Shopping on social media is becoming mega-business

Social Commerce in China

The Chinese influencers Viya (left) and Li Jiaqi sell products for many billions of dollars in the live stream on the Taobao app.

(Photo: Reuters)

Dusseldorf The Chinese live streamers Li Jiaqi and Viya achieved record sales in just twelve hours: in the run-up to the Singles’ Day shopping event, which is popular in China, they sold video products worth the equivalent of three billion dollars at the beginning of November. That is roughly three times what the e-commerce giant Amazon does on average in a full day.

488 million people watched as the influencers advertised products from make-up to mascara live. The app from Taobao, the online shopping subsidiary of the Chinese e-commerce platform Alibaba, briefly collapsed.

Streamer Li, known as the “lipstick king”, promoted 439 products in the twelve hours, especially cosmetics from the brands L’Oréal, Shiseido, Guerlain and Esteé Lauder. L’Oréal alone brought the social media star to this event a turnover of 115 million dollars.

A concrete example of how direct sales via social media are growing massively worldwide. Sales through “social commerce” could almost triple from the last $ 492 billion to as much as $ 1.2 trillion in 2025. This is what the consulting firm Accenture predicts in a current study.

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Today around ten percent of all e-commerce spending is done through social commerce. By 2025 it should be just under 17 percent. In total, around seven trillion dollars are then likely to be turned over in online trading worldwide.

Shopping via social media (social commerce) means that the customer’s entire shopping experience, from discovering the product to completing the purchase, takes place via Instagram, Tiktok, Facebook, Pinterest or similar platforms. Accenture surveyed more than 10,000 social media users in China, the US, the UK, India and Brazil.

China is a pioneer in social commerce

It is by no means just influencers, network stars or celebrities who are successfully selling products on social media platforms. According to Accenture, 463 million people make money from social media in China alone. Worldwide, the consultancy estimates that almost two billion people made at least one purchase via social media in the past year.

“Social commerce can make it easier for smaller brands and sole proprietorships to approach customers creatively,” emphasizes David Holtmann, Accenture’s Managing Director for consumer goods and services. Because even without expensive marketing campaigns, potential customers can be addressed in a much more targeted manner via social media. 59 percent of respondents say that they are more likely to buy from small companies on social media than online. 44 percent give unknown brands more of a chance there.

At the same time, big brands are required to rethink traditional strategies in e-commerce, says Holtmann. Alpecin manufacturer Dr. Wolff has been active in China with social commerce for a long time. During the “818 Trendy Goods Festival” on Douyin, the Chinese Tiktok counterpart, more than 30,000 bottles of the caffeine shampoo were additionally sold. The Asian team of the German medium-sized company worked with 34 influencers and recorded four million views of streams and short videos.

Alpecin

Influencers from the Chinese video platform Douyin advertise caffeine shampoo from German manufacturer Dr. Wolff.

(Photo: Douyin)

“Many established brands could get an additional boost through social media sales,” emphasizes Wanja Oberhof, CEO of Social Chain AG. Georg Kofler’s Munich-based social commerce company sells its brands, from porridge and fitness accessories to box spring beds, mainly via social media. According to the Social Chain Group, the community has 86 million followers worldwide. The company, which has been listed in the Prime Standard in Frankfurt since November, is aiming for sales of one billion euros in 2023.

Generation Z first found brands on social media

The target group for social media shopping is growing. “Generation Z in particular, who are online for several hours every day, first find brands via social media,” emphasizes Mirko Warschun, Head of Consumer Goods and Retail Europe at the Kearney consultancy. Social media is the main source of inspiration for young customers across all product groups.

According to Accenture, most purchases via social media by 2025 will be in the areas of clothing (18 percent), consumer electronics (13 percent) and home textiles (seven percent).

According to Warschun, consumers expect to be able to buy the products immediately. “Live streaming” or “in-app purchasing” have long been standard in China, and are becoming increasingly important in the USA and Europe. “Direct marketing to consumers via social media is also becoming increasingly important in this country,” confirms trade expert Gerrit Heinemann, professor at the Niederrhein University of Applied Sciences.

Even if shopping on social media is trendy, concerns remain. Half of the global social media users surveyed are concerned that purchases are not adequately protected and refunded when necessary. Holtmann sees a lack of trust in the credibility of the providers as the greatest obstacle to the new sales channel – similar to what was the case in the early days of online trading.

More: This is how Tiktok becomes the next-generation Amazon

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