- Social commerce was a US$30 billion a year industry in 2015 and is expected to exceed US$400 billion by 2018.
- Surprisingly, social giants like Facebook, Instagram, Twitter and Pinterest have not been able to create the level of stickiness required for social commerce.
Social commerce has been a buzzword for a few years now – if there’s a platform to be transacted on, you can add a letter to the front and create a trend.
From e-commerce, to s-commerce, m-commerce and even subsets like f-commerce, there is no online platform you can’t commodify.
The holy grail for markets and retailers alike has been cracking the ability to sell directly through social media, but it might surprise people to know that it’s Asia and not the US that’s leading the charge to get people to React, Interact and Transact on one platform.
What is social commerce?
The term was originally coined as a subset of e-commerce and used to be widely measured in terms of the ability to send people from a social platform through to an e-commerce site – and when up to 31% of all website referrals come from social, it’s not a surprise to see why it caused such a stir.
These days it’s much more about creating a walled garden to try and keep the customer doing everything they possibly can within the confines of one network – including direct store selling and payments.
It was a US$30 billion a year industry in 2015, and that’s why it matters. Think about what Facebook is trying to with Messenger and Marketplace and you’ll see what I mean.
Why is it important?
That US$30 billion figure was expected to be more than US$400 billion by 2018, so for the payment and retail industry it’s important.
For merchants and start-ups it gives another platform to sell on, and it comes closest to mimicking the behaviour in offline retail. Remember that shopping is an inherently social activity, with people gathering in groups to seek opinion and discuss both the purchase and other things.
For those who get it right, it’s opening the doors to a potentially huge audience, with potentially huge numbers of transactions.
Who is getting it right?
Surprisingly, the US social giants like Facebook, Instagram, Twitter and Pinterest have not been able to create the level of stickiness required. This is partially because they have been trying to force users into certain behaviours (Facebook using storefronts, Pinterest simply acting as a redirect) when the huge advantage of social media allows for the ability to interact with the consumer on their level, and on their platform.
The market leader is in Asia, where the messaging platforms are the ones leading the way in creating a seamless payment, commerce and social model that combines the best of all worlds.
WeChat has a staggering 846 million Monthly Active Users and 35% of all time spent on mobile in China is on the platform. They’ve realised that making an intuitive experience for users – whether its chatting, brands or buying – is the key to success.
As such they’ve been slow to roll out advertising on the platform (Called WeChat moments) but instead focus on effective social commerce campaigns.
One campaign for GAP in 2016 saw 49 million users pushed a chance to sign up for a loyalty programme, which they could sign up for with two click and no form filling, then be sent a voucher that ended up in millions of purchases.
WeChat’s fierce rival AliBaba has also been buying online commerce sites and looks to be trying to create a very integrated network, which it will probably push hard outside of China too, allowing Chinese tourists to use the platform to pay in Southeast Asia, amongst other places.
What’s the future?
Interestingly, for all it’s reputation as a copycat market, Asia is an innovator in both payments and social commerce startups and adoption.
Now the West is finally taking notice. Facebook’s developer conference announced the use of chatbots within messenger and most importantly, the ability to order and pay for food on the same service. A nod of the head to WeChat and a hint at the future of the payment industry.
Also read all about why the smartphone is the new key to marketing success in the digital age.
Adam Flinter is managing partner at Golden Equator Consulting, a company which helps start-ups, SMEs and mid-stage businesses with their strategy and growth.
Image by Seamless Asia.