If you still think eCommerce will not be a big part of B2C sales, don’t tell anyone, lest they think you live in an alternate universe. eBay went public in 1998 with a market cap of US$1.9 billion by the end of the trading day. Today, it’s worth US$35.9 billion. Amazon held its IPO in 1997 with a market cap of US$438 million, which has since grown to US$370 billion. And it’s not just happening in the West - Alibaba got on the NYSE in 2014 at a market cap of US$231 billion, and that also stepped up to its current value of US$249 billion.
Today, eCommerce sales are estimated to make up 8.7% of total retail spending worldwide, and are expected to grow to 14.6% of total retail spending by 2020. Many B2C firms have since caught on to this trend and armed themselves with digital commerce capabilities, shifting business operations to online platforms. In the West, Brand.com websites have emerged by the multitude and B2C sellers have also placed themselves on third-party aggregators and marketplaces. Businesses supporting this transition have likewise benefited a great deal. Shopify reports 325,000 active shops on their platform, and parcel drop boxes (think Bumbox, Ninja boxes) have emerged across the world to facilitate eCommerce logistics.
Mobile Leapfrogging in Southeast Asia
In recent years, mobile technologies have matured and mobile has already become the consumer’s device of choice. Developing economies missed the personal computer era, and instead saw internet penetration grow in recent years through smartphone usage. This mobile leapfrogging has caused many in Southeast Asia to own a smartphone but not a computer.
Running in parallel with the growth of mobile is the rapid growth of mCommerce. In fact, it is getting cliché to say that mCommerce will become a significant part of digital sales in the near future. Just check out here, here, here, and here.
There are many ways that businesses can get on board the mCommerce bandwagon.
- Mobile App - They can develop their own mobile app and actively advocate for customers to download and place their app on their primary home screen. In a time when Android users have 2.2 million apps to choose from, such businesses better be issuing free gold bars to convince their customers to give up precious homescreen real estate.
- Mobile-friendly Site - Alternatively, businesses could develop mobile-friendly websites, and hope that customers make it to their website and navigate through the pages to making purchases on their phones. Even with responsive design, this has proven tricky for many, and it’s difficult to get a perfect mobile-friendly site without UI problems.
- Marketplaces - Smaller B2C sellers could consider alternative ways to go mobile, such as selling through mobile-enabled marketplaces (think Carousell). This is a quick and easy way to start selling, but for existing sellers it means moving to a new platform. For a seller who was already selling on social media, this means leaving behind painstakingly-built audience and starting anew. Redirecting social media audience to the new marketplace could help, but this would invariably lead to a significant loss in followers.
Are there no better ways to sell to the consumer on mobile? Businesses should home in to platforms that their customers are most used to. Facebook boasts a monthly user count of 1.74 billion people, and social media is estimated to take up 30% of time spent on the internet. Just pay attention to commuters on your local public train and it won’t be difficult to spot people scrolling Facebook feeds, double tapping Instagram pictures and texting friends on instant messaging apps.
For good reason, marketers have swarmed to social media platforms to establish their presence. However, to make a purchase, customers are still required to navigate to the seller’s website or mobile app, and by no means does that result in an automatic sale. Unless they were intent on purchasing something, it is not easy to get a conversion from visitors who stumble into your site, even with the prettiest UI/UX. This “platform chasm” often results in low conversion rates, lost sales. Could there not be a more streamlined process to sell to customers who find you on social media?
Social Commerce in Southeast Asia
Studying Southeast Asia might provide some clues. When emerging markets in the region missed the desktop computer trend and moved straight to mobile, they were expecting to use the mobile phone to connect with friends and family, not do their groceries. In a way, social media apps defined smartphone usage for the Southeast Asian user.
Naturally, small-scale B2C businesses flocked to social media to reach their customers, setting up free Facebook, Instagram and Line accounts. Unlike building a website, which is easier done on a desktop computer, business pages on social media platforms can be easily created on mobile. Consequently, eCommerce in Southeast Asia is heavily reliant on social media. Bain reports that more than 80% of digital consumers in Southeast Asia use social media for product research and contact with sellers. Likewise, PwC found that 51% of shoppers in Thailand shop directly on social media channels. In fact, GMV on social media sites in Thailand was estimated at $510m in 2014, a whopping one-third of their total e-commerce GMV.
While most Western retailers put up Facebook adverts to refer you to their webpages, B2C sellers in Southeast Asia do not have mCommerce-enabled webpages. Their Facebook page or Instagram feed is their webpage. But social media in its current state is ill-equipped to handle end-to-end eCommerce. There is no checkout option, nor are there payment options. How then do businesses in Southeast Asia manage this?
“Social media apps defined smartphone usage for the Southeast Asian user”
Enter ChatStores, where you sell to customers by… chatting with them. In Southeast Asia, direct sales through chatting with customers on social media has become quite the norm. Sellers show their wares on social media, and complete the transaction on chat apps like Facebook Messenger or Line. Just take a look at this store, this one and this one. In fact, this pattern is so entrenched that C2C marketplaces find it tougher to create the same network effects in emerging markets as they managed to in Singapore. Why start from scratch on a new platform when these sellers already have strong followings on social media? Chatting with customers also allows sellers to engage with them, opening the door to upselling and hustling. This is something webstores are simply not designed to do. Mobile leapfrogging has led to the emergence of social commerce, with sellers locked in by network effects, and buyers accustomed to shopping on social media.
“Why start from scratch on a new platform when these sellers already have strong followings on social media?”
It comes as no surprise then that major brands and platforms are exploring ways to connect with customers directly on social media channels. We now have Chinese consumers purchasing handbags on WeChat. Facebook has also enabled sellers to chat directly with customers who click on adverts.
ChatStores are the most direct way of connecting with your online customers, all of whom are well-experienced with social media and instant messaging. Will they be more familiar with these social media platforms compared to your mobile site? You bet. Will they prefer to learn how to shop on your website or on channels they are accustomed to? I vote for the latter.
Challenges Facing Current ChatStores
However, if you had purchased something via chat previously, you probably experienced something tedious like this:
Buyers don’t have a ready view of all available products, and need to wait for sellers to respond manually to confirm a sale. The agony is even greater for the seller, who faces the challenge of manually managing orders of a thousand buyers. This was less of a pain when they had a small following. After gaining popularity and building a sizable fan base, B2C sellers are in need of a scalable solution.
Demand for Social Commerce Solutions
To tackle this problem, a number of startups have already appeared. Vouch enables sellers to manage inventory and automate checkout processes on Facebook Messenger and Line, reducing time spent per transaction by 90%. Soldsie creates an Instagram-like store that enables customers to browse products and transact on their platform. Spreesy offers a range of tools to support commerce on numerous social media platforms.
For sure, there are many more innovations that can serve the social commerce space. With the speed that technology is moving, we can expect this sector to look very different in the near future. Its developments will be significant in shaping the shopping experience of the Southeast Asian consumer. With a clear opportunity and a rising demand, we’d say, watch this space!