International: With ecommerce firmly established as an integral part of China’s highly competitive retail scene, businesses are now looking to social commerce to fuel their next phase of growth.
WPP today released a “Content, Conversation & Commerce” white paper, providing insights into what is tipped to be the next disruptive formula to owning China’s marketplace.
Buying and selling on social media apps have become commonplace in China.
The consumers of today are better informed, sophisticated and particular about what they like. “Casual shopping” is on the rise, driven by the 5Cs; namely content, customer voice, convenience, conversation and commerce.
“Chinese shopping habits differ from the rest of the world, due to the tremendous reach of ecommerce and high penetration rates of social media. With unique functions such as Key Opinion Leader (KOL) live-streaming, social activations, content sharing and referral selling, social commerce is challenging the status quo of traditional commerce,” said Patrick Xu, CEO of WPP China.
China’s social commerce market is forecasted at CNY 2 trillion this year, with more than 48 million users and a growth rate of over 60 percent on-year, according to the Internet Society of China.
Since 2014, ecommerce sales have more than doubled, thanks to its 650 million users in China. Seasonal events like Alibaba’s Singles Day, the increased adoption of digital wallet usage within rural China, and the creation of market places for buyers and sellers on the same platform have all contributed.
- The “now” consumer
They are known as the “now” consumers – shoppers who are quick to browse, bookmark products and buy.Chinese consumers today are better informed and feel more empowered about their purchase decisions. A recent Kantar survey found that consumers’ insights are most effective in influencing purchase decisions. Consumers are more trusting of knowledge that is self-sourced, especially those based on other users’ reviews.
- New ways of interaction
The “now” consumer follows trends and has unplanned brand experiences and retail interactions. They can be shopping while at home, at work, on the go, or just before bedtime. In fact, it is this behaviour that is driving the need for new approaches to planning social commerce.
- Social-first customer conversion
Brands are challenged to go beyond traditional marketing strategies. From a desire to buy to making an actual purchase, the customer conversion process now has to be augmented by social-first approaches. These includeuser-generated and promoter-generated content (UGC/PGC) and live broadcasting. Social commerce channels have had a late start but they are steadily catching up. Wechat Commerce has grown seven-fold since 2014, while other platforms like Pin Duo Duo has doubled its sales in just two years.
- Measurable customer ‘voice’
User reviews are verbatim and customer ‘voice’ measurable on ecommerce channels. Such feedback better informs brands on how to build their content and messaging strategy to impact sales conversion. Through these, brands are also rewarding consumers for their referrals and for being brand advocates.
- Countering inflationary pricing pressures with content
The advertising and promotional expenses for leading ecommerce platforms have increased notably. CPM (cost per thousand impressions) has tripled within a few years (2015 to 2018) and ecommerce operational costs have increased. As paid ad inventory on ecommerce channels increase in costs, brands are compelled to leverage brand content (UGC/PGC) as an alternative for growth.
- Social commerce approaches
When devising a social commerce program, brands have six options for managing their social commerce programs: Vertical Content, KOL Product Launch, Group Buy Promotions, Gifting Driven Occasions, Membership-Driven Purchases and New Retail. Brands should choose their approach according to their product category, brand maturity and product availability.
“Brands need to find more efficient ways to connect with consumers. A strategic approach using data and technology would allow brands to tap into the full benefits of social commerce. Should brands rely exclusively on ‘classic’ commerce activities for growth, they may risk long-term brand equity in exchange for short-term gains,” said Xu.
WPP’s commerce offerings in China
WPP offers end-to-end service solutions that help brands plan, set up, operate and optimize their ecommerce programs, backed by over 500 ecommerce and social media experts to ensure the success of program delivery. WPP in China has worked extensively with brands like H&M, MAC, KFC, Dell and Oreo (see report), delivering strong growth across ecommerce platforms and during major shopping festivals like Alibaba’s Singles Day.