The market for social commerce is only going to grow further in 2023. Indeed this market is expected to continue to expand, topping US$1 trillion in annual global sales this year. And when it comes to which market stands out when it comes to social commerce, it has to be China.
China’s social commerce has increased significantly, with a 40.25% increase in market size from 2021 to 2023. Between 2021 and 2025, their market size is expected to rise at a 17% yearly rate.
While the size of the social commerce market did not rise as rapidly in other places, regions such as North America, Europe, and Latin America are predicted to grow exponentially over the next two years.
Traditional e-commerce channels in China remain dominant with 72% market share in H1 2022, but social commerce is rapidly gaining popularity, growing from a 14% market share in 2021 to 21% in H1 2022. New sales channels are changing the way businesses approach e-commerce, and they’re adapting their strategies to stay competitive.
Given the development of social commerce, it’s important for brands and businesses to stay ahead of these changes. Below are some key trends and insights found in the China Social Commerce Report 2023, a report that guides businesses in navigating the world of social commerce, allowing them to leverage lessons for and from China effectively.
The ‘What and Why’ of social commerce
Social commerce integrates social interactions and e-commerce, creating a seamless shopping and social experiences. With personalised content recommendations, user-generated content, and influencer endorsements, social commerce platforms facilitate purchases and emotional connections between customers.
Here are some of the benefits to embracing social commerce:
- Social commerce increases brand visibility
Large social media platforms can increase brand visibility and enable brands to connect easily with their target audience as well as new customers with the right marketing strategy.
- Customers engage more on social platforms
Brands can build stronger customer relationships through interactive social commerce features, such as livestreaming, shoppable posts, gamification and more.
- Creates a smooth customer journey to drive conversions
Brands can use mini programs, direct links to the brand’s store, easy online payment options, virtual try-ons, livestream sales, and exclusive offers for members to increase sales and customer loyalty.
It’s imperative for brands to understand the customer journey elements unique to social commerce and those include shoppable content, livestream shopping and shoppable chat.
- Shoppable content
A Douyin storefront, for example, integrates shoppable content into various aspects of the user experience. From the moment users enter the store, they’re met with a range of interactive features, including livestreams, membership deals, and engaging short videos with embedded product links, making shopping a seamless and engaging process.
- Livestream shopping
As livestreaming commerce in China continues its growth, brands are embedding livestreams in their Douyin brand zones. This strategy allows customers to access product pages, showcased products lists, membership registration, and special offers with just 1-2 clicks during a livestream, ensuring a dynamic and interactive shopping experience.
- Shoppable chat
Platforms like WeCom Clienteling, WeChat, Weibo, and Douyin have become critical tools for businesses in China to provide personalised customer experiences. Brands are using WeChat questionnaires to schedule appointments and curate experiences based on customer preferences, while some employ WeChat mini programs for live customer support and offering personalised advice and recommendations.
Top Chinese social commerce trends
- Merging marketing and transactions
Social media platforms in China like WeChat, Weibo, and Douyin have evolved beyond just socialising to become vibrant shopping hubs.
Brands can strategically leverage these platforms to engage with customers and sell products directly, transforming the social media experience into an immersive shopping journey.
Western brands, in particular, can tap into this opportunity to interact with their customers and amplify sales. This can be achieved through shoppable posts, integrating buy buttons, or linking to online stores within social media ads.
By simplifying the purchase process right from the social media interface, businesses can potentially enhance conversion rates and propel sales.
- Personalisation through first-party data
To craft highly personalised experiences, it’s best to monitor customer actions across all touchpoints and categorise users according to their preferences. This facilitates the development of customised pathways and the automation of bespoke experiences.
For example, use consumer-preferred platforms and relevant content to attract and engage with customers. By meeting customers where they are and providing content that resonates with their interests, businesses can build stronger relationships with their audience and create a more positive brand image.
First-party data in China can be obtained and consolidated from WeChat mini programs and official brand accounts. This data includes user location information, conversion path data, purchase history, wish lists, app activity, and click data.
