Among the many forms of progressive and continuous retail innovation, social commerce stands out for its important dimensions of perspective and the evolution of its very definition.
HARD NUMBERS AND FORECASTS
According to final estimates from various sources, the global social commerce market is expected to reach $604 billion by 2027 (source: Research and markets). Valued at $89.4 billion in 2020, this volume is expected to be achieved at a compounded annual growth rate of 31.4% over the period considered.
In the United States, at the end of 2020 this market was worth $26.9 billion. China is forecasted to grow at 30.5% CAGR and, according to eMarketer analysts, in 2021 it will generate 2.180 trillion RMB ($315.50 billion) in social sales, compared to the $31.35 billion of the US. It is also expected that the US market will reach a value of $103.3 billion by 2027, with a CAGR of 30.5% during the forecast period starting from 2020. Japan and Canada will grow at the rate of 28.1% and 27% respectively, and Europe will see German leadership at a more restrained 22.1%.
EAST AND WEST
For social commerce, as for any other global phenomenon, attention should be drawn to the speed and characteristics of the different geographical areas.Given that by its nature it is inevitably linked to variables such as spending capacity and the spreading of electronic payments, by looking to the East it will be possible to obtain very interesting indications on the size and nature of the change.
In India, for example, there are currently nearly 160 million mobile payment users, but they are expected to increase fivefold by 2025, reaching 800 million. These are excellent preconditions for the development of social commerce in that country, estimated in 2020 at about $2 billion and, in the projections over the coming 5 year, up to $20 billion (source: India Times).
This clearly reflects a typical propensity for different product areas and social referents compared to conventional e-commerce. If Amazon India and the giant Flipkart (which is controlled by Walmart) traditionally owe their fortune mainly to consumer electronics and telephony for users in big cities, the social alternative rewards small retailers, until now offline, serving the middle- and low-income population in second-tier cities. The business prospects are significant and foreshadow a growth over the next decade of up to $60-70 billion, double the size of the current Indian e-commerce market.
In our West, social commerce is primarily a vehicle for advertising rather than actual transactions, and the difference with the East is really noticeable. In China, WeChat generated, with mini-programs, transactions for over $115 billion (source: eMarketer), almost four times the corresponding American market. China’s digital leadership is inherent in the history of that country and it is therefore well worth taking a closer look.
ANOTHER SOCIAL COMMERCE
In China, social commerce has a different meaning from what we commonly understand by having Facebook or Instagram as reference models. It does not refer to a more or less traditional and advanced online trading platform, but to an interesting phenomenon that will inevitably mark the entire world development. Doing social commerce means, in this case, relating to people who share a common interest, before and much more than for a specific product.
WeChat is a real digital ecosystem based on communication, in which those who sell meet those who buy in a relationship very different from classic e-commerce. Within a very strong personalization context, based on common values up to the creation of brand communities, brands can present anything they want to involve consumers in the definition and overall development of the brand and its history. So much so that some product launches went viral on TikTok in 2020, without the control and, frequently, not even the direct involvement of the brand.
GET THERE FIRST
Last October, Shopify, the leading Western e-commerce service platform, has entered into a partnership agreement with TikTok, which in the United States and Europe has a following of almost the same size (100 million users). The agreement aims to make it easier for traders (over one million) who use Shopify the access to the youth target group typical of the Chinese social network.
This collaboration allows Shopify users to create promotional campaigns directly from the Shopify dashboard. This enables the creation of native, shareable content which turns them into in-feed video ads for the TikTok community, which will be segmented according to the most appropriate discriminators (gender, age, purchasing behaviour, type of video) to then monitor the results over time.
As always, and even more so after the sudden changes induced by the health emergency, retail has innovation as the only possible insurance policy for its future. The digital evolution dictates the timing of the change, to be implemented in such a way that the adjustment to market demand will start from a few, simple and stringent assumptions: no delay; alignment as minimum necessary requirement; head start as a far preferable option. All entirely possible, with technology and innovation.