In recent years, U.S. and European retailers have closely observed the rapid rise of social commerce, which has become a significant force in China and other Asia-Pacific (APAC) markets. With platforms like TikTok, Instagram, and YouTube introducing features for in-app purchasing, social commerce has evolved from the pioneering efforts of Chinese giants like WeChat and Taobao. The Retail TouchPoints reports on the current landscape and future trajectories of social commerce in Western countries, noting that while its adoption is progressing more slowly than in China, the opportunity for businesses to experiment remains substantial.
The integration of social commerce into the retail landscape is largely facilitated by a younger demographic, particularly millennials and Generation Z, who are increasingly engaging with products through streaming video content. These consumers show a proclivity for livestreamed product demonstrations, as exemplified by similar trends in Indonesia with platforms like Tokopedia and Bukalapak. According to the report, categories such as consumer packaged goods, fashion, beauty, and health & wellness resonate strongly within this commerce model, leveraging promotional strategies such as coupons and discounts to foster engagement.
Notably, businesses are observing higher conversion rates for product sales driven by entertaining content and personal storytelling within these platforms. Data indicates that companies can expect a return of approximately $5.79 for every dollar spent on influencer marketing, allowing brands to rethink their strategies regarding influencer collaborations. The study draws attention to the potential effectiveness of key opinion consumers (KOCs), or micro-influencers, who may yield better results compared to established key opinion leaders (KOLs) with larger followings.
Despite these promising developments, the report highlights discrepancies between the experiences of APAC nations and those of U.S. and European retailers. The extreme and prolonged pandemic lockdowns in China accelerated the evolution of social commerce there, while consumers in South Korea demonstrate rapid technological adoption and strong engagement with social media platforms like KakaoTalk and Naver Shopping. In contrast, Western consumers appear to favour educational approaches over immediate purchasing prompts; a survey indicated that 70% of Gen Z and millennials prefer a “learn more” call to action instead of a direct “buy now” button.
The engagement model in the West allows retailers to lead consumers to rich product-related content, creating pathways to convert interest into sales. However, the reliance on third-party platforms presents challenges regarding customer data ownership. Retailers are urged to ascertain what data is accessible from these platforms to maximise its utility. Maintaining an integrated data strategy is critical, as AI and machine learning can help merchants identify successful product combinations and respond effectively to sudden demand spikes.
An example illustrating the potential for rapid sales in the social commerce arena occurred when Kim Kardashian participated in a Chinese livestream event, resulting in the sale of 15,000 perfume bottles nearly instantaneously. Such instances underscore the importance of robust data and logistical infrastructure in harnessing spikes in consumer interest.
While retailers in the United States and Europe have the advantage of learning from their counterparts in APAC, success in social commerce hinges on how strategically retailers approach their product offerings and the channels through which they present them. The consensus remains that social commerce is a lasting feature of the retail landscape, and the importance of data-driven strategies is paramount for organisations seeking to navigate this emerging frontier effectively.
Amanda Spencer, a noted global leader in retail growth, emphasises the necessity of leveraging technology to refine customer experiences and ensure operational efficiency. As the Global Industry Marketing Lead for Retail at SAP, Spencer is committed to aiding retailers in anticipating shifts in consumer behaviour and adapting to the fast-paced developments of the market.
Source: Noah Wire Services