Graff China, for example, collects first-party data through their 1-on-1 online customer service. This enables customers to book appointments and provide location and other information about their preferences. Graff also provides a WeCom contact for a 1:1 relationship, which has become an industry standard in China. Chat archiving and WeCom data integration into CRM systems help track opportunities and improve performance.
While third-party e-commerce platforms offer reach, they often limit direct access to customer data. These insights can enhance personalization, engagement, and ultimately, conversions. However, brands should also be mindful of complying with local data privacy regulations in their respective markets.
By segmenting target audiences and developing personalised marketing strategies, brands can create more meaningful connections with their customers, improve customer engagement, and ultimately increase sales and revenue.
- Unifying data
It’s essential for brands to combine the data of their social media followers and sales channel clients in order to create full profiles of their customers. This combination allows the creation of comprehensive 360 degree customer profiles for the brand to analyse.
Unified data also paints a complete picture of the brands’ customers’ interactions and behaviours across all of different channels, allowing engagement boosting and experience customisation.
Unified membership code (ID) integration has been achieved for offline channels, Tmall, and WeChat mini programs, enabling seamless integration of membership levels and loyalty points, and achieving omnichannel management.
- Shopping in the metaverse
The concept of “Metaverse Shopping” extends beyond QVS style TV channels and retailtainment in the sense that it is less about convenience or a different form of media and more about discovery and social engagement.
While the hype for the metaverse has waned, the concept is still in its nascent stage and slowly gaining traction in some markets. In China, metaverse shopping is more widely used. Chinese consumers were already accustomed to integrated online shopping experiences due to the prevalence of super apps like WeChat. This makes the transition to shopping in the metaverse smoother.
Alibaba’s metaverse shopping app, Taolive City, exemplifies China’s strides into the metaverse and luxury marketing. The app enhances customer engagement through mission-based games and lucky draws. It combines video content, social elements, and immersive features in a metaverse-like space to elevate online shopping.
To effectively venture into this space, brands must understand and adapt to the cultural and social dynamics unique to these digital environments, treating them not just as marketplaces, but as platforms for meaningful social interactions.
- Virtual influencers as brand ambassadors
Chinese tech giants Tencent and Alibaba are at the forefront of the virtual human market. By innovating and forming partnerships across industries like advertising, education, and entertainment, they’re driving increased demand and commercialization. The result is a booming sector, with Statista estimating China’s virtual human industry will be worth 5.56 billion USD by 2023.
In late 2022, L’Oréal Travel Retail Asia Pacific China spearheaded a metaverse campaign for Viktor&Rolf featuring virtual versions of popular KOLs. It marked a brand first, with Chinese KOLs CallmeVila, IamReddi, and 虚拟人AliCE sharing their experiences via their virtual counterparts. The campaign included a Viktor&Rolf Douyin challenge that drew over 42,000 participants and amassed an impressive 126 million impressions.
Foreign brands should note the power of using virtual influencers in their social commerce strategies. This campaign success shows how these digital personalities can drive high engagement and reach vast audiences. It should also be noted that L’Oréal Travel Retail Asia Pacific did not only just use virtual KOLs, but the virtual versions of existing popular celebrities.
This strategy effectively leveraged the fame and fanbase of these celebrities, ensuring significant traffic and attention to their campaign. The success of this approach underscores the potential of employing both real and virtual influencers in tandem to maximise brand exposure and customer engagement.
As we traverse the ever-evolving landscape of social commerce, it’s crucial to stay ahead of emerging trends and their implications for your business. Understanding these shifts and acting on them can be the difference between staying ahead or falling behind in the current competitive market.
As marketplaces and social networks become more integrated everywhere, brands need to be aware of the merging and melding of functions and services that used to be considered separate and different.
It’s vital that brands think in terms of shopping experiences that provide seamless transitions from social to retail functions where people can move easily between browsing, sharing, being entertained, researching, playing a game, recommending and buying.
Brands need to foster engaging, interactive experiences that encompass a variety of functions, including retail, to captivate their audience. Devising innovative retail strategies, creating unique, personalised customer journeys will be paramount.