What is Social Commerce? How does it Work?
The purchasing habits of the population are changing. In the past few years there has been a shift from traditional shopping to online shopping and then from online shopping to social commerce.
But what is exactly social commerce?
By definition, social commerce encompasses every activity of purchasing a product through the intermediary of a social media platform. But easily described, it is the activity of discovering a product in Facebook, Twitter or other social network and buy the product directly from that social network, with no need to go to another webpage, usually thanks to a buy bottom.
Why Popular in China ?
New consumers' generation
The new generation of consumers are the ones starring this shift to online shopping. Their attitude towards shopping is completely new compared to their parents and grandparents, who where educated in saving money.
E-Commerce sales are not anymore restricted to apparel retailing. Chinese population likes everyday products, electronics and even food, the markets is growing each day and there is room for everything.
Shift to social and the need for opinion and references
In the last years a change in the purchasing habits of Chinese customers has occurred, 15 years ago, shopping was a social activity in which friends or families got together in shopping malls or commercial streets, the online stores made the social element of shopping disappear, as customers could shop online from the sofa of their house. But now social commerce has made the experience social again, according to Mckinsey, more than a 66% of Chinese consumers believe that recommendations from friends and family are the most important factor in their purchase decision.
Chinese people wanted to share their activities with their friends and family and shopping is one of the activities they like the most, so the possibility of getting references from other customers and sharing their purchases with their friends has made social commerce a complete success in China.
Available for everyone.
The key of social commerce success in China is the reach it has had, not only it has reached the main cities like Shanghai, Beijing, Chengdu, it is also part of the life of the population in rural areas. This has been possible thanks to the investment that some companies like Alibaba have made by creating cheap mobiles phones, affordable for nearly everyone, so that people from all across China can access the internet. Even now these low tier cities are using more e-commerce platforms than high tier cities.
What Companies are Leading the Market?
It has always been the reference on e-commerce in china, the platform lets users buy cinema tickets, pay their part of the bill of the dinner with friends and pay for a taxi without leaving the app. But they have taken it to the next level, now customers can buy from stores without leaving the app, and everyone can create a store on WeChat, just with the help of a 3rd party ecommerce platform and everything is set up and ready to sell.
Big brands are also taking part on this, by opening their official WeChat accounts where they offer presents, coupons and promotions.
Alibaba´s online e-tailer store is on the way to become the largest company is this market, the company has perfectly understood that more sharing is more selling so they are promoting the interaction among the users, they are encouraging customers to share their pictures of their purchases, and even giving incentives to those who achieve a high commitment to this sharing activity.
The company, with more than 369 million users is the largest social commerce platform in the world, with more than 20 million product reviews every day and more than 5 million users.
Taobaos´s main competitor, who aims to improve the exchange and sharing of information that taobao offers and also provide a simple and easier use. For stores, it allows to manage orders look at the revenues, sales statistics and also save articles for promoting or selling. The customer can access the store through hyperlinks or QQ codes sent by their contacts and can browse the products before buying them. It also features the “look around” mode, which enables browsing stores that are located nearby.
The Social Commerce Experience
Better products and increase the product awareness
Companies can show only some of their inventory to see how those products reach the consumers and by that prepare a better online catalogue. Social commerce also enables companies to create a higher visibility of the product and by that increase the product awareness.
Increase the number of customers and personalise the experience
Social networks are the largest sources of data in the world, thanks to this a larger number of consumers can be reached and the message delivered to these consumers can be changed according to their preferences. How? Easy, if someone is interested in animal products, more animal products will be advertised to that person.
Increase the talking about the product
Platforms like Taobao let customers upload pictures of their purchases, with reviews and recommendations when buying the products, by this people can share opinions and comments and the visibility of the brand will increase. This benefits customers by providing them with more information about the products they want to purchase, and also companies who will enjoy the increase of conversations about their products.
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