What’s driving China’s social commerce boom?

What’s driving China’s social commerce boom?

Guest columnist Jacob Lovén discusses global consumer behaviour and what it could look like in the near future.


What happens if you mix Instagram, Candy Crush Saga, and Amazon? The answer is the Chinese platform Pinduoduo, which has become a monster phenomenon with a mindboggling annual turnover of more than 20 billion euros.

Last year, the three-year-old company was publicly listed on the New York Stock Exchange at a valuation of 30 billion euros. One thing is for certain: the trend of social commerce is challenging how traditional commerce works and is putting pressure on an already suffering retail sector.

On the surface it may appear a bit strange. Pinduoduo, which means “buy together” in English, is a platform that mixes social media with shopping and gaming, thus quickly gaining millions of loyal and enthusiastic (and sometimes addicted) users. But if you dig a little deeper, the Chinese app is an example of how shopping is fundamentally changing and what global consumer behaviour could look like in the near future. You see, over the past decade our overall behaviour has increasingly adapted to the formats of the various digital services we use on a daily basis.

First, let’s take a look at social media. While Facebook, Instagram, and Snapchat aren’t new, the global usage of social media is continuing to grow. Nowadays, it’s the primary way for us to discover new things such as new products to buy. If you think about how we consume news and media online it actually makes sense: When the number of choices available becomes overwhelming, we turn to likeminded people for recommendations and a curated list of selected items.

The Chinese app is an example of how shopping is fundamentally changing.

Second, the rise of social commerce has been enabled by the way games have changed how we value our time and where we spend it. The gamification process of almost any service has become one of the key ingredients in making digital platforms sticky and ensuring that we spend as much time there as possible. Think of how LinkedIn rates our profile based on how active we are. Or consider how our progression is being measured and displayed by any language-learning app. These are all principles of gamification, and they are incredibly addictive.

Third, there is something even more powerful than the first two trends. You see, as traditional e-commerce has made anything available to us at the click of a button, we’ve become easily bored and are widely looking to invest our hard-earned money in things that create an experience and reflect our values and preferences and help us to enforce our personal brand. In commerce it’s no longer about transactions, it’s about experiences.

Looking at all these factors, it seems likely that the rest of the world will also experience the rise of social commerce. As with any major shift, billions of euros could be gained by the companies that catch the right wave and billions of euros could be lost by the ones that realise it too late − that’s how Darwinistic the internet economy is.


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