So­cial Commerce: The Mar­ket is the Mes­sage

Thai-American Business (T-AB) Magazine - - Contents - Writ­ten by: Ian Fen­wick & Su­rawat Promy­otin


As with so many things dig­i­tal, much of the last 20 years have been spent de­vel­op­ing on­line ways to repli­cate con­ven­tional off- line be­hav­ior. E- commerce has been no ex­cep­tion. It’s been mer­chant­driven and prod­uct- driven. Mer­chants present, pro­mote and push prod­ucts. We have taken the con­ven­tional sales model and moved it to a web­site: the mail or­der cat­a­logue went on­line.

How­ever, one true thing we have learned about dig­i­tal is that it tends to start small, and build, of­ten in the back­ground, un­til it ex­plodes into ma­jor changes. Just re­call that at the start of 2010, Thai­land had fewer than 1.7 mil­lion Face­book users; we now have, re­port­edly, over 30 mil­lion. This growth tends to be ac­com­pa­nied by a mor­ph­ing be­yond recog­ni­tion of the dig­i­tal en­tity, and a mas­sive dis­rup­tion of the tra­di­tional model.

Dig­i­tal is al­ready im­pact­ing con­ven­tional top- down e- commerce. Con­sumers are start­ing to as­sert them­selves, in the form of crowd- cu­rated prod­uct dis­cov­ery, rec­om­men­da­tions, and sales. Cus­tomers are help­ing each other dis­cover in­ter­est­ing prod­ucts, re­view­ing prod­ucts for each an­other, eval­u­at­ing their suit­abil­ity for dif­fer­ent uses and users, and ac­tu­ally sell­ing to one an­other.

In most cases, con­sumers are re­pur­pos­ing and hi­jack­ing plat­forms which orig­i­nally fo­cused on some­thing else. The big­gest ( of course) is Face­book. It is es­ti­mated that there are al­ready well over 10,000 Face­book pages making sales in Thai­land, some re­port­edly gross­ing more than USD 100,000 a month. This pat­tern is re­peated in In­done­sia, Malaysia, Sin­ga­pore, Viet­nam and many other mar­kets. We are al­ready see­ing mes­sag­ing apps ( e. g. Line) and photo- shar­ing apps ( e. g. In­sta­gram) adopt­ing so­cial commerce as a key part of their ap­peal, and mon­e­ti­za­tion. When you look at it closely, like most dig­i­tal suc­cesses, it’s not really new. It’s sim­ply adapt­ing what we have al­ways done – men­tion­ing things to our friends, shar­ing our finds, giv­ing friendly ad­vice, trad­ing things – to a dig­i­tal world. And of course the dig­i­tal world lends reach and scale to what we’re do­ing, while main­tain­ing the so­cial edge.

This will be a dis­rup­tive change. And as with all dis­rup­tive changes, those that get in early will thrive, those that don’t will dis­ap­pear. Just ask Ko­dak.


Con­ven­tional e- commerce in South­east Asia is still a small per­cent­age of to­tal re­tail. So­cial commerce is but a frac­tion of that small e- commerce. But so­cial commerce com­bines a num­ber of fea­tures that seem uniquely suit­able for dig­i­tal and for South­east Asia. We can ex­pect the so­cial commerce model to scale and scale fast. There are sev­eral rea­sons why we can ex­pect so­cial commerce to con­tinue to res­onate with con­sumers in South­east Asia.


First, so­cial in­ter­ac­tion has al­ways been a key in­gre­di­ent of South­east Asian life and cul­ture, and es­pe­cially South­east Asian shop­ping. The trip to the mall has been pre­dom­i­nantly a so­cial trip for en­joy­ment, con­ver­sa­tion and eat­ing, along­side shop­ping. It’s not by chance that of the largest ten malls in the world, six are in South­east Asia ( and two of them in Thai­land).

In many ways, tra­di­tional e- commerce was an anom­aly. We cre­ated a ‘ lone­li­ness of the long- dis­tance shop­per.’ We sep­a­rated out the so­cial as­pect of shop­ping and fo­cused on the trans­ac­tional, com­mer­cial as­pect. The on­line cat­a­logue ex­pe­ri­ence cre­ated a soli­tary shop­ping ac­tiv­ity, com­ple­mented per­haps with a few re­views, some star- rat­ings, and a rec­om­men­da­tion en­gine (“Peo­ple who bought X, also bought…”). But it in­cluded no real im­me­di­ate peer feed­back, dis­cus­sion and com­men­tary. It was but a pale re­flec­tion of shop­ping in the mall.


