Social Commerce Will Triple Of Traditional E-Commerce

The growth rate of global social commerce will be triple that of traditional e-commerce in 2025, reaching $1.2 trillion, with Generation Z consumers accounting for 62 percent of global e-commerce spending.

Social Commerce Will Triple Of Traditional E-Commerce

With the idea of making online shopping experiences more interactive and pleasant gathering steam in many parts of the world in recent years, DHgate Group, a Beijing-based cross-border business-to-business e-commerce company, plans to boost sales revenue generated by MyyShop — its social commerce platform — to $3.8 billion and cultivate up to 1 million overseas content creators over the next three years.

Many opportunities come from the fast-growing trend of diversification and fragmentation of shopping channels after the impact of the COVID-19 pandemic caused many challenges for the world economy in 2020. The reality has raised the penetration rate of cross-border e-commerce of Chinese companies in many foreign markets and boosted the country’s foreign trade volume in recent years, said Diane Wang, founder and chairperson of DHgate Group.

According to Guangzhou, Guangdong province-based market consultancy iiMedia research, the revenue of China’s e-commerce livestreaming sector amounted to 1.2 trillion yuan ($172 billion) in 2021, up 25 percent year-on-year, and the figure is projected to reach 2.1 trillion yuan in 2025.

“If the decentralized cross-border e-commerce model can be successfully expanded from China to overseas markets in the coming years, there is a huge market space behind it,” said Wang.

Eyeing new opportunities in industries driven by social media, DHgate launched MyyShop, a social commerce software-as-a-service business that connects Chinese supply chains with people who have substantial private domain traffic or influencers on social networking platforms worldwide.

The platform aims to facilitate export-oriented companies, especially small and medium-sized enterprises, with access to global private domain channels. It is designed to empower Generation Z consumers — those born between the mid-1990s and the early 2000s — and content creators, including internet celebrities, key opinion consumers, drop shippers and brand owners.

“As the first generation in the mobile internet era, they are the dominant voices on social media, leading popular culture and greatly influencing consumption. Their strong and high-frequency willingness to consume is leading the global consumption trend and bringing notable changes to the world economy,” she said.

“Unlike the domestic market, the lion’s share of influential livestreamers are led by multi-channel networks or e-commerce livestreaming companies. They are normally supported by a team. It is rare to see foreign content creators work individually for MCNs or other companies, indicating our decentralized platform fits the reality of many countries,” said Wang.

According to global consultancy Accenture, the growth rate of global social commerce will be triple that of traditional e-commerce in 2025, reaching $1.2 trillion, with Generation Z consumers accounting for 62 percent of global e-commerce spending.

To build a technical edge and reach more businesses, MyyShop offers social media-based services such as artificial intelligence-powered smart product selection and smart logistics services. It also helps SMEs, especially entry-level merchants and individuals with social influence, to run their online stores as direct sellers.

With the cross-border e-commerce industry entering the next growth stage, it is practical and vital for capable platforms such as Myy-Shop to connect China’s powerful supply chain with influential livestreamers on social media, helping them start businesses and participate in global trade, Wang said.

As watching e-commerce livestreaming has gradually become an online habit for many consumers globally, a total of 1.66 million content creators worldwide had registered on MyyShop, boosting sales of more than 4 million types of products by June 2022, while a total of 147.3 billion short videos had been played, according to DHgate.

The number of active users on MyyShop increased 76.3 percent year-on-year in the first quarter of this year, while the number of paying users rose 65.6 percent year-on-year.

As logistics is a key factor in cross-border e-commerce services on timeliness and stability, Wang said MyyShop has created a niche for itself in the drop-shipping services sector by collecting products directly from suppliers and shipping them from warehouses in the United States, Europe and Mexico to the customers’ doorstep to ensure delivery efficiency.

In addition to rolling out a completely hassle-free and smooth system for both businesses and buyers, the platform also connects suppliers with online influencers, assists them with convenient tools and services including logistics, marketing and finance, and provides the guarantee for reliable delivery, she added.

Headphones, LED lights, phone cases, scooters, yoga wear, wedding dresses, party supplies, cosmetic bags, string lights and drones were the most popular products among its overseas buyers last year, according to DHgate.

In some developing markets such as Africa, people have moved to social commerce directly, surpassing the PC-dominated e-commerce era and smartphone-dominated e-commerce era. In developed markets, social commerce also develops faster than traditional e-commerce, said Wang.

Established in 2004, DHgate Group to date has provided services to 46 million businesses and buyers around the world. The top five countries importing Chinese goods are the United States, the United Kingdom, Australia, Canada and France. There is also rising demand from emerging markets such as Seychelles, Zimbabwe and Senegal.

Empowered by opportunities brought by the Regional Comprehensive Economic Partnership agreement and the country’s new opening-up measures, Wang stressed that China still has the most mature, advanced and accountable supply chain. The country’s advantages such as an educated labor force and highly competitive business environment cannot be duplicated by other countries.

Despite greater complexity and uncertainties in both domestic and global markets, the import and export scale of China’s cross-border e-commerce business hit 1.92 trillion yuan in 2021, an increase of 18.6 percent from a year earlier, statistics from the General Administration of Customs show.

The foreign trade transaction volume of cross-border e-commerce grew 28.6 percent year-on-year in the first half of this year, according to the administration.

Eager to boost foreign trade, China announced in late November that it had approved the establishment of comprehensive pilot zones for cross-border e-commerce in another 33 cities and regions. This is the seventh batch of such pilot areas, which lifts the tally to 165 across the country.

Cross-border e-commerce platforms, supported by advanced digital technologies, have acted as a great stabilizer and engine of global trade. Its growth will not only benefit China’s vast consumer market, but also bring growth points to SMEs in both domestic and global markets. It has helped them sell their products on a level playing field, lower costs and reduce middlemen, said Dong Yan, director of the trade department of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences in Beijing.

“China’s efforts to join high-level international economic and trade pacts will facilitate its companies to better manage cross-border flows of digital data and tap growth opportunities,” she said.

Cross-border e-commerce is also a new path to promote China’s consumption upgrading. Its characteristics of decentralization and globalization can meet consumers’ needs for tailor-made products, said a report released by the Beijing-based China Council for the Promotion of International Trade in November.

Originally published by China Daily