For the last half decade, U.S. and European retailers have observed – and, often, participated in – the social-commerce explosion happening in China and elsewhere in the Asia-Pacific region (APAC) while wondering if, when, and to what extent the same thing would happen at home.
The “if” and “when” are now clear. TikTok, Instagram, YouTube and others have enabled in-app purchasing during videos and livestreams (the most popular flavor of social commerce in APAC) that WeChat, Taobao, Douvin and others pioneered.
To what extent social commerce will happen in Western countries is still to be determined. Certainly it’s happening more gradually than it did in China, and it looks like social commerce’s evolution here is taking a different path.
For retailers, that’s a good thing. There’s more time to experiment, to determine if and how social commerce best works for you, and to understand what systems and data you need to exploit and foster what is certainly an important emerging retail channel, regardless of geography and culture.
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APAC countries that pioneered social commerce – in particular, China – have taught us some important lessons:
- There’s an affinity of key social commerce demographics – in particular, the Douvin equivalents of TikTok-loving Gen Z and millennials, aged roughly 13 to 34 – for personal, livestreamed introductions to and explanations of products. Indonesian platforms like Tokopedia and Bukalapak in particular exploit that country’s large, tech-savvy “Gen Next” cohort.
- Certain categories seem to work best with social commerce: Consumer packaged goods (CPG), fashion, beauty, and health and wellness.
- Promotional efforts such as coupons and discounts work well in social commerce, too, as do flexible payment terms.
- Engaging, authentic stories and entertaining content can sell product at what appears to be much higher conversion rates than traditional ecommerce.
- Cultivating KOCs (key opinion consumers, a.k.a. microinfluencers), may be a better bet for many brands than paying big bucks for KOLs (key opinion leaders) – major creators with huge followings. Regardless, influencers pay dividends: businesses are making an average of $5.79 for every $1 spent on influencer marketing, one study found.
That said, some lessons from APAC may not translate as directly, and that may be why growth has been slower here. China’s pandemic lockdowns were both more extreme and longer-lasting, and they proved to be social commerce rocket fuel. South Koreans enjoy blazing digital infrastructure and high social media engagement through platforms such as KakaoTalk and Naver Shopping. In addition, South Korean consumers are known for their quick adoption of new technologies.
There also seems to be a greater willingness among APAC consumers to buy directly through social media, in-app. A 2023 study found, for example, that 70% of 28,500 Gen Zs and millennials surveyed across the United States, the United Kingdom, France, Germany, India, Mexico and the United Arab Emirates said that they prefer a “learn more” call to action to a “buy now” button.
That may be good news for retailers here. That “learn more” button can link to compelling product-specific content that retailers own. There they can place their own product-related videos – and get visitors who have learned more to “buy now.” Seamless in-app purchasing is great, but, in the end, it’s about making the sale and capturing as much information about a given customer as possible.
Success with Social Commerce Depends on Data
That brings us to data. One of the downsides of selling on social commerce platforms is that the retailer doesn’t own the customer. That means less customer data coming to you. It’s vital to establish what customer data you’ll be getting from a given platform and then making the most of it.
That means tracking and integrating data from multiple platforms into your core systems, just as you would with any other channel, so you can track it, act on it and forecast from it. At the same time, you’ll need to understand the costs associated with a given platform/product combination to assess the profitability of a given product, messaging strategy and messenger (i.e., influencer). Given the diverse data pools, artificial intelligence and machine learning solutions can make a difference in both identifying winning combinations quickly and determining what might be the next big thing.
AI also can help with making quick decisions when surprises happen. An example from APAC: when Kim Kardashian joined a Chinese livestreamer to pitch her name-brand perfume, she sold out of 15,000 bottles in a matter of minutes. That sort of spike has obvious production, supply chain, delivery and pricing implications that the right data and infrastructure can help sort out quickly.
APAC has been way out ahead in social commerce. Retailers in the United States and Europe have had the luxury of being fast followers. Some lessons translate well; others, less so. It’s time to digest them and be strategic about what to sell, through whom, and to whom. What’s certain is that this new channel is here to stay, and that data is going to be key to making it work for you.
Amanda Spencer is a global leader who is passionate about driving retail growth and innovation and understanding customer needs. She has a diverse background spanning marketing, partnerships and business development for both the tech and consumer industries. Currently, Spencer is the Global Industry Marketing Lead for Retail at SAP, where she overseas messaging and content creation grounded in industry trends and customer insights. Spencer focuses on helping retailers leverage technology to enhance customer experiences, optimize operations and stay ahead in a rapidly evolving market.
