The use of social media in the context of e-commerce is gaining traction in China. The booming mobile generations and accelerated growth of social media usage are fuelling the growth of social commerce. Increasing numbers of consumers are making their purchases through social media platforms such as WeChat and Xiaohongshu these days. The boom of social commerce has revolutionized and reshaped the competitive landscape of the e-commerce sector, so as the way people shop, and how brands and retailers should market and sell their products. Social commerce is set to proliferate over the next few years and become one of the mainstream sales channels.

This article looks at the rise and evolution of social commerce in China and reviews the latest developments and implications for brands and retailers.

Key takeaways

Huge growth potential of China’s social commerce sector. China’s social commerce market is estimated to reach 547.4 billion yuan in 2018 and increase to 2,419.4 billion yuan in 2022. The huge growth potential has drawn the attention of investors – the sector attracted over 2 billion yuan of financing in 1H19.

Social commerce revolutionizes consumers’ purchase journey. Social media is now an integral part of consumers’ daily lives. It not only is a platform for consumers to look for product information and share experience but also a popular marketplace for consumers to buy online. Young consumers, in particular, are more likely to make purchases on social commerce sites based on friends’ or KOLs’ recommendations.

Social media becomes a popular marketing and sales channel. In today’s digital era, traditional way of marketing and selling can no longer capture the attention of the “post-90s” and “post-00s” generations – who are the most promising consumer segments in China. Increasing number of brands and retailers are using social media to market and sell their products.

Currently, there are three major types of social-commerce platforms, each adopting different business models – content-sharing platforms, membership-based platforms, and team purchase platforms. These platforms share some common characteristics: they are online marketplaces which allow customers to look for product information and compare products, place orders, and also share their product usage experiences and recommendations. They also provide value-added services and functions such as IT infrastructure support and embedded marketing tools, as well as create and provide content for merchants and users on their platforms.

“Content is king” is more relevant than ever. In China, user-generated content is one of the most effective ways to increase engagement and customer reach. Content which is highly relevant, straightforward, attractive yet easy to recall will be more likely to gain consumer engagement and boost brand affinity. Interactive elements such as live streaming, short videos, VR/ AR are also essential to improving customer experience.

KOLs become a pivotal part of social commerce. KOL marketing is crucial in China as young consumers’ purchase decisions are highly influenced by KOLs. KOLs can help brands and retailers build brand awareness, drive sales, and gather customer insights. Apart from popular KOLs, brands and retailers could consider working with smaller influencers, or so-called local opinion leaders (LOLs) who are more influential among certain target customer groups.

To stay relevant in the market, tapping social commerce is a must for brands and retailers. However, as the social media landscape is evolving everyday with the emergence of numerous innovative social media platforms, it is crucial for companies to keep a close watch on the development of these platforms.