Sec­ond, the risk as­so­ci­ated with al­most all commerce in South­east Asia is per-

ceived more acutely than it is in other lo­ca­tions. We are ac­cus­tomed to doubt the le­git­i­macy of the goods dis­played; con­di­tioned to watch out for fraud and rip- offs ( al­though other coun­tries may be rapidly catching up here); and very much aware of caveat emp­tor. When we go on­line, this lack of trust mush­rooms, jus­ti­fi­ably or not.

It is pos­si­ble that South­east Asia tends to have less eas­ily in­voked in­sti­tu­tional sup­port in cases of fraud than some other ju­ris­dic­tions. As a re­sult, we tend to pre­fer more per­sonal trans­ac­tions. It’s safer to trade with those we trust, those who are our friends, or those vouched for by our friends. The per­ceived se­cu­rity of deal­ing with some­one with whom our friends have trans­acted, with­out any prob­lems, is much greater that the per­ceived se­cu­rity of a ma­jor brand, or credit card, or other agency.

Study af­ter study con­firms that the most trusted source of in­for­ma­tion is ad­vice from real friends and real fam­ily. And the sec­ond most trusted source of in­for­ma­tion? Re­views and ad­vice posted on­line, even by peo­ple we don’t know. De­spite the best ef­forts of mar­keters, the cred­i­bil­ity of so­cial me­dia re­ports out­strips brand ad­ver­tis­ing by a mas­sive mar­gin. If I can get my real friends’ ad­vice, that is the best case sce­nario, but on­line ad­vice runs a close sec­ond.


Third, dig­i­tal is teach­ing con­sumers to ex­pect per­son­al­iza­tion: ‘ the seg­ment of me.’ As much as pos­si­ble, I want to see a prod­uct se­lec­tion which is unique to my en­vi­ron­ment, to my sur­round­ings, to my tastes. The stuff I ac­tu­ally like is not quite the same as what is in all the stores. I want some­thing that is a bit dif­fer­ent and dis­tinc­tive. But just as so­cial is a key back­drop to my en­joy­ment of life, so it is cru­cial to my ap­pre­ci­a­tion of prod­ucts. My friends’ re­ac­tions to my prod­ucts im­pacts my en­joy­ment of those prod­ucts ev­ery bit as much as the prod­ucts them­selves do. En­joy­ment of pos­ses­sions is very much a communal af­fair.

With the selfie well- es­tab­lished, we are now in the realm of the ‘ chelfie’- the chang­ing room selfie. Pic­tures of you try­ing on clothes, posted to get in­stant re­sponse from friends whose opin­ions you value, it al­lows you to garner feed­back be­fore you take the plunge and de­cide whether to buy or not. Re­port­edly, for shop­pers aged un­der 30, al­most 15% are al­ready seek­ing oth­ers’ opin­ions on ev­ery out­fit they buy. For 13- year- olds, that num­ber is 33%.

No­tice that this brings a so­cial di­men­sion to tra­di­tional store pur­chases. So­cial commerce is not all on­line. It’s about com­bin­ing so­cial in­ter­ac­tions with com­mer­cial in­ter­ac­tions. Whether those in­ter­ac­tions oc­cur pri­mar­ily in the world of phys­i­cal things ( bricks and mor­tar, breath­ing peo­ple) or in the vir­tual world ( on- screen video and im­ages, mes­sages and rep­re­sen­ta­tions of peo­ple), is largely ir­rel­e­vant. So­cial commerce is al­ready here. There is ev­ery in­di­ca­tion that it will have a ma­jor im­pact on how we buy and sell. The ex­act fi­nal na­ture of that im­pact can­not be pre­dicted, but those who ex­per­i­ment and learn now are likely to be those that dom­i­nate in the fu­ture.

Dr. Ian Fen­wick is Pro­fes­sor of Mar­ket­ing at Sasin Graduate In­sti­tute of Busi­ness Ad­min­is­tra­tion of Chu­la­longkorn Univer­sity and Pro­fes­sor Emer­i­tus at Schulich School of Busi­ness, Toronto. He can be con­tacted at: ian@ian­fen­wick. com. Su­rawat Promy­otin is CEO and Co- founder of Styl­hunt Pte Ltd, and Sasin EMBA 2006 alum­nus. He can be con­tacted at: Sam@ Styl­hunt. com.

In­stra­gram used as a re­tail plat­form

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