China: the most valuable social commerce market in the world?


A new report by Boston Consulting Group (BCG) claims that China could become the world’s most valuable e-commerce market within four years.

BCG claim that for the foreseeable future another 30 million Chinese people will go online to shop for the first time and by 2015 they will each be spending $1,000 a year—about what Americans spend online now.

BCG has also calculated that e-commerce could rise from 3.3% of China’s retail sales today to 7.4% by 2015. This is not just because the government subsidised high speed internet aids online shopping, but also because China’s has an expensive, inefficient ‘bricks-and-mortar‘ retail ecosystem and so a quarter of Chinese shoppers seek products online because they are not physically available in-store.

The rise in value of  e-commerce in China could also impact the social commerce market as Chinese e-shoppers are big users of social media.

As Chinese shoppers are somewhat reticent to trust sellers or advertising messages they turn to online customer reviews to form their opinions and according to BCG, over 40% of Chinese online shoppers read and post product reviews online. This is twice as likely as American online shoppers and four times as likely as Indians.

So what should retailers do to take advantage of the growing social and e-commerce market space in China?

Aside from considering the value of an e-commerce presence in Chinese, brands would do well to secure their presence on sites like Sina Weibo - a Chinese social networking site with over 200 million registered users - or other Chinese social networking sites like Tencent WeiBo or Ren Ren.

Retailers may also want to think about how to start engaging Chinese audiences online, not just in terms of where to engage them, but how to engage them in the context of a wider brand and social media strategy.

And as China is accountable for a large share of  share of mobile social media revenue at the moment, it seems that China could lead to some interesting new online revenue streams in terms of both e-commere and social commerce, as well as mobile shopping.

You can read the full BCG report here.

F-commerce - is it here to stay?


F-commerce (commerce through Facebook)  is not just a buzzword; stores are opening up daily and Payvment, a third-party Facebook comments platform, boasts in excess of 60,000 stores using its features.

Starbucks is using Facebook for its loyalty card scheme, Coca-Cola uses it to sell branded merchandise and GameStop, one of the biggest video game retailers in the world, has just opened a full-range shop on Facebook called The GameStop Shop.

Despite generally lagging behind when it comes to embracing new Facebook features, the UK is starting to see some f-commerce traction. Perhaps the best known example is digital fashion powerhouse, ASOS, who have their own Facebook shop. But what are the real opportunities behind F-commerce for brands and businesses here in the UK?

F-commerce enables smaller brands and businesses to set up a secure shop without the hassle of owning and setting up their own e-commerce store. Challenger brands will seek digital market share from e-commerce giants by opening up shop on Facebook. Larger brands can use Facebook as an alternative engagement platform to their main e-commerce site or as a way of selling different or targeted merchandise.

The key to f-commerce success will, of course, remain in users purchasing from stores in sufficient quantity to justify investment. This does not appear to be an issue. A March 2011 WebTrends report suggests that Facebook conversion rates range from 2-4% - this doesn’t sound much but it’s pretty much on par with e-commerce stores. The nascent industry will rely on customer trust in the Facebook platform, ease of use, social buying and going straight from a Facebook advert or a friend’s recommendation to purchasing an eye-catching product - a new social take on impulse/checkout purchases.

It’s time for brands who want to, or can sell to consumers to consider how f-commerce fits into their business model. If it’s suitable for their business, it may be worth entering the market while it’s still young.

Social commerce - the future of e-commerce?



We’ve written previously about the value of social shopping and how it can benefit online retailers,  and it seems that the issue of social commerce has risen to the forefront of e-commerce strategy discussions again.

Social commerce involves the use of social media, in the context of e-commerce, to assist with buying and selling products and services online. It includes features like customer ratings and reviews, user recommendations and referrals, social shopping tools and online communities.

While social commerce has existed for some time now, with brands like Dell claiming to have made $6.5m (£4.2m) from computer sales via Twitter since 2007, social commerce has become a major point of strategic discussion for online retailers again because of 2 reasons:

  1. Facebook announced it will shut down the Facebook Gift Shop next month in order to prepare for the launch of its virtual currency,  Facebook Credits, possibly as early as September. Facebook Credits will initially allow users to pay for virtual goods such as games, but will eventually let them buy anything. It is expected that Facebook will take a 30% cut of all transactions.
  2. FMCG giant Procter & Gamble (P&G) has started selling its Max Factor brand cosmetics through Facebook .

Michael Nutley, editor-in-chief of New Media Age, rightly points out in his Marketing Week article that these two approaches to social commerce take social media a step further by bringing the ability to purchase what’s being talked about on the social network within the network itself.

Etailers are more than aware of the fact that every page they ask customers to click through to results in a drop-off in numbers of people who convert, so the strategy employed by P&G is a clever one in that it brings the checkout to the potential customer, rather than the other way round.

It’s this ease of purchase, in combination with the persuasive buzz and consumer-driven product discussions that will have been generated on the social networking site, that’s likely to increase sales.

So is social commerce the future of e-commerce? Will etailers move more towards using Facebook or their own branded online communities as a direct space for selling products? It would be interesting to hear your thoughts.