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Social Commerce Insights

Why China and not the US are leading in Social Commerce

For many years the United States have been considered as the biggest eCommerce market of the world. Not only Amazon and eBay were founded here, but also several renown (internet) retailers such as Groupon, Macy´s, Walmart and Zappos. But times have changed: Today Asian players such as Alibaba, Aliexpress and JD.com are about to outshine their American competitors. While American online shoppers spent $483 billion for their purchases in 2014, China-based retailers have generated a turnover of $538 billion. There are reasons for America’s loss of significance, even in the field of Social Commerce.

Take your time and think about the most famous social media networks for a while. Which one are on your mind? Facebook, Twitter, Instagram, Pinterest, Vk.com, Linkedin, Weibo and maybe Snapchat? Except of the St. Petersburg-based network Vk.com and Peking-based Sina Weibo all of them were founded in the United States and are headquartered right in the neighborhood of Amazon, eBay and Co. One could think that the American eCommerce industry would strongly benefit from this. But the opposite is the truth: Not the United States, but China is currently the leader in the area of Social Commerce.

 

Buy-buttons are not a feature many Americans have waited for

A few months ago, buy-buttons have been hailed as a smart way to remove barriers in shopping. Now, in the mid of August 2016, disenchantment has set in. As the traffic stats and conversion rates show, American consumers aren’t very likely to click on a buy-button or to purchase an item directly on a social network. According to a study carried out by Sumo Heavy only one in ten respondents has already used a buy-button, with about 25 percent of those claiming they won’t be doing so again. This could have been foreseen: As GlobalWebIndex found out back it 2015, only 14 percent of the questioned 16-64-year-old social users were interested in Instagram buy-buttons and 13 percent were interested in Pinterest’s buyable-pins.

American Social networks have not reacted quickly enough to their members’ missing interest in using buy-buttons. Of course, there are a some other sales-promoting features in the pipeline, but neither Twitter’s “instant unlock cards” nor Facebook’s shopping solutions are currently available for all internet retailers. As Business Insider found out, Facebook has just decided to roll-out its newest shopping feature “initially focused on markets in Southeast Asia and Latin America, and smaller merchants in these developing e-commerce areas”.

In the meantime, many American retailers fall into lethargy when it comes to using the potential of social media, like an analysis concludes that was published by 1to1 media a few days ago: Instead of finding innovative ways how to reach out to their (potential) customers they are passively watching what’s currently going on in China as Judith Aquion, writer at 1to1 media, resumes.

So, it’s no wonder that social networks are still of little relevance for American internet retailers as Business Insider found out. While 22 percent of all eCommerce orders in the US were made via organic search, 20 percent via paid search, 12 percent via affiliate channels and 19 % via direct type-ins only 2 percent of all online purchases were made via  social media networks in the first quarter of 2016. Compared to the first three months of 2015, the share of social media was down one percent.

 

Chinese have a more conversational understanding and therefore successful of Social Commerce

What doesn’t work in the United States seems to turn out well for Chinese internet retailers.  The success stories of companies such as XiaoHongShu – an app with 17 million users and a valuation of $1 billion that was founded in 2014 – and the mobile messaging and payment app WeChat clearly show that there is a chance for Social Commerce.

The reason why social media and eCommerce are effectively working together in China is simple: Chinese social media companies build communities and encourage their members to share their experience with products and retailers instead of disturbing their user experience with interruptive types of advertising such as buy-buttons, buyable pins and “instant unlock cards”: XiaoHongShu (“Little Red Book”) is a social e-commerce shopping app based in Shanghai that aims at 18-to-35-year-old Chinese women and helps them to discover and buy luxury products from overseas, share shopping tips and swap fashion ideas. And WeChat’s wallet allows users not only to seamlessly make in-app purchases, but also to share their experiences and discuss offers.