Guide to Social Commerce in China, 2022

Social commerce – the overlap of shopping and community online – has come to the fore globally in the last couple of years. Partly due to the fact that it’s been literally impossible for most people to get out, shop, and socialise physically, and partly due to the changing digital media landscape, more and more people are choosing to buy things online. More than that, they’re doing so via social media. Nowhere is this truer than in China.

  • $350bn – This is how much China’s social commerce market is now worth. To put it in perspective, it’s about ten times more than that in the US; roughly $350bn vs $36bn.
  • 90% – The amount by which the social commerce market in China grew between 2018 and 2021. It’s predicted to grow by another 24% this year.
  • 50% – The share of all retail purchases in China that, it is predicted will be made via e-commerce in 2021. This would make China the first country in world history to achieve this milestone.
  • 7% – The share of all e-commerce sales made via social commerce. This figure currently stands at 4% in the US.

 

Why is China leading the world when it comes to social commerce?

There are many reasons. Here are two:

 

Digital and corporate infrastructure

Two companies, Tencent and Alibaba, have created digital ecosystems that command 90% of e-commerce, 85% of social media usage and 85% of the online payments market in China. These services are integrated on a level that the likes of Facebook, Amazon and PayPal can only dream of. It is entirely possible to be scrolling through a private social feed, see an appealing product, and within moments have it ordered, paid for, and on its way for delivery.

 

Culture

In China, livestreaming and mobile video apps grew in popularity earlier, and far more quickly, than elsewhere. While this has been utilized by brands of late, users in China originally, and still, interact with livestreams for the purposes of entertainment, gaming, making social contact and, according to research presented by the University of Hong Kong, simply killing time after work. Platforms like Yizhibo, Yingke and YY were designed specifically with audience-host interaction at their core, while this has only been the case on international social media platforms more recently. This was significant, because it gave a strong cultural foundation, onto which social commerce could build.

 

 

Where is social commerce heading in 2022?

For the last few years, KOLs (Key Opinion Leaders) have reigned supreme in the social commerce world. While they still wield significant clout, things show signs of changing.

 

Rise of the KOC

The boom in time spent on livestreaming platforms is now intersecting with the long-held tendency among Chinese consumers to thoroughly research products, and highly value product recommendations from other shoppers. Research shows that the latter is valued significantly more than recommendations from KOLs.

Enter, the Key Opinion Customer (KOC). KOCs are livestreamers, short video makers and micro-bloggers who are (ostensibly) ordinary consumers. Not celebrities. Not idols. Just normal people. Instead of selling a lifestyle and its attendant products, like KOLs do, KOCs are focused on specifically representing or reviewing products, from a non-associated, objective point of view.

Their audiences are often much smaller than those of KOLs, and comprise partly actual acquaintances and friends. They are driving social commerce at the community-level; localized brand advocates for the digital age. With their continued rise during 2022, KOCs offer campaigns the opportunity to achieve depth over breadth.

 

The top 5 channels for social commerce, 2022

 

Xiaohongshu (RED)

Perhaps the most disruptive player in China’s e-commerce market over the past five years, RED came onto the scene as a social commerce pioneer. It first gained a reputation for reliable, authentic reviews of products aimed towards women; cosmetics, fashion and beauty. Now with over 300 million users, 80% of whom are women but with a rapidly increasing male userbase, it is a sprawling masterpiece of integration between social media and retail. This November, it raised US$500bn in funding, after a valuation at US$20bn.

Example of our client Lil Lets’ RED account

 

Some key points:

  • Now one of the most popular livestreaming and vlogging platforms
  • Engagement metrics are high – average users spend 40 minutes a day on the app
  • Jointly invested in by Tencent and Alibaba, integrated with both WeChat and Alipay
  • Allows brands to capture user interest with content, then seamlessly make conversion
  • Very young userbase – 90% of its users are under 32 years old
  • Livestreams integrated with Taobao

 

WeChat

WeChat, the super-app that everyone who knows anything about China, is familiar with has rapidly expanded its social commerce offering over the past two years. It now presents a platform of fully integrated social commerce.

Example of our client Duckhorn’s mini-program with WeChat Pay integration

 

Here are a few key advantages to using WeChat:

  • Virtually everyone in China uses it on a daily basis
  • It is first and foremost a social app, meaning there is a high level of integration with friends, family and work
  • New ‘Channels’ feature enables livestreaming and video-blogging
  • Huge range of customizable mini-programs within WeChat, which can be linked to channels and micro-blog style official accounts
  • Integration with WeChat pay, the second-most used online payments method in China

 

Taobao / TMall (GuangGuang)

The e-commerce giants, both owned by Alibaba, have gone all-in on social commerce since the pandemic begun. Their combined social commerce product goes by the name of GuangGuang, but is integrated seamlessly on both apps.

Exemple of KOL Li Jiaqi’s livestreaming on Taobao 

 

Here are a few key advantages:

  • Huge market share. Livestreaming KOLs such as Li Jiaqi, the lipstick king, have become celebrities their own right thanks to social commerce on Taobao.
  • Retail-specific platform. Users are there with buying in mind, not just socializing.
  • A whole calendar of special sales events (not just 11.11!)

 

Pinduoduo

Social by design, Pinduoduo facilitates group-buying between friends and acquaintances. Its over 500 million buyers access special discounts by buying as part of teams, thereby leaning in heavily to the tried-and-true digital marketing concepts of social proofing and exclusivity.

Example of Pinduoduo’s group buying concept

 

  • Has daily check-in bonus for users
  • International brands are popular
  • Is somewhat gamified, through time-limits for creating teams
  • Has inbuilt minigames for added retention

 

Weibo

Weibo is a dinosaur that refuses to die. To the surprise of analysts, it has maintained a competitive edge even as new, innovative social media platforms emerge. In 2020, Weibo became a true social commerce platform, by launching its e-commerce management function, Weibo Xiaodian. While previously brands were able to refer users to external marketplaces, they’re now able to directly manage inventory and orders, create a digital storefront, and build a presence on Weibo itself. The results of this experiment on Weibo’s roughly 500 million active monthly users are not yet clear, but it is one to watch.

Example of Weibo official accounts’ posts, KOLs posts, and livestreaming

 

It has the following things going for it:

  • Longevity – Weibo is not a flash-in-the-pan platform. It has proven time and again that is here to stay
  • Users from essentially every demographic in China, across the entire country
  • The most popular platform with KOLs
  • Easy brand-customer communication

 

Sekkei Studio: Your Social Commerce Agency for China

We have been helping Companies and Governments with their Digital Marketing campaigns in China since 2008. Let us know more about your eCommerce project for China and we’ll be glad to schedule a call to help you start or take things to the next level.

 

David Henriques

Digital entrepreneur and co-founder of Sekkei Studio, a digital marketing agency in Shanghai, Paris and Hong Kong. More than 10 years of experience in helping the communication of foreign companies in China.

SEO China 2022

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