Social Commerce: The Market is the Message
E- COMMERCE COMES OF AGE
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.
SOCIAL COMMERCE HAS WHAT WE WANT
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.
JUST DO IT, TOGETHER!
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.
SAFER WITH SOMEONE YOU KNOW
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.
ESPECIALLY WHEN IT’S JUST WHAT I WANT
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.