How COVID-19 accelerated social commerce in SEA

Social media is one of the industries that has experienced significant tailwinds despite the disrupted and unpredictable business climate caused by COVID-19. Due to the shifting user behaviours, social media platforms have seen an increase in total users and user engagement. TikTok, a relatively new player in the social media industry, has been leading the app downloads ranking and clocking more than a ten-fold spike in active users throughout the course of this year. While more established social media platforms like Instagram has seen increased engagement and gained 800 million monthly active users.[1] This has given social media a space to expand their reach to a more lucrative ground, namely, commerce.

Since the beginning of the pandemic, online spending has increased by 30% in Southeast Asia alone. This happened concurrently with the 47% decrease of offline purchases.[2] The numbers shouldn’t be as surprising as this isn’t the first time that a call to stay at home has changed the modes of commerce. A similar case was seen with the rise of e-commerce in China and South Korea in the wake of SARS and MERS respectively.

As e-commerce stayed long after the epidemics passed, social commerce is predicted to continue to thrive post-pandemic. The discovery of social commerce shopping’s convenience and the newly-established habit are here to stay after traveling restrictions are lifted.[3] This is further amplified by the progressively increasing variety of goods that enter the social commerce market, added by fast-growing features in social platforms such as Instagram and TikTok that allow users to checkout without leaving the app.

Different from e-commerce, social commerce allows a much shorter shopping journey that occurs entirely on a social platform.  Shopping is no longer a process on its own, rather, it is integrated with the social media experience and allows users to interact with brands before making purchase decisions.

Social media giants have also shifted focus to acquire and retain more social commerce customers. This is done by improving basic features like payment and delivery options, or adding entertainment layers to boost engagement and spur call-to-action to purchase. An example of this comes from TikTok’s Chinese app, Douyin, which constantly launches new innovations that blend entertainment and commerce.

The app has allowed users to shop by zooming and tapping on items in a video and check out without leaving the application. Although such features have not been seen outside of China, it is almost certain that other social media platforms are following this roadmap to bridge the missing link between social and discovery and commerce.

Southeast Asia is home to approximately 350 million internet users, 90% of which are smartphone users.[4] In order to grab the large smartphone users market, social commerce will likely be equipped with a mobile-friendly ecosystem.  As far as market sizes go, Google expects a $240 billion growth in Southeast Asia’s internet economy by 2025[5]. This is met by Econsultancy’s report that shows 84% of Southeast Asian respondents looking to increase social media purchases over the next few years.[6] To boot, many people have yet to use smartphones in the region, paving way for larger market expansion as more businesses and consumers digitize.

Companies report issues including ‘lack of measurement technology to set goals and benchmarks’ (14% of respondents), ‘lack of social commerce expertise’ (13%), and ‘lack of overall digital maturity’ (11%). This shows a need to expand their database and  analytics tools to emulate the success of international brands and evaluate their own social commerce strategies.

With the competition in the social commerce industry becoming more fierce, it’s time for social-based enterprises to form an effective strategy.  Analytics tools such as Analisa.io are able to equip social commerce with data of past performances or other businesses’ performances, enabling Southeast Asian commerce to apply similar strategies and see similar social growth.

Author: Bradian Muliadi

[1] https://www.oberlo.com/blog/tiktok-statistics#:~:text=TikTok%20has%20800%20million%20active%20users%20worldwide.,App%20Store%20and%20Google%20Play.

[2] https://www.bain.com/insights/how-covid-19-is-changing-southeast-asias-consumers/

[3] https://www2.deloitte.com/content/dam/Deloitte/dk/Documents/strategy/e-commerce-covid-19-onepage.p

[4] https://econsultancy.com/is-social-commerce-finally-taking-off-in-southeast-asia/

[5] https://www.thinkwithgoogle.com/intl/en-apac/future-of-marketing/digital-transformation/e-conomy-sea-2018-southeast-asias-internet-economy-hits-inflection-point/

[6] https://econsultancy.com/is-social-commerce-finally-taking-off-in-southeast-asia/

Leave a Reply

Your email address will not be published. Required fields are marked *