Social commerce has become a buzzword in recent years, but how is it distinct from traditional e-commerce — and how should brands adjust their strategies accordingly? WPIC Marketing + Technologies offers an explainer for British brands targeting the China market
The last few years have seen the rapid growth of “social commerce” in China, a term that refers to the integration of shopping into social media platforms. China’s social commerce revolution has been led by Xiaohongshu (also known as Little Red Book) and ByteDance’s Douyin (China’s version of TikTok).
Traditional e-commerce on platforms like Taobao/Tmall, JD, Amazon or Rakuten depend on search-based journeys —consumers actively seek out products through search queries. This model relies on pre-established consumer intent and the consumer’s ability to navigate through extensive product listings.
Imagine a Chinese consumer who wants to buy protein powder – they will search for protein powder on Tmall, browse different products and prices, and ultimately make a purchase. Search engine marketing is thus essential for protein powder brands so that their product appears near the top of the search results. Cross-media campaigns stimulate demand for protein powder and help consumers to recognise a brand – but it is difficult to accurately attribute sales to these campaigns.
However, in the last few years, two of China’s most prominent social platforms – Douyin and Xiaohongshu – have introduced e-commerce functionalities creating a “preference-based” rather than search-based e-commerce model. These two platforms offer brands highly sophisticated tools to reach and convert target consumers.
Algorithms on these platforms serve product listings to users through engaging content formats such as short videos and livestreams, tailored to the users’ preferences and behaviours. This approach not only simplifies the discovery process but also enriches the shopping experience and stimulates spontaneous purchases.
For example, if a male user browses several exercise-related videos every day, Douyin can display product listings for protein powder, athletic apparel, or other supplements, and when the user sees those products offered to him for purchase, he can make the purchase instantly within the app. Once they are converted on one purchase, Douyin will expose that user to additional fitness, sports, and healthcare content and products. This same model is applied across all possible interests and product categories, from beauty to pets to baby products and beyond.
Apps like Douyin can continuously optimise for users’ interests and serve relevant ads. As a result, the app executes highly accurate product matching to the user’s interests, and therefore results in more conversions and repurchases. Douyin posted US$200 billion in GMV in 2022, up 80% from the year prior. For 2023, this is expected to be closer to $350 billion.
For brands, this preference-based system can be a more attractive model for reaching target consumers than simple search engine marketing.
Search engine marketing is a battle to capture existing demand for the users that have already decided to buy a given product, whereas social commerce has exciting potential for demand generation and an efficient means to reach target buyers.
In this new landscape, it is key for brands to maintain a consistent omni-channel presence. With a wider and shallower funnel, consumers are now discovering and buying brands across multiple platforms.
Traditional search-based marketplaces are still relevant and should play a prominent role in a brand’s e-commerce strategy. But social commerce innovations on Douyin and Xiaohongshu have redefined the boundaries of online shopping — and brands need to capitalise on these unprecedented opportunities to connect with consumers in more meaningful, engaging ways.
This article was provided by our content WPIC Marketing + Technologies, the headline sponsor of China Consumer 2024, CBBC’s flagship annual consumer conference.
