Mapping the Social Commerce Revolution in Asia

The convergence of social and e-commerce continues apace in Asia.

More established e-commerce businesses, led by the likes of Alibaba and Rakuten, are investing heavily in social to maintain growth momentum and give them direct access to millions of users via social networks and messaging apps. One only needs to look at Rakuten’s $900 million acquisition of chat app Viber just last week, and Alibaba’s $586 million investment in the Sina Weibo microblogging platform last year, to see that e-commerce businesses are betting big on social.

Across the way, social platforms are finally starting to monetise the retail opportunities that their platforms create. Alibaba’s Sina Weibo investment was seen as an effort to see off competition from its big rival, TenCent, and its messaging app WeChat, which is increasingly active in e-commerce and has a staggering 300 million users. In other parts of the region, fast-growing messaging apps like KakaoTalk and Line are partnering with retailers by offering official shopping channels, discounts and flash sales.

Meanwhile, “social first” e-commerce startups are building their businesses right in the area of convergence between social and retail, whilst payment providers like Doku and service providers like aCommerce and Shopify are cashing in on all of this activity.

Let’s look at some of the investments, acquisitions, partnerships and startups that are leading the social commerce revolution in Asia.

Who?

What?

Social grabbing a piece of retail

TenCent It’s no wonder that Alibaba is investing in social. A clear challenge is coming from its big Chinese rival, TenCent, and its WeChat messaging app, which has around 300 million users. In November 2013, device manufacturer Xiaomi managed to sell 150,000 units of its Mi-3 device in less than 10 minutes – exclusively via WeChat. And much more established businesses are also working closely with WeChat in the social commerce space. Chinese McDonalds fans can now pay for their meals via WeChat.
Facebook, Instagram, WhatsApp Facebook is having a good deal of success with so-called “F-Commerce” in the region, taking advantage of the absence of global players like eBay and Amazon. Thailand is a good example. There are 24 million Facebook users in the country. Small and medium sized operators are using the platform to sell an ever-increasing range of products and merchants are now starting to invest in advertising on the platform. The company’s incredible $19 billion acquisition of WhatsApp will see it move into messaging apps and, one imagines, a broader range of social commerce opportunities. The acquisition also hit the share prices of the platform’s Asian competitors, like Line and WeChat.
Line Japan’s Line messaging app, with its estimated 300 million users, is moving ever-further into retail. In December 2013 it began rolling out Line Mall, a C2C retail platform. It has also been striking deals with retailers to enable them to sell products through channels on the Line platform. For example, in late 2013 it arranged a flash sale for L’Oreal’s Maybelline New York brand that sold out within 13 minutes. Japan’s Rakuten also uses the Line platform to promote sales on its Tarad platform in Thailand.
KakaoTalk The Korea-based messaging platform KakaoTalk is active across much of the region. Like Line, KakaoTalk has partnered with retailers to give them access to its more than 100 million users. The likes of Groupon, Pizza Hut and Zalora are now all on KakaoTalk.

…while retail gets ever more social.

Alibaba Where do we begin? Alibaba is betting big on social in an effort to see off the challenge from social rivals like TenCent (makers of WeChat). In 2013 it paid $586 million for an 18 per cent stake in microblogging platform Sina Weibo. Soon after, ads for Alibaba’s Taobao store appeared on the platform. Meanwhile, it is putting the full force of its promotional machine behind its own messaging app, Laiwang, which now attracts over 10 million users a month (although it is still a long way behind WeChat). Expect more of this to come from China’s e-commerce behemoth.
Rakuten Japan’s Rakuten took another big step into social in early 2014. Its $900 million acquisition of messaging app Viber gives it access to the platform’s roughly 300 million users. Rakuten has been looking at social for a while. Back in May 2012 it led a $100 million investment round into Pinterest. “We live in an era where consumers are more social, interactive and empowered” – that’s the view of CEO Hiroshi Mikitani and his company’s strategy is a good reflection of that.

Opportunities opening up for a new breed of “social first” offerings

500Trends This Bangkok-based startup is typical of a new breed of retail platforms that are going “social first”. 500Trends allows users to clip products they like, whilst retailers can post items them want to promote for users to follow.
Ticket
Monster
The Korean daily deals platform has been acquired by global internet giants twice in three years. Back in 2011 it was acquired by LivingSocial for an undisclosed sum. In January 2014, LivingSocial sold TicketMonster to its big daily deals rival, Groupon, for $360 million. The business has around 4 million active customers and $800 million in annual revenues.
Klip.in Klip.in is an India-based social shopping platform startup. It has been described as a kind of “Pinterest of e-commerce” and the main focus of the service is on enabling product discovery. It secured its first funding round in 2013.

…payments

Alipay Alibaba’s relationship with microblogging platform Sina Weibo extends to payments. Early 2014 saw the launch of “Weibo Payment”, which is basically a deeper integration of Alipay into the Sina Weibo platform. Users can connect their Alipay account with their Weibo account, buy products and then talk about them with their friends.
TenPay TenCent has its own payments offering in the form of TenPay. A good example of the platform in action is the tie-up with McDonalds – users can now use TenPay to pay for their lunch.
Doku In 2013, the Indonesian payment platform launched MyShortCart, which is targeted primarily at the operators of blogshops and F-Commerce sites.

…and service providers.

aCommerce Some of the biggest challenges for social commerce (and, indeed, e-commerce generally) in Asia are logistics and payments. That is where aCommerce comes in, providing end-to-end e-commerce solutions. Perhaps its highest-profile deal to date was the Line / L’Oreal deal for the flash sale of Maybelline New York products in Thailand.
Shopify, BentoWeb, Square.my, Page365, Instapps Startups like these across the region aim to provide an “all-in-one” solution for blogstores, F-Commerce and SME websites. 

In the end, all of this activity comes down to one thing: the staggering number of Asian consumers who are using social platforms daily to communicate and socialise.

For e-commerce companies, the enormous popularity of social platforms simply cannot be ignored. The cumulative userbase in Asia of the platforms mentioned above can be counted in the billions. E-commerce giants like Rakuten and Alibaba clearly see the potential for social platforms to give them a direct dialogue with an army of potential customers across the continent. Of course, moving further into social gives them access to even more user data. With the data protection shake-up happening across the continent, as new countries pass data protection laws (many for the first time), these platforms will need to carefully manage how they collect and process all of this data.

The social platforms, meanwhile, are finally developing commercial models to monetise their enormous userbase. Line, TenCent, KakaoTalk and of course Facebook are increasingly reaching out for those retail dollars. And the more they do that, the more the e-commerce platforms will reach out for the social platforms’ userbase or even seek to invest in or acquire the social platforms themselves.

2014 should see increasing investment in social, increasing competition, new retail/social partnerships and more acquisitions and investments, as social and e-commerce businesses battle for the same customers in an increasingly-crowded marketplace.

 

Credit to Tech in Asia and e27 for their great research into some of the smaller startups mentioned above.

Matt Pollins

Author: Matt Pollins

Matt is an international technology, media and telecoms lawyer and Head of Commercial and TMT at CMS in Singapore. He supports clients across Asia-Pacific. You can contact Matt via the "Contact" page. Views expressed on Connected Asia are those of the author. Nothing here constitutes legal advice or creates a lawyer-client relationship.

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