Social Commerce in China: trends and platforms
A look at the recent tendency in online shopping that has rapidly developed in China over the last few years.
Social commerce merges e-commerce and social media best practices allowing consumers to search for brands through social content and explore products that they would not normally search for on an e-commerce platform.
The largest e-commerce market in the world, China is a leading country in the development of social commerce, that up to the present drives 13% of its total retail e-commerce sales.
Social commerce has grown exponentially in the last few years in China, thanks to the Country’s well-established e-commerce ecosystem and the presence of pervasive online payment systems that facilitate transactions and the transfer of information. The rapid growth of social media use in China, which recorded over 854 million users in 2020, has sped up the development of a favorable online shopping habit. Following the rapid spread of social commerce platforms, this fast-growing market is expected to reach in China approximately $363.26 billion U.S. by the end of 2021.
Social commerce platforms: what are they?
Social commerce platforms are a fusion between an e-commerce channel and a Social Media, and they have revolutionized the customer journey of Chinese customers. These platforms offer social features for brands and retailers to create interactive, shareable, and immersive campaigns that help new product launches go viral. Online mini-games, interactive challenges, and group-buying deals have deeply enriched the customer experience: customers can now search for products, compare and purchase them while sharing their experiences with other users, and express their preferences while exchanging recommendations. They can also interact with people they know and follow their product recommendations or listen to suggestions from KOL (Key Opinion Leaders).
Major social commerce platforms in China
1. WeChat
With its 1.2 billion active monthly users, WeChat (微信) is heavily investing in its e-commerce ambitions and has been the leading platform for social commerce in the past few years. On WeChat, global brands can enter the market by establishing Mini-Program stores of their own and driving traffic through social media marketing campaigns, influencer marketing, and digital advertising. Brands can use WeChat ads and recent live-streaming features to target their digital-savvy user and facilitate the selling of products. In 2020, WeChat facilitated transactions worth almost $250 billion U.S. through its 2.3 million mini-programs, two times the transaction value reported in 2019.
2. Content-sharing platforms Douyin and Little Red Book
Content-sharing platforms Douyin (抖音) and Xiaoshongshu(小红书) are particularly popular within Chinese Millenials and Generation Z and are among China’s main social commerce Apps. On these platforms, based on User Generated Content (UGC) and designed to build interaction with consumers through KOLs, brands can launch videos or live streaming campaigns to promote their products and followers can buy directly through links embedded in posts.
Since its launch in 2016, Douyin has gained huge popularity in China and is one of the first Chinese apps to successfully draw worldwide attention. As of August 2020, the platform achieved a total of 600 million daily active users in China and has become a global leader in the short video market. Through its powerful editing tools, Douyin is used by brands to reach young Chinese users with entertaining video content.
Xiaohongshu, also known as Little Red Book or “RED”, is one of the main Chinese social commerce platforms. RED mainly attracts consumers who are looking for authentic experiences and reward quality and authenticity. Xiaohongshu represents an opportunity also for international brands: the platform also launched its own cross-border e-commerce platform in response to the high demand for foreign luxury goods, allowing Chinese consumers to purchase products from overseas directly from the app.
3. Yunji
Since his launch in 2015, Yunji (云集) quickly build up a large network of users through the years. The platform relies on a registration fee system to generate profit and, with 14.7 million customers in 2020, is one of the most used membership-based platforms in China. Following the S2B2C (Supplier to Business to Consumer) formula, Yunji sources products directly from brands and suppliers and sells them to micro-store owners, which then sell them to customers through their social network. As an e-commerce platform for VIP members driven by social networks, Yunji provides a host of selected commodities, namely beauty and personal care, mobile phones&digital products, baby&maternal products, toys, fruits, and other fresh products.
4. Pinduoduo
With more than 788.4 million users, Pinduoduo (拼多多)is undoubtedly one of the main purchase apps in China. The core of the Pinduoduo experience is team purchase: shoppers can receive discounts by sharing a link and gathering a group of friends to purchase products collectively. Moreover, the site has a product feed that shows shoppers products they may like based on their previous browsing behavior. Pinduoduo has made buying online feel a lot like entertainment also through engaging live streams and games.
Conclusions
Compared to Western e-commerce platforms, Chinese social commerce platforms are multifunctional and have a broader purpose. In China, many of the most popular e-commerce platforms are heavily integrated with the most popular social networks, featuring innovative services like Mini-Programs and live streaming commerce. These new technologies have enhanced the shopping experience, making the process more authentic, trustworthy, convenient, and positive, while also building large communities of engaged followers.
