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What’s next for social commerce?

As social commerce continues to gain momentum in the US, Azoya’s Franklin Chu examines how China’s top social platforms have embraced it –- and what lesson retailers can learn.

7 min read

MarketingSocial Media

Franklin Chu asks: What’s next for social commerce?

Mohamed Hassan / Pixabay

Boasting massive online user bases, social media platforms in China — Little Red Book, Douyin, Bilibili -– have been accelerating their own e-commerce ecosystems. The timing is perfect, as many consumers remain devoted to digital consumption for work, shopping and connecting on social media, driving the social commerce trend

Here is a look at how China’s top social media platforms are embracing social commerce and lessons for US and other retailers.

Douyin: Tapping into a young customer base 

Boasting 600 million daily active users, Douyin is venturing into a new market dominated by Alibaba, and Pinduoduo. Douyin is the most popular short-video platform in China, and it has been working to consolidate and develop a cross-border e-commerce business. As of October 2020, Douyin no longer supports links from third parties in livestreams; it only allows links from the Douyin store. Last January, Douyin officially launched its payment service, Douyin Pay.

As a social media giant that has captivated younger generations, Douyin may be an interesting test ground for overseas brands and retailers to develop their e-commerce presence in China. For instance, clothes, jewelry, beauty & cosmetics, food and shoes & bags are the leading categories on Douyin.

ByteDance, the parent company of Douyin and TikTok, has launched a standalone shopping app in China, similar to its Fanno platform in Europe. It’s betting on the growing trend of Generation Z customers buying based on the endorsements of online influencers.

The new e-commerce app, Douyin Box, is positioned as a trendsetting e-commerce platform. ByteDance will try to push traffic to the app via other ByteDance-developed apps, like Douyin and Toutiao. It will then evolve into a comprehensive e-commerce platform, with plans to compete with top products like Taobao or Tmall.

Douyin’s move into social commerce is expected to ratchet up the rivalry among China’s e-commerce business, where Alibaba Group Holding, and Pinduoduo are vying for the attention of the country’s online customers.

Douyin is building its own e-commerce ecosystem over the past year, and it joined the annual 618 mid-year shopping festival, officially stepping in to compete with online retail giants.

Since 2021, the number of official accounts outside of China has grown at a high rate, and brands such as Yaman, VANS, Sulwhasoo, COACH, P&G, Swisse, SKECHERS have found success through livestreaming.

To enter the Chinese retail market, an increasing number of international firms are partnering with influencers to livestream e-commerce. It is noticeable that livestream e-commerce maintained high growth from April to October 2021, as the number of key opinion leader (KOL or influencer) livestreams for imported products nearly doubled.

In the past six to eight months, the volume of content related to popular products from overseas has increased exponentially, including the peak of the content volume in August due to the 818 New Chic Shopping Festival.

The solid performance of social platforms like Douyin in driving overseas brands to yield marketing communications and sales conversion has made overseas products, especially popular ones, regard Douyin as an important product promotion channel.

In terms of segmentation, dietary supplements, mother and child, personal care, and beauty are the main categories where overseas brands thrive in China. We can also see that consumer products are expanding from mother and child to more industries, driven by consumption upgrading, as consumers trade up to more premium products.

Bilibili: A new beauty battlefield to win Chinese Gen Z shoppers

Brands may be more aware about Douyin, Kuaishou, or WeChat Channels. However, there is still a youth-focused platform that brands can leverage: Bilibili — the video platform favored by millions of young, Generation Z Chinese consumers.

Why does Bilibili matter for international retailers and brands selling in China?

According to Bilibili’s financial report, the average daily active users (DAUs) reached 62.7 million in Q2 2021, a 24% increase from the same period in 2020. With quick market share growth, marketers and brands are paying more attention to this platform. Young Chinese people are growing increasingly loyal to the platform, as they entertain, learn, communicate and publish on this emerging long-video platform.

Notably, the platform has previously revealed several steps to enhance its e-commerce capabilities.

In July 2020, Bilibili launched Sparkle, a platform to match KOLs with brands. At the same time, Bilibili also connected users with access to major e-commerce platforms, including Tmall, JD, Pinduoduo, and many other marketplaces within its app.

Brands also can start their own official accounts to create original content on Bilibili. Leveraging display video ads and campaign hashtags, brands can showcase promotional materials and even link to external e-commerce platforms, converting to sales or social media account followers.

Brands with official accounts on Bilibili include Dior, Perfect Diary and more. For the 12 months ending June 2021, there was a 20-fold increase in the number of beauty brands with an official Bilibili presence, the most of any category.

Just before the Singles’ Day shopping spree in 2021, Bilibili announced plans to launch a shopping cart feature in its livestream pages, in an attempt to diversify its revenue sources. Users will be able to explore product lists and place orders by clicking on a shopping cart embedded in the livestream interface.

Bilibili will support content creators like video bloggers who take the lead in trying livestream e-commerce by allocating more traffic to them. On the other hand, this new feature would offer brands a new way to approach target customers and drive sales conversion.

Little Red Book is still dreaming of social e-commerce

Little Red Book is a blend of social media and e-commerce, which started out as a community for users to do pre-purchase research on beauty and fashion. This e-commerce unicorn launched its livestreaming feature in March 2020, allowing brands to sell directly via e-commerce livestreaming.

One key reason Little Red Book has attracted scores of new high-end and niche brand users is its reputation for driving e-commerce sales via the phenomenon of “product seeding,” a Chinese internet buzzword that refers to how consumers turn to Little Red Book for product reviews. For this reason, Little Red Book is a popular destination for brands to market to digitally-savvy Chinese consumers.

Established as a lifestyle-sharing social platform, Little Red Book today has become a pan-lifestyle community, evolving from female-dominated to an influx of more male users. For many young people, the platform has become an encyclopedia.

In the past year, Little Red Book has made frequent moves on the road to e-commerce.  In June 2021, a new content-sharing tool “Small Goodies List” was launched to encourage content creators to promote merchandise to Little Red Book’s self-operated mall.

At the same time, the “Honor Store Integration” policy was launched. Through this effort, creators can apply for certification as a “professional account” and open their own stores with a zero cost threshold.

For brands, it’s increasingly important to invest in growing the brand’s discussion and popularity on the Little Red Book platform. Debuting on Little Red Book can be regarded as a part of the brand’s e-commerce expansion.

The major drawback of the Little Red Book store is it has little organic traffic. Most users still use Little Red Book as a social media and product review platform. Most users will switch to a marketplace to make an order.

Little Red Book store is not for everyone. Little Red Book requires a consistent investment to see a return. Little Red Book is definitely not as big as Tmall Global or JD Worldwide in terms of the market share, thus brands should not expect sales volume as huge as Tmall Global.

Companies will need to have a brand flagship if it has strong performance on Little Red Book.

Or brands would like to test the Chinese market with a small investment and a cross-border store. Cosmetics and skincare brands are the best fit to launch beauty stores on Little Red Book.

Franklin Chu is managing director in the US for Azoya International, a provider of turnkey cross-border e-commerce solutions to assist retailers looking to expand into China through a cost-effective and low-risk method. To date, over 35 retailers in 11 countries are partnering with Azoya to expand into China with ease, including French fashion retailer La Redoute, Australia’s largest pharmacy group, Sigma, as well as Feelunique, the largest online beauty retailer in Europe.

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