Facebook chats power a new $48 billion market in social commerce
THROUGHOUT SOUTHEAST ASIA, CONSUMERS’ AFFECTION FOR INTERACTING WITH BUSINESSES IS FUELLING A BOOM IN SOCIAL COMMERCE.
MENLO PARK: Samantha Proyrungtong, co-owner of an artisan food shop in downtown Bangkok, keeps three phones and a laptop glued to Facebook and Softbank Group-backed Line Corp.’s social-media app throughout the workday.
She needs them not to hear from friends and relatives but to get orders from customers since her shop, Vivin Grocery, relies on chat applications for a big part of its sales of goat cheeses, locally sourced jams and organic vegetables.
Throughout Southeast Asia, consumers’ affection for haggling and interacting with businesses is fuelling a boom in social commerce.
Social commerce accounted for about 44% of Southeast Asia’s $109 billion e-commerce market last year, according to Bain & Co.
The rapid adoption of commerce via social media across the region could offer valuable lessons to internet giants like Bytedance Ltd and Facebook’s Instagram, which are experimenting with the format as they try to disrupt the traditional styles of platform commerce.
On a recent weekday afternoon, Proyrungtong received a message from a customer through one of the store’s official messaging accounts asking whether their double-duck sandwich was available. Proyrungtong messaged back to confirm the duck’s availability, quickly concluded the sale, confirmed receipt of payment via bank transfer and arranged a time for pick-up at the store, all via messages. “We saw the need to shift online and have a competitive platform that people can order easily off of,” she said, adding that managing customers can be challenging.
“You need someone who can accommodate your customers and know your product,” said Proyrungtong, “so it’s not just having the channels to sell but also people to take care of it.”
The pandemic has led global brands such as Chanel and Louis Vuitton as well as Thai brickand-mortar retailers to register for accounts on Line, spurring a 25% annual growth in official accounts in 2020, said Norasit Sitivechvichit, chief commercial officer of Thailand’s most-used messaging platform, which charges retailers based on their messaging activity and number of followers.
“Chat commerce has become a disruptor,” he said. “Not just small and medium-size enterprises are conducting chat commerce on Line, but also global and local corporate brands.”
Southeast Asian countries are natural places for the model, said Alessandro Cannarsi, a Singapore-based Bain & Co. partner. “The fact that these are very young, tech savvy populations, especially on mobile, and they’re very entrepreneurial, encourages social commerce,” he said.
Vietnam led the region, with social commerce accounting for 65% of its $22 billion online retail economy, compared to $4.2 billion in 2018. Social commerce revenue in Thailand grew from $3 billion three years ago to about $11 billion in 2020, half of the total e-commerce market.
In countries like India, the popularity of shopping through Whatsapp has led Reliance Industries Ltd to target 20% of sales at its Hamleys toy stores through direct selling over the messaging application. The Facebook-owned messaging application added shopping carts into its chat rooms last year to court more merchants and tap onto its 2 billion user base to shop on its platform.
A search for home decor, fashion accessories or tech gadgets on Facebook or Instagram will often lead shoppers to find businesses’ pages, wares offered and prices listed on social media profiles filled with carefully orchestrated photographs to make their pages look enticing, similar to a digital photo catalogue or magazine.
Unlike more established e-marketplaces, though, the chat applications on social media pages aren’t designed for commerce and don’t include payment systems, so customers need to use external payment methods, such as direct bank transfers or e-wallet services like Amazon Pay and Grabpay to finalize sales.