Social Commerce is the talk of the town in marketing circles in China
Last month, the userbase of Alibaba’s second-hand platform, Idle Fish, crossed the 500 million mark. It is reflective of Chinese consumers becoming more open to ‘pre-loved’ goods than in the past, in addition to a sector of consumers who are more price conscious. It highlights the rise of trading collectables, and also represents that Chinese are becoming more aware of environmentally-responsible consumption. Yet the biggest announcement from the platform on World Environment Day on Monday was that it is adopting social commerce.
Just as every marketer in China was talking ecommerce a decade ago, social commerce is the talk of the town right now. Social commerce is using social media to sell goods and services, blurring the lines between social networks and ecommerce platforms.
Traditional ecommerce has become saturated in China. While ecommerce in China grew 8.6% in the first quarter of the year, JD saw just 1.4% growth in sales and Alibaba’s Tmall and Taobao sales decreased by "mid-single digits." Social commerce platforms such as Douyin, Kuaishou, WeChat and Pinduoduo have accounted for almost all of China’s online retail growth this year.
China’s social commerce sales grew from $352 billion in 2021 to $406 billion last year according to McKinsey. This growth is being driven by livestreaming. Live commerce accounted for a little over a third of social commerce in 2021, growing to half of sales last year. That growth hasn’t slowed down, with sales of categories such as fashion on Douyin outselling Tmall in the first three months of this year. It’s why Apple is selling products via livestream for the first time during this month’s 618 ecommerce festival.
The shift in buying preferences represents how much Chinese consumers want to be entertained when doing their shopping. While conversion rates on traditional channels are around 3%, some brands are achieving conversion rates of almost 30% on livestreams. Consumers are making impulse purchases and are much less likely to shop around than on old-fashioned shopping sites.
Live commerce can be a lucrative pathway to reach Chinese consumers; this is particularly true for brands that have built up their own channels, being less reliant on increasingly expensive and fickle influencers. Yet livestreaming needs to be supported by strong branding and positioning.
Without a strong brand proposition, products can be challenging for a livestream host to sell. This means building strong brand value and purpose to talk through on a show. Consumers need to be well-understood so a host can share functions and benefits that support their needs, as well as pushing those viewers’ emotional buttons. And beyond that, operational systems need to be flawless, ensuring that the end-to-end customer experience goes off without a hitch.
Social commerce is no longer a novel add-on to a marketing plan in China, but a central pillar in the channel plan aligned with your branding strategy. Contact China Skinny to ensure that you are doing it as well as you can.
