E-commerce in the Web3 Era: From Digitalization to Social Commerce and Future Technologies
In today’s digital age, social media has become an integral part of our daily lives, impacting how we connect, discover, and consume information. It is remarkable that the average individual interacts with approximately 6.6 social media platforms, underscoring the widespread usage and influence of these platforms. As of March 2023, there are approximately 4.9 billion social media users worldwide, and this number is projected to reach 5.85 billion by 2027*. With such a massive Monthly Active Users (MAU) base and consistent annual growth, businesses cannot afford to overlook the immense potential offered by social media. It is crucial for brands to recognize and capitalize on this opportunity to connect with their target audience effectively. Despite Meta’s recent decision to step back from Instagram’s social shops, social commerce remains vibrant and thriving across various other platforms, thanks to a multitude of features and functionalities.
Luxury and retail brands are at the forefront when it comes to embracing Web3 and NFTs, positioning themselves as the pioneers in this emerging technology landscape.
*Statistics are based on available data up to March 2023 and projected figures for 2027.
Understanding Social Commerce: Enhancing the Shopping Experience and Expanding Audience Reach
In the realm of online shopping, social commerce has emerged as a transformative concept. It encompasses a shopping experience that integrates elements of real-time interaction between brands and their followers, creating a dynamic and engaging environment.
Social commerce goes beyond traditional e-commerce by creating a seamless shopping journey, from product discovery to checkout, directly within the social media platform. It offers a convenient and immersive experience, allowing consumers to explore, engage, and purchase products without leaving their preferred social media platforms.
This innovative approach brings forth a range of features that enhance the social commerce experience. For instance, live streaming enables brands to showcase products in real-time, engaging with their audience and offering immediate feedback. Additionally, live tipping or gifting options add a personalized touch, fostering a sense of connection and gratitude.
Moreover, social commerce leverages direct links to brand websites, facilitating effortless transactions and ensuring a cohesive online experience. By providing a direct path to purchase, brands can optimize conversion rates and streamline the buying process.
Given the remarkable potential of social commerce, luxury and retail brands are well-positioned to leverage this transformative trend. Their exposure and experience in utilizing social media platforms for social commerce, coupled with their established brand presence, make them ideal candidates for embracing Web3 and exploring the metaverse.
In conclusion, social commerce empowers brands to create immersive shopping experiences, reaching wider audiences through seamless integration with social media platforms. As luxury and retail brands embrace this evolving landscape, they can unlock new opportunities for growth and enhance customer engagement in the digital realm.
Embracing Web3 and Expanding Social Commerce: Transforming the E-commerce Landscape
As the e-commerce landscape evolves from Web2 to Web2.5 and Web3 experiences, leading brands are recognizing the importance of this shift and swiftly immersing themselves in decentralized environments. Web3, in particular, empowers brands to innovate rapidly with concepts like community engagement and ownership.
One of the powerful strategies brands employ is social selling, which not only enhances customer engagement but also leads to increased revenue. In 2022, Southeast Asia accounted for 25% or USD 42 billion of the e-commerce market’s gross merchandise value (GMV). Interestingly, this region also experienced the highest surge in social media users during the COVID-19 pandemic. Around 55% of internet users in Indonesia and Thailand now make online purchases on social platforms, with an average spend of USD 100-USD 180 per user annually.
This exponential growth in e-commerce GMV can be attributed to the adoption of social commerce practices. Brands effectively utilized new features and seized selling opportunities to counter the lockdown crisis. Conversational commerce, social platform commerce, livestreaming shopping, and community group-buying emerged as popular channels for users to connect with others and make online purchases.
Several factors have influenced consumers’ buying decisions in social commerce:
- Engaging user experiences facilitated by influencers, creating more immersive interactions.
- Easy connectivity and transparency between buyers and sellers, fostering trust and credibility.
- Seamless user experiences within the app, from product discovery and research to seamless in-app purchases.
- Trust developed through reliable fulfillment and effective communication from sellers, building a sense of security and satisfaction.
In conclusion, as technology progresses and Web3 becomes more prominent, brands that embrace social commerce stand to gain significant advantages. By leveraging social selling strategies, capitalizing on the growing user base in Southeast Asia, and ensuring seamless user experiences, brands can tap into the immense potential of social commerce and drive substantial growth in the e-commerce market.
