Benjamin Franklin once said, ”When you are finished changing, you are finished”. This holds true everywhere, but even more so in E-Commerce. New platforms emerge, trends shift and user behavior changes. Everyone working in E-Commerce, and customer experience, has to adapt to this truth.
But what is E-commerce going to change into? What is the next step on the journey?
It may be social commerce, and/or live commerce. Social commerce is the use of social media to sell a product or service. Live commerce uses live video, often through livestreams, to also sell products and services. Although they seem separate, there is a lot of overlap between the two. Plus Metaverse Commerce is looming on the horizon…
This week we dive into social and live commerce to see if they are the next step for the E-commerce industry. We will look at why SEA (South East Asia) leads the way in both and whether there are some regional differences at play.
Let’s dig in. But first, some key takeaways.
- E-commerce in SEA is very healthy
- SEA’s digital economy is worth $200 billion and will grow 20% YoY
- Younger demographics have a totally different mindset
- More discovery is happening on social, it is not just search anymore
- Time spent online “researching products and brands” is down by 11% from Q3 2018
- Social platforms like TikTok are taking users away from Google
- 87% of marketers report that video delivers positive ROI
- Daily user time on TikTok and YouTube will reach 45 minutes per day this year in the U.S.
- 70% of europeans are open to live shopping
- In China, by March 2020, live commerce was already used by 265 million people
- According to a Statista survey, 61% of respondents in Thailand have made a purchase from a commerce livestream
- 80% of VCs expect to focus on Web 3.0
- Large commerce brands are already engaging Gen Alpha on platforms like Roblox
- Gen Alpha expects an average order fulfilment time of 2.23 days
- B2B commerce players have to partner with third-parties to deliver these new commerce experiences
E-commerce in SEA Right Now
E-commerce in SEA is in a very healthy place. In fact, SEA’s digital economy is closing in on $200 billion, growing 20% year-on-year.
The combined population of the SEA countries is approximately 600 million. According to Google’s e-Conomy report, 100 million more users have come online in the last three years. Going from 360 million in 2019 to an estimated 460 million in 2022.
The E-commerce sector has been the primary beneficiary of this acceleration. Especially among urban SEA users. 75% of them had been active E-commerce users in 2021, with a further 19% becoming active in 2022.
In fact, among urban users at least, E-commerce is nearing full adoption. Which means that the emphasis in SEA is shifting from one of acquisition to a focus on deeper engagement and profitability.
Even though offline shopping has resumed and focus has shifted to profitability, double digit user growth is still expected to at least 2025. There is a usage gap between suburban and urban users. Especially in sectors like “groceries”. Delivery is harder in suburban locations due to logistical factors.
But if this gap between urban and suburban user behavior could be bridged, even more growth is possible.
So the E-commerce industry is in rude health in SEA. But that shift in emphasis towards engagement is an indicator towards something new. So, what is going on?
Discovery Is Changing. Demographic Changes Are Shifting Behavior
For a long time now, the way we look for information, products or services online has not changed.
We go to a search engine and type some text into a search bar. When voice search arrived, some, but not all of us, decided that voicing our queries was better than typing them.
But, as mentioned at the top of this article, when we finish changing we’re finished. A big change to user behavior is making its presence felt. This change is very clear in younger demographics.
Google has also noticed this. Younger people, and newer internet users, have a different mindset to older demographics. They will not go to a search engine or conduct a voice search; They will head to TikTok. Or Instagram.
People do not only use search for discovery anymore. This is a huge behavioral shift.
User behavior, especially in younger demographics, has been changing steadily for years. For example, you would assume finding information would be one of the primary reasons for “going online”. Except now it isn’t. According to the GWI “Connecting the dots” report, “finding information” is one of the fastest falling reasons why people go online. It is down by 14% since Q3 2018. Most notably for commerce operators, “researching products and brands” is down by 11% since Q3 2018.
Time spent online, according to GWI, has dipped. Despite a surge during the peak of the pandemic when everyone was stuck at home. Since then online time has begun to decline again. But people are still using the internet, so what are they doing?
The answer is that services like TikTok and Instagram (and online gaming) have taken the usual foundational activity of “being online” and improved it. They are taking users away from search engines like Google.
What Does This Mean?
This has big implications for brands, retailers and commerce businesses.
It means that although the game (acquiring, engaging and converting users into customers) is the same. The goals are a new shape and now the pitch is at a different angle.
So social commerce has been on the way for a while. SEA’s change in emphasis from acquisition to engagement almost mirrors the shift in customer behavior. Users are looking for a more engaged experience when they use the internet. Brands want to give that to them. That rush of new users in SEA? They do not behave in the same way or follow the same patterns as older users.
