China’s young consumers don’t just want to shop online – they want to be entertained while doing it
Social commerce has exploded in popularity over the past two years, posing a threat to traditional e-commerce players like Alibaba and JD.com
The first time Sun Yuxiu heard of Pinduoduo was at the end of 2017, when her mother asked her to share in a discount deal on tissue packets. By ordering at the same time, they each got 20 per cent off the original price.
Since then, Sun, a Beijing-based office worker, has bought everything from live crabs to apples on the social commerce platform, combining purchases with her mother and aunt to get discounts.
Sun and her relatives are just a few of Pinduoduo’s 300 million paying customers in China, where the concept of social commerce has exploded in popularity over the past two years. Social commerce is a new form of e-commerce which involves social interactions among consumers, who also play a part in encouraging others to also purchase items.
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“The potential of social commerce is huge because people like to buy what their friends recommend. Increasingly, in China’s e-commerce landscape, people don’t know what sales channel to trust, but if they see their friends purchasing things on social commerce sites they are more likely to buy,” said Shaun Rein, the managing director of China Market Research Group and author of The War for China’s Wallet: Profiting from the New World Order.
The pervasive use of smartphones among mainland China’s population is a key factor enabling social commerce. Research firm Emarketer forecasts that the total number of smartphone-based online shoppers in the country will reach 443.3 million this year, making up more than three quarters of China’s online retail sales.
The potential of social commerce is huge because people like to buy what their friends recommend
China’s social commerce market will top US$150 billion with 24 million merchants selling on such platforms by 2020, according to e-commerce marketing firm Advangent. Still, that is only a fraction of China’s total e-commerce market which is forecast to reach US$1.7 trillion by 2020, according to Goldman Sachs.
