How social commerce fills infrastructure gaps in Southeast Asia – TechCrunch

Conceptually, social commerce isn’t new – it’s been around in one form or another ever since people made recommendations to each other. Today, social media is more powerful than ever, and startups and enterprises are innovating new business models that take advantage of the greater reach available to us.

It is important to understand the fuzzy but persistent difference between social commerce and conventional e-commerce. Where e-commerce aims for a direct, digital translation of physical browsing, social commerce refocuses the entire customer journey on people.

Social commerce does not separate our retail experiences from the rest of our lives; rather, it leverages the power of community and connection to create opportunities in daily life through social media.

Globally, social commerce is on track to become a $1.2 trillion industry by 2025, with the biggest gains being made in Brazil and India. It is estimated that the $2-3 billion social commerce market in India today will grow to $70 billion in value by 2030, enabling around 40 million small entrepreneurs.

However, the real growth of social commerce is in Southeast Asia, where it is already worth more than $13 billion.

Using social commerce to foster community growth

The popularity of social commerce in Southeast Asia has been accelerated by high mobile internet penetration rates, a mobile first generation that spends a lot of time on social media, and high engagement.

But the main driver of social commerce is the fact that it is a collectivist society. At the heart of Southeast Asian culture and approach to life is a community that is woven into the fabric of everyday life. While Southeast Asians believe they can succeed as individuals, they still appreciate the value of their traditionally collectivist society.

Percentage of people who strongly appreciate being part of a group by region

Picture credits: Kantar Global MONITOR 2019

Southeast Asians have a strong desire to belong to a community, and finding strong relationships is more important to them than their global counterparts. They use their networks to socialize as well as transact, and they are particularly enthusiastic about peer-to-peer services.

And that sense of community is affecting how they buy.

The social commerce model relies on the relationships of community leaders and influencers to drive sales by marketing directly to their friends and family. Through social platforms or an app platform, these leaders, acting as resellers, can order products at wholesale prices before redistributing them to their networks for a markup; although in some cases they may also earn a percentage commission.

Southeast Asians show higher preference for P2P online marketplaces than other regions

Picture credits: Kantar Global MONITOR 2019

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