Traditional e-Commerce is still dominating the digital economy with its original concept of merchandising items online to sell. Growing with the cycle of Internet, this format is serving well for baby-boomer generation (4X-6X) in Western or (6X-8X) in SEA/ APAC. However, a new cycle of social network and mobile adoption is born with Millennials and GenZ help define a new way called Social-eCommerce. This latest concept is skyrocketing across APAC, especially mainland China.
Social eCommerce Model is initial emerging as the evolution of classifying group of sellers from the traditional e-Commerce. This model has defined differently by B2C or S2B2C into 04 types:
- Group Buying Social-eCommerce (B2C)
- Membership-based Social-eCommerce (S2B2C)
- Community Group Buying Social-eCommerce (S2B2C)
- Content-based Social-eCommerce (B2C)
Group Buying Social-eCommerce Model
Traditional e-Commerce started first with B2C model then C2C marketplace to differentiate their group of sellers. Since global Brands realized that they need to follow the O2O strategy by operating their Branded Online Shops, the trend pushed small local sellers out of the leading marketplaces. In the big market like mainland China, group of small local sellers gather to form new channels to supply cheap-unbranded items to middle-class consumers. Accidentally, it helped build the new platform of Group Buying Social-eCommerce Model. It looks like Groupon model but it’s more powerful with mobile-native design and social-content operation. When Tencent launched mini-program in Jan 2017, the transaction of model has grown exceptionally by easy-launching thousands of mini-programs to acquire users and gain purchases.
Let’s see the below diagram of buying of users from Pinduoduo, a best-case study for the model. Any users can start initiate a new group-purchase or join an existing group-purchase, he or she can invite more friends via WeChat platform to complete the target of group-buying then the deal is firmed for all buyers. After that, the product is released to customer’s doors. With the power of social chat platform like WeChat, users can invite friends to join deal, follow the favorite sellers and rate their services, they also can share their own content around the deals or sellers to attract other users to join other deal quickly in future.
Membership-based and Community Group Buying Social-eCommerce Model
Membership-based and Community Group Buying Social-eCommerce Model are S2B2C models which classified users by hierarchy of distribution commission earning. The models will have some power-users on the top of the pyramid who deal directly with Brands to earn commission to re-distribute to lower-rank users at the bottom. Yah, it looks like MLM in your head right now, right? Yes, it’s an MLM model with a small different factor with the role of controller from the platform to monitor every deal in the system. Community Group Buying Social-eCommerce is different with Membership-based by focusing to build the logistics back-bone to support delivery to any offline-blocks, and community means offline-based geography. These models require a good-controlling policy to quarantine any Ponzi schemes, examples some models just accept to count a new-registered member as a user who paid COD to the platform, then platform will pay incentive to the higher-rank users.
Let’s see the below diagram of buying of users from Yunji, a best-case study for Membership-based Social-eCommerce. The platform help Brands/ Suppliers deal directly with their power-users called Diamond members who had followed-members to re-distribute and earn commission, Yunji provides delivery and after-sales services for Diamond members to care the purchases. With new booming trend of KOL/ Influencers Marketing, the next wave maybe grows by collaborate between Suppliers/ Brands to launch personal boutique KOL brand products to harvest the fans.
Content-based Social-eCommerce Model
Initial launching of this kind of model was the content-sharing social networks likes Instagram, Youtube or Youku. First starting with purely traffic-commercial selling via Ads distribution network, these models inject selling-in app/ in-content with Buying button. Content is attractive, Sales is booming. The next generation of Content-based Social-eCommerce called Douyin with Tiktok brand was born, it’s the 15 seconds video-creation app with huge library of licensed music and effects to help young users build their content channel. It helps their Content creators and Content creator communities launch their best creative-addicted short-videos to attract fans and sell items inside the app.
This model requires strong investment to build creative communities, it’s high risk but high-return when it could catch the wind. Long-tail economic behavior of content also help it retain and grow by tipping point chances side by side earning media selling commission. In Vietnam, we have some local players to follow this model with their own talented content-production team.
Millennials and GenZ, who have a super-power of absorbing huge content per day are the growth factors of Social-eCommerce. Let’s see how the traditional eCommerce involve to compete with the new wave of Social-eCommerce to win the digital economy of distribution.
The article is posted with some key finding from the reports of iResearch China and Fung Business Intelligence.