SPECIAL REPORT: The next big thing is social commerce in Asia
Lee Kok Leong, our special correspondent, talks to Charles Brewer about why social commerce is growing at such a fast pace in Asia.
Charles is the CEO of Click & Connect, an e-commerce and logistics consultancy. He was previously the CEO of DHL e-commerce and has spent 30 years at DHL Express.
Social media can turn strangers into friends, and friends into customers. Assuming that the product genuinely helps consumers to solve a problem, it is now relatively easy to promote your products on your social media account where followers and friends can directly make a purchase. Basically, social commerce means selling products on social media networks.
Social commerce works and is giving other forms of online businesses a run for their money because of two reasons. There is a personal touch involved as customers are originally friends and words of mouth can be a powerful testimony. There is a level of trust here that is relatively devoid of in other platforms, like a company’s website.
According to the Nielsen Consumer Trust Index, 92 percent of consumers trust other users’ opinion more than they trust traditional advertising. The second reason is that social media is where the customers, especially millenials who are one of the biggest spenders, are most active and engaged. It also helps that buying on social media is a very simple and streamlined process.
Here are some global statistics to put things into context.
There are 1.47 billion daily active users on Facebook alone. It is the most popular sales channel, outside of China. In China, it’s WeChat. 60 percent of Instagram users say they find new products on Instagram. 30 percent of online shoppers say they would be likely to make a purchase from a social media network like Facebook, Pinterest, Instagram, Twitter or Snapchat.
Trends in Asia
According to a recent study by Paypal, which surveyed over 1,400 sellers six Asian countries (Singapore, Thailand, Philippines, Indonesia, India and China), 92 percent of the sellers believe social commerce is vital to their business growth.
Another report from consulting firm Bain has found that approximately 30 percent of online sales in Southeast Asia can be attributed to social commerce platforms.
Corporate Fair Trade Community (CFTC): What is your views of social commerce in Asia?
Charles Brewer (CB): If you thought e-commerce was big, just wait till you see how big social commerce becomes in Asia. It is growing at an accelerated rate. In Southeast Asia, it is already contributing 10 to 20 percent in any one market. This will quickly rise to more than 30 percent.
Over the past few years, billions of dollars have been invested into building large e-commerce marketplaces like Lazada, Tokopedia, and Shopee, among others. These marketplaces have hugely helped brands and retailers to reach large swathes of consumers.
But they don’t really appeal to the small social sellers, the entrepreneurs in Malaysia, Thailand, Philippines, Singapore, Indonesia, Vietnam, etc, wishing to start a small business and sell online. They just don’t entirely fit. As such, we are seeing an incredible growth of social sellers selling through social channels, like Facebook, Instagram and WhatsApp. They are growing at an accelerated rate across Asia.
PayPal, in a recent report, highlighted that as many as 95 percent of Thailand’s merchants see social media as the next big thing. In Malaysia, we are seeing more and more small and micro-small companies setting up shop fast and selling on social channels. We are seeing more and more consumers using social channels to research things to buy and posting what they have bought.
In China, it is WeChat, but for all other markets, Facebook is the big social selling media site, with Instagram and Pininterest following closely on their heels. Only very recently, we saw GoJek launching a social selling site. It won’t be long before, I am sure, we see Grab and others follow.
CFTC: What are the implications of social commerce on the logistics sector?
CB: Social selling has huge implications, not only for the large platforms, but also for the logistics sector. Brands aside, (and trust me, they are all quickly waking up to the huge opportunity that social commerce represents) most social sellers are super small, sending one, two or three parcels a day, from their residences to other residential addresses.
We already know that last mile delivery to residential addresses is challenging (to say the least) and that challenge is compounded further when you add in single or small parcel volume pick-ups.
How is the logistics market responding? As we have seen in Europe and North America, the most effective way to deal with rising pick-up and delivery costs is to offer alternate methods.
Across Southeast Asia, we are seeing rapid deployment of first mile retail points; service points that act as a consolidation point for social sellers. This improves the economic proposition for the logistics company, and improves the flexibility for the social seller who no longer needs to wait at home for the courier. It also creates new revenue streams for the retailer.
This system is a win-win for all parties concerned. There has been plenty of noise and speculation that brands will develop a two-speed approach to the opportunity that is e-commerce. One being via platforms and the other via ‘direct to consumer’. We can easily argue that this will become a three-speed approach with the social channels creating a more personal and direct relationship with the consumer.
Time will tell, of course, but my prediction is that social commerce will contribute more than 30 percent to the market in the next two to three years…happy clicking!