In the near future, e-commerce revenue in China will overtake the United States and become the number-one global e-commerce market in the world. But in some ways, the tight integration of social and shopping behaviors in China is already five years ahead of the US. In China, social media platforms are rapidly integrating native e-commerce capabilities while those established in the e-commerce space are getting into the social platform business. This is leading to an increasingly aggressive battle between dominant players Tencent and Alibaba, which, until recently, had very different strategies. Business leaders in the US shouldn’t just keep an eye on the competition, they should take notes.
Just take a look at online behavior in China vs. the US – there are two key differences. First, Chinese internet users are influential content creators, while those in the US are primarily content consumers. Second, in China users achieve massive purchasing power simultaneously with their social media use, while in the US there is still a generational gap between purchasing power and social media consumption. These contrasting trends create an intersection between those spending money online and those spending time on social media platforms in China, while the same intersection in the US isn’t nearly as dramatic. If you couple this with the pure scale of the Chinese market, you have some significant differences between the two countries.
Similar to how demographics are indicative of social brand engagement, the history of social media is indicative of why the Chinese are so invested in content creation. In a country where people live a more restricted social life due to its immensity and the one-child policy, adults were eager to use social media to transform how they interact with friends and family in a community they trust. Demonstrating their strong reliance on these trusted networks, there are now more than 300 million people who move forward only with purchasing a product after getting consent from their peers via social media and ecommerce forums. In fact roughly 75% of all online users provide purchase feedback at least once a month, while that figure is less than 20% in the States. As a result, although it’s growing rapidly, social media doesn’t play a large role in the total marketing activity in the US, while it is the key pillar of all engagement for successful Chinese brands. It’s clear that China-based brands recognize the value of user-generated content and are embracing social influence on their e-commerce platforms, as brands from the US continue to miss the boat when it comes to acknowledging the social tendencies of Chinese online shoppers.
Specifically, US brands need to appreciate how Chinese companies are reinventing the online recommendation system and transforming the social commerce landscape. For example, every product detail page on Jingdong has a forum where people can post questions, discussion topics and even pictures of the product they bought. Typical US e-commerce sites have far less social proof on their product detail pages. Another company, Meilishuo, is a Pinterest-like website where every product display is for sale on PC and mobile, and where VIP users are selected as editors. Lastly, mobile app Weixin (WeChat) is a messaging platform, mobile e-commerce site, mobile wallet and geo-location sensitive marketing platform all rolled into one. In early February 2014 during Chinese New Year celebrations, 5 million people opened a bank account on Weixin and exchanged 270 million Rmb ($45 million US) with their mobile phone. Because digital natives in China are growing up with tightly integrated commerce and social experiences, US marketers should pay close attention to the Chinese market to get a sense of how social commerce might evolve in the US. Facebook is clearly aware of how this progression is impacting social media, and acquired WhatsApp in part as a defense strategy against the expansion of WeChat outside of China.
If there’s one thing that the Chinese model has shown, it’s that delivering utility and services is the only way for brands to have a seat at the social media table, and that simply using social media as an advertising platform is only pushing subscribers away. We have seen this with Facebook in the US and with Weibo in China. Only the future will tell if Facebook will succeed in transforming an instant messaging app into a lifestyle mobile platform comparative to WeChat, but we agree that this is territory worth fighting for. As an aside, Facebook has recognized the dominance of mobile, WhatsApp is not their only play into mobile+social+commerce. They recently invested more deeply in mobile with the purchase of Parse and the recent introduction of the App Links protocol, enabling deep linking across apps. In the meantime, there are three clear actions US marketers must take to stay ahead in social commerce:
- Stop focusing exclusively on social advertising. Paid media isn’t going to build your brand-consumer relationship. Instead, make owned digital properties such as your e-commerce platform the center of your brand-building practice.
- Include social proof in every marketing activity. Rather than renting an audience on social networks, use social interactions to generate user-generated content that can serve as social proof on your owned digital destinations.
- Prepare your organization for commerce everywhere. Social, brand building, and commerce are no longer separate activities. The best brands will integrate all three into seamless experiences wherever and whenever the shoppers wants.
To really master social commerce, you need to breakdown the silos of your organization, define new shared success criteria and focus on the consumer. Do all three today, and you will be ready for tomorrow.