examples of highly successful, gamified content.
5. Increased social presence: Collabs/Liveshopping
It is a no-brainer that an increased social presence gives more leverage to a brand in a platform that gives more exposure to viral trends. Chinese consumers, compared to other kinds of consumers, are heavily reliant on influencers. The creator culture in China is very strong, and it is the key factor that makes livestreaming or liveshopping a success among Chinese consumers. Aside from this, one way to increase your social presence is to link your brand to well-established IPs to generate buzz and talk. These collaborations are very effective in tapping into an already existing consumer base.
An example is Miniso’s IP collaboration with Marvel to create Marvel superhero-themed items, ranging from pillows to earphones or cutlery. Your brand can definitely benefit from an increased social presence, and the way to do it is to use livestreamers and do collabs with other brands to create excitement and organic referrals.
Social commerce is the biggest in China, with a lot more potential for brands given the Chinese consumers. The West is still catching up on social commerce; hence there is a big market opportunity for brands to pivot towards social commerce. How can brands maximise social commerce in China or elsewhere in the globe?
Brands must be more personalised in their services, integrate KOC reviews/content, invest in digital experiences like AR or the metaverse, create gamified content, and increase their social presence with IP collaborations and livestreamers.
If your brand needs help and guidance we can help with training tailored to your specific needs or answer your most urgent questions in an expert call or a series of consultation sessions. Contact us and we’ll arrange a video chat to find out what you need and move forward from there.