Louis Vuitton, a renowned luxury brand, recognized the potential of live streaming as a vital tool for social commerce. In March 2020, Louis Vuitton became the first luxury brand to embrace live streaming for sales on Little Red Book (Xiaohongshu). Other brands quickly followed suit, and for good reason. The social commerce sector in China alone reached approximately 2.5 trillion yuan in 2021, with an expected 10% increase, according to Statista. These figures indicate the immense potential of the market for digital fashion wearables, augmented reality wearables, and phygital goods. Additionally, the sales of Fashion NFTs reached a staggering USD 245 million in 2022. Despite concerns about the ban on TikTok in the United States, the platform has recently announced its partnership with Cymbio, a solution that facilitates brand selling. With 834.3 million monthly users worldwide, TikTok remains a formidable player in the social commerce landscape.
The Growth of Social Ecommerce: Technology and Covid-19 as Catalysts
Social ecommerce has experienced significant growth, driven by advancements in technology and the impact of the Covid-19 pandemic. Technological factors such as data-led targeting, in-app stores, advanced chatbots, and evolving ecommerce experiences have played a key role in fueling this expansion.
The Covid-19 pandemic has accelerated the adoption of digital channels, making online shopping more crucial than ever. As people spent more time at home, social ecommerce provided a convenient and safe option, resulting in a substantial increase in online shopping activities.
Moreover, Covid-19 has also propelled the rise of Web3, NFTs, and the Metaverse, with the gaming industry serving as a foundation for these emerging technologies. This convergence of factors has further boosted the growth and adoption of social ecommerce.
In summary, social ecommerce has thrived due to technological advancements and the transformative effects of the Covid-19 pandemic. Brands that embrace these changes and leverage social platforms are well-positioned to capitalize on this trend, delivering enhanced shopping experiences and reaching a wider audience.
1: GMV estimate includes all transactions where product discovery, evaluation, and selection happen on the social platform (payment may or may not happen on the same platform)
The shift from Web2 ecommerce to Web2.5 and Web3 has been remarkable, with decentralization forming the foundation of Web3 and revolutionizing the consumer experience.
In this new landscape, marketers and customers are encountering novel concepts like ownership, community, decentralization, and innovative activations such as gamification and co-creation. To grasp the impact of decentralization, one can observe how companies like AirBnB and Uber have transformed the traditional centralized model through the introduction of the sharing economy. This model enables individuals and groups to monetize their underutilized assets, with companies like Uber acting as intermediaries without owning physical assets and the asset providers not being direct employees of the company. The sharing economy serves as a precursor to the current developments in Web3.
Loyalty programs offer some of the best examples of Web3’s potential and its evolution thus far. By leveraging blockchain and Web3 principles, brands are creating new forms of loyalty programs that captivate customers and engage fans, all while embodying values like ownership, equality, equity, and privacy. This resonates particularly well with the emerging Gen Z consumers, who value these principles. Ecommerce has democratized technology, allowing both sellers and buyers, as well as brands, to benefit from this new wave of consumer preferences.
One of rounded up a few of the most notable (or entertaining) Web3-adjacent retail experiences from 2022:
Nike leads the way: After purchasing digital-sneaker company RTFKT in December 2021, Nike was all-in on Web3 in 2022. In November, the athletics brand announced its new Web3 platform, .Swoosh, which will allow users to collect digital apparel like jerseys and shoes, unlock access to physical events, and to co-create virtual merchandise. As of mid-December, the platform is still in beta mode.
Web3 and Digital Fashion Today
The current retail market is still catching up with the possibilities that Web3 can open up for them. Top brands have begun venturing into the Web3 space, with events like Metaverse Fashion Week showcasing the potential.
The Rise of NFTs and Fashion
During Metaverse Fashion Week, NFT sales volume and prices witnessed a substantial increase, emphasizing users’ interest in fashionable wearables. Brands and consumers alike are exploring the possibilities and potential of NFTs in the fashion industry.
Embracing the Web3 Journey
Web3 offers endless possibilities for the fashion industry, but brands need to adapt and pay attention to the changing landscape. Staying updated with new technology and understanding customer motivations are key to success in this evolving scenario.
Integrating Web3 into Ecommerce
Ecommerce brands should carefully consider how Web3 can enhance customer experiences and operations. By leveraging data and analytics, companies can navigate the transition from Web2 to Web3, innovating their products and services to meet changing consumer demands.
Web3 and Luxury Brands
Luxury brands can not only survive in the Web3 era but also lead in effectively engaging with customers. Building communities and utilizing immersive experiences like avatars can create stronger connections and elevate the customer experience. NFTs present opportunities for long-term strategies and community building.
Moving Forward with Web3 Integration
To integrate these new elements, brands must closely examine customer purchase motivations and innovate their offerings. Adapting to the evolving landscape and leveraging data and analytics will help companies thrive in the Web3 environment.