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Social Shopping in China: The Future of E-commerce - Part 1

Posted in E-commerce on February 8th 2018
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COO and Co-Founder

The buying journey of a Chinese customer

With the rapid penetration of smartphones into our lives, there have been significant changes in the ways people make purchases. This is even truer in China, where online shopping via the social network (social shopping) has taken the country by storm, becoming, in fact, a lifestyle. A typical customer journey in China has its own peculiarities: this is what it may look like.

Lihua, a young professional girl working at a local architecture firm in Shanghai, loves the ease of shopping online. She buys almost everything on the internet, be it clothes, make-up items, food items or gadgets, online. She and her colleagues have created a WeChat group, where they can share the purchase links and QR codes of interesting products, together with their own reviews or opinions on the products. Lihua goes to the group chat, is directed to the product pages and completes the purchase by paying immediately with WeChat Pay. Occasionally, she is also assisted by an online service agent to help her choose the best product. However, she generally relies on the reviews of her group mates for purchasing the product. Lihua also follows some KOLs, mostly beauty bloggers, and watches their makeup tutorials. While watching one KOL live streaming on how to do the makeup for a party, Lihua notices that the color of the lipstick being used is one of her favorites. She quickly clicks on the embedded link in the video and is directed to the JD store, where she can buy that lipstick. Two weeks after purchasing it, Lihua receives an H5 campaign from that lipstick’s brand, where she can play an interactive game to receive discounts on the next purchase.

That was quite a journey, huh?

Just like Lihua, numerous shoppers today are purchasing items online via social platforms. The statistics of China’s e-commerce activity confirm this trend. China leads the race in the number of e-commerce consumers throughout the world today. According to a research by Mintel, the total B2C and consumer-to-consumer (C2C) online retail sales in China were expected to reach RMB 6.4 trillion by the end of 2017. This is indeed a jaw-dropping number. What is even more interesting is how differently China’s digital marketplace, technology platforms, and online behaviors have evolved compared with those in Western markets. This complete revolution in the shopping experience has brought in a new terminology into the picture, popularly known as social shopping.



What is social shopping, exactly?


Social shopping is an excellent mix of the engagement of a social network and convenience of online shopping. This integration acts as a catalyst to boost the online purchases. The integration has given birth to an ecosystem where shopping is embedded into social life and the social networks have turned into a multi-dimensional experience platform. This experience has lured people to buy goods in order to stay up with the social trend.

Brands selling on WeChat

Social shopping is being seen as the future of shopping in every industry. China is believed to be ahead of others in bringing about this change in the shoppers’ habits. According to experts, e-commerce purchases made with mobile phones will account for almost 74% of total e-commerce in China by 2020, compared with merely 46% in the US.

Unlike other shoppers, Chinese are eager to spend money on social shopping as it turns out to be an engaging & pleasing experience for them. 79% of Chinese customers (46% globally) say that they are more likely to endorse the brands when experiencing positive social interaction, and 71% of them (44% globally) have spent more as a result.

In China, online shopping isn’t just a purchase - It is rather a social engagement with a group of people with similar interests. It is about engaging with their favorite celebrities & friends and discovering the latest trends in the industry based on their interests.

The concept of social shopping has been broadly categorized across four categories based on the type of engagement involved:

  • Social Shopping via Social Marketplaces: Marketplaces like Taobao’s Juhuasuan offers group-buying via flash sales, or products at highly discounted prices for a short period of time. Because of the time and quantity constraint, it promotes the social aspect of sharing and buying together. Similarly, trending social shopping apps such as Pinduoduo or Xiaohongshu encourage the buyers to buy goods of their interest and also attract the sellers with vast audiences on the platform.
  • Social Shopping via Social Media Apps: This is the newest concept wherein a group of friends can easily share the products among them using applications like WeChat and buy goods based on reviews from the group.
  • Social Shopping via Like-minded Communities: In this category of social shopping, a community of like-minded people discuss on forums or blogs to find out what is the latest in the industry and thus plan out their shopping list.
  • Social Shopping via Recommendation Algorithms: Artificial intelligence has started playing a role even in the e-commerce industry. There are smart programs which start providing you suggestions for shopping based on what you search.


Social Shopping in China - Present Scenario

 

At present, it is believed that social commerce in China is already 10 years ahead of other nations. An exemplary proof in favor of it is the buyer statistics of Burberry within China. Burberry has been widely accepted among Chinese young people which is evident from the average age of its shoppers in China. It has been observed that the shoppers are on an average 20 years younger in China as compared to the developed market. This has been made possible due to the high popularity of social commerce in China.

Despite this high volume of engagement via social commerce, there is a severe disparity in the number of retailers adopting this concept. According to a survey by ClickZ Intelligence, only 26% of US retail and e-commerce specialists had formally formed a plan to be ahead of digital transformation. The major hurdle that retailers face is that they lack a streamlined plan laid out for improving their sales via the social selling concept. In China, however, the scenario is different, social selling portrays a huge potential for retailers to skyrocket their sales. With appropriate plan and guidance, the retailers could drive their business towards success at a rapid pace.



Conclusion


Social shopping is being adapted at an exponential rate by the young crowd in China. This has a huge impact on the retail businesses that rely solely on shop based selling methods. Every business has the potential to grow by leveraging the features of online shopping platforms in an organized manner. It is important to have a clear understanding of these features. Hence, we will be discussing on how to leverage these platforms for boosting the sales in the next article.

 

About the author

Thomas Guillemaud

COO and Co-Founder of IT Consultis

As the COO of ITC, Thomas manages all operations and promotes the adoption of new technologies and philosophies within the company. In addition to raising the efficiency of each project, he invests his time in coaching and mentoring the project management as well as the development team, ensuring they all have standardized knowledge and skills to successfully meet client's expectation.