But where is this path leading? Or, are there many paths and evolutionary journeys for eCommerce?
Live Commerce – The Future Of Commerce Is Televised
Video has been a part of most commerce brands’ online content mix for a few years now. Especially in acquisition.
But according to Hubspot it’s much more effective. 87% of marketers now report that video gives them a positive ROI. A big improvement. Only 33% of marketers felt that way in 2013.
In 2022 the “picture” is becoming even more clear. According to eMarketer daily user time on TikTok and on YouTube will reach 45 minutes per day this year.
So the touted “pivot to video” has been a long time coming. But it is here.
In the context of these behavioral shifts, live commerce becoming more successful makes logical sense. But it has exploded in SEA, more than in other territories. Awareness and usage of live commerce is very high among SEA users.
According to a survey on Statista, 61% of respondents in Thailand have made a purchase from a commerce livestream. 84% of respondents are aware of the existence of live commerce. That is not even the highest in SEA. In Vietnam 92% of respondents are aware of live commerce. With a huge 70% of respondents stating that they have made a purchase from a commerce livestream.
For brands and commerce operators, this is big. There are now whole demographics who might not use search, or even a website to find products or services they want to buy. There’s a vast amount of traffic going through commerce livestreams that they might not even see.
So commerce brands that can handle this will be well placed to grow. But there are logistical difficulties. Not just in producing the live content, but also in making sure sales track properly.
Regional Differences – Asia Leads The Way
Asia, including SEA, is leading the way in live commerce. Social commerce has become popular everywhere. Millions of people around the world shop on platforms like Instagram and Facebook.
But is Live Commerce going to break through worldwide in the same way it has in Asia?
The answer is a resounding yes.
Big brands like Tommy Hilfiger and Levi Strauss have already jumped on the live commerce bandwagon. In Europe, 70% of Europeans are open to the idea of live shopping. So consumer sentiment, like everywhere else, is shifting more towards a live commerce model.
This is not surprising. Live shopping is not new. TV networks like QVC have been doing it for years.
But technological innovations mean that brands can take advantage of the live commerce model, with a little investment. They can also now own the content, rather than relying on third-parties like a TV network. And they can reap the rewards of digital brand engagement.
Planning For Metaverse Commerce – Gen Alpha In Play
But what about even further in the future? What is the next step for social and live commerce?
Generation Alpha already has spending power. They have grown up with social media and multiple devices. Their mindset is different again from gen z consumers. Plus sweeping technological innovations are going to change the game again.
According to Google’s E-conomy report, 80% of VCs expect to focus on Web 3.0. Generation alpha already spends a lot of time in Roblox and Fortnite. We have already seen the first football match broadcast in the metaverse. It is not a huge leap to suggest that more commerce transactions will happen in immersive digital spaces. Early adopters of this technology are not representative of the wider population. But as the barrier to entry goes down, more people will join in.
The world of commerce has to adapt to these new realities. Generation alpha are tomorrow’s consumers. The signs are that they expect a different way of doing things. Brands, for example, are already active in Roblox. With Tommy Hilfiger again leading the way.
Commerce players should also be aware of Gen Alpha’s expectations. They expect an average delivery time of 2.23 days. 25% lower than Gen Z expectations around order fulfillment. They place more value on sustainability and are skeptical of brands like Amazon, but they expect Amazon levels of service.
But What About B2B?
Some will find it more difficult than others to adapt to social, live and metaverse commerce. The B2B industry has definite challenges in moving towards these newer forms of digital commerce.
It is much easier to do a live commerce stream selling clothes or smartphones than it is selling a B2B service. That is self-evident. But the B2B industry has to start delivering more satisfying experiences. Starting with more “self-service” B2C style commerce experiences.
That is not to say that live or social commerce experiences are impossible in the B2B space. But B2B companies need to approach it in a different way. B2B commerce players will have to partner with third-party experts to deliver these experiences. These partners will have to be able to create social and live content for B2B customers. While also ensuring these experiences are properly integrated into the purchase funnel. So sales and leads can be tracked.
Live, social and metaverse commerce are the future of E-commerce. It is clear that users are demanding more immersive, community based shopping experiences. But many companies will need help in transitioning to these different models.
MAQE can help with this transition. We can provide the technical and creative help for brands to move towards the future of E-commerce.
Talk to MAQE
Want to plan for the future of commerce? Need help in creating immersive social and live commerce experiences? Get in touch with MAQE via firstname.lastname@example.org to see how we can help your business.