The COVID-19 era is a brave new world, where value creation occurs in both the digital and physical economies.
Nearly 1.5 years have passed since we began to live with COVID-19 and how it reacts to its many variants (alpha-beta, gamma, or delta).
Individuals, communities, and businesses have found it frustrating to switch between lockdown and normal around the globe. The point of the lockdown is for the global population not to be able to toggle between pre-COVID-19 normal and lockdown.
Perhaps this is the new normal, with COVID-19 as a time marker to BCE (Before COVID Era) and CE (COVID Era).
As we live in these times, it was hard not to think about Huxley’s vision of a society that is completely planned. This society would consist of alphas and betas, gammas, and deltas. These people are genetically engineered to live pain-free lives.
As the world’s population fights against the spread of the virus, we are still far from this society. Although I am not a fan of Huxley’s Brave New World, I believe that we are now moving into our own Brave New World due to the pandemic.
The Brave New World is strongly characterized by high tech and personal touch. These are trends that were prevalent in the pre-COVID-19 period and will continue to evolve in the COVID-19 age.
Digitally, life continues. The world has to go online to do everything, from socializing to business to shopping.
13 million people in Latin America made their first e-commerce transaction. McKinsey reports that social commerce is also on the rise, with 34% of respondents saying they have used Instagram to shop based on recommendations from an influencer.
The convergence of commerce and social media is a highly exciting area for the digital economy. It’s powered by tech and personalization.
It’s not a new realization that social interactions can convince people to buy products. In-store shopping can lead to consumers discovering products and experiences through groups. When we first started social commerce 1.0, it was thought that online promotion, discovery, and interaction were not possible.
Social commerce 2.0 is now possible. It allows for high-tech and personal shopping experiences without ever leaving the comfort of your home.
Social commerce is a combination of the stickiness of online shopping with the network effects of social networks. According to ARK Invest, social commerce, which currently accounts for 5% of all eCommerce, will account for 19% of the 14.7 trillion eCommerce market by 2025.
Social selling and referral are the only options at social commerce 1.0. Ten years ago, while 12 percent of the 500 largest retailers had Facebook apps that allow shopping, none have seen significant sales activity.
Gap Inc. and Nordstrom have opened and closed Facebook stores in the last year. In general, social media posts (influencer and sponsored posts) were ineffective in driving traffic to webshops. Consumers also need to leave the platform.
In 2.0, commerce and social are layered within the same stack. The mobile screen (or any other screens for that matter) will be the point of access for all consumers to shop and socialize simultaneously.
Fintech innovations that enable payments in social media platforms, online marketplaces, and eCommerce have also revolutionized eCommerce and supercharged social commerce.
With the various social commerce challengers, consumers can now find, discuss, decide, and make a deal online.
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You can purchase directly through online marketplaces or social media platforms. We have seen more marketplaces layering on social to create an interactive shopping experience. But now, social companies are layering commerce as part of their social commerce play.
Brands will be able to create, run, and optimize their social media marketing campaigns by collaborating with major social media platforms like Shopify, Facebook, Instagram, and TikTok.
This is a huge opportunity with TikTok’s more than 100 million engaged users and Shopify’s more than one million merchants joining forces for social commerce.
Shopify, Facebook, and Instagram are currently working on Shopify’s Shop Pay function. This allows for a 70% faster checkout speed and a 1.72 percent higher conversion rate.
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Social commerce is evolving rapidly and consumers are driving the new social commerce model. In contrast to traditional e-commerce, which relies on search engines for its format, companies are developing more discovery- and feed-based formats that allow consumers to shop together in groups. This allows consumers to shop in teams and creates an interactive shopping experience that allows them to combine demand and bargain.
At the same time, it enables a Consumer-to-Manufacturer (C2M/C2B) model to bring about better forecasts for manufacturers’ production and cheaper prices for consumers. China’s Pinduoduo, which was valued at US$24billion at IPO, generates US$38m per day in revenue.
The C2B model of the site is characterized by buyers posting details about products on WeChat (China’s WhatsApp with over 1.2 billion users) to get their friends and family to purchase as a group. Discounts are more generous for larger groups. The orders are sent directly to the farmers and manufacturers, which reduces the cost and increases profits.
TechCrunch reports that “Pinduoduo’s annual GMV (gross merchandise quantity) was more than RMB100 billion (US$14.7billion) in 2017, which is around two years after its inception.
Taobao was able to reach the same milestone in five years, VIP.com in eight years, and JD in ten years. Pinduoduo has more than 343.6 million active buyers and a GMV of RMB 262.1 million, or USD 38.5 trillion.
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Live-streaming is a way to take social commerce to the next level. Influencers and ordinary people can create content and sell products or services to consumers in real-time. Some influencers can use social media platforms that have live video functions like Facebook Live, Instagram Live, and TikTok to entertain, take orders, and sell in real-time.
According to the agreement, the seller or buyer will pay for the fulfillment of the sale. Live-streaming content is perceived as more authentic and allows for immediate responses to buyer and seller questions regarding the product or services.
According to ARK Invest, streaming revenue will exceed US$390 billion in 2024. This is more than 3.5x the growth rate over 5 years. Live shopping in China is already an industry worth US$137 billion annually
These are just a few examples of social commerce models. You can also dive deep into Poshmark (a list on NASDAQ that has a market cap exceeding US$3.1 billion), Meesho from India, which raised US$300,000,000 from Softbank, Super from Indonesia, that raised USD 28,000,000 from Alibaba and Softbank, and Partipost, which raised USD 5,000,000 from Quest Ventures.
Social commerce 2.0 requires that you don’t sell the same products or use the same marketing and acquisition strategies to sell them the same products.
Bain & Company stated that social commerce is paving way for a more distributed model based on trust, community, and connection. As social commerce develops, we will see greater digital migration and expansion.
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The home is the command center of life, livelihood, learning, and leisure.
An average American household has 25 connected devices. In the Asia Pacific, each person has three devices and connections.
As a result, people are constantly connected to the internet and engage with it. They live, work and learn in the same environment. This convergence results in new customer profiles and consumer behavior. There is only one way to reach all of them: home.
Businesses need to find different channels to “break into” their customers’ homes and seamlessly send a message to their screens or smart devices. Connected homes, which are not only for customers, will soon enable businesses and individuals to have a two-way conversation.
You can purchase a home by talking to your virtual assistant. Additionally, you can hold meetings in AR/VR spaces and get another professional certificate from around the world in the same place on the same day. The future is now.
You have unprecedented control over the digital and physical worlds from your home. As Paul Chaney stated in Digital Handshake, there is a merging of electronic interactions and face-to-face interactions. This is being accelerated by COVID-19.
We are here! We are entering our Brave New World in great hopes of creating value in the digital and physical economies that grow and integrate continuously.
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