Digital has become the new normal in many aspects of our lives today, especially in how we shop. Southeast Asia has one of the fastest-growing internet economies in the world, with a value projected to reach US$360 billion by 2025.
Thailand's e-commerce industry is flourishing, with a plethora of online channels available to consumers, such as e-commerce marketplaces, mobile-commerce and even livestream shopping.
To stay ahead of the curve, brands and retailers must deliver a seamless experience to consumers, who are also seeking a more authentic shopping experience and exploring avenues that are more socially engaging.
This has fuelled the rise of social commerce nationwide. Simply put, social commerce is the selling of products and services directly through social media. While the concept isn't new, it has really picked up steam in the last couple of years. It is even being touted to eventually succeed "traditional" e-commerce -- but will this really be the case?
Thailand has 56.8 million active social media users, with at least 36.6 million of these users purchasing consumer goods online. Shopping is a social experience, even if we don't realise it.
We rely heavily on reviews and comments from other users before deciding on a purchase, demand responsiveness and transparency from sellers when asking questions or giving feedback, and enjoy sharing pictures of our recent purchases.
Social media facilitates these two-way interactions, creating conversations and even communities around brands. If done well, this potentially harmonious joining of e-commerce and social media opens many opportunities for brands to generate more direct revenue.
Mini-programs within apps allow users to purchase items within their social media experience, making it more seamless and convenient. In this context, Line is a leading example, with a strong customer base of at least 7 million Thai users who are engaged with Line Shopping on the platform.
While they serve different markets, Facebook and Instagram have been quick to follow suit by rolling out in-app features such as Facebook Shops and Shopping on Instagram Reels. These allow customers to easily browse, order and even list products for sale, reducing the friction of the shopping experience.
EARLY STAGES
At first glance, it seems obvious that social commerce would be the natural evolution of e-commerce. Yet, social commerce is still in its early stages and has limitations.
One hurdle is that social commerce is mostly limited to larger platforms, and even these are just beginning to embrace it. For instance, Instagram only very recently introduced shopping on Instagram Reels. TikTok launched TikTok Shopping in November 2021. There's still some way for social commerce to be more ubiquitous across social media and become a mainstream purchasing channel.
People still think of social media as a place to socialise and discover products and services rather than do their actual shopping. While social media undeniably helps brands reach and engage with more customers, a study showed that only 23% of Thai users shop regularly using social media platforms. This may be partly attributed to shoppers having more privacy concerns on social media. In 2021 alone, the Ministry of Digital Economy and Society (DES) reported 20,000 cases of online shopping fraud.
E-commerce platforms showcase thousands of brands in a single place, giving consumers a wide range of choices. They also streamline and personalise the shopping experience by using cookies to offer recommendations based on browsing history and user interests.
Social commerce, on the other hand, centralises the experience around individual brands and their products. Users who aren't looking for specific brands may find it more time-consuming to search for what they want and compare prices.
Additionally, online marketplaces, as their name indicates, are designed with the sole purpose of enabling the best e-commerce experience. They provide important infrastructure to sign up and screen sellers, as well as facilitate customer support, payment and order processing.
In contrast, social media, and thus social commerce, focuses on reach and exposure -- getting views for your products or services and building purchasing intent.
BACK-END SUPPORT
But once a user moves from "I want" to "I will buy", the purchasing experience for the buyer, as well as the experience for the seller, is far from that provided on a marketplace.
This disparity in back-end support is even more pronounced when comparing the availability of third-party digital solutions. Software companies provide solutions that facilitate end-to-end operations for online sellers thanks to direct integration with marketplaces, webstores, logistics providers and related services. However, they are designed to be used on e-commerce platforms and are not yet ready to integrate with social commerce.
While social commerce does have inherent advantages in personalised customer engagement, it still lacks the intelligent and intuitive features of more mature e-commerce platforms.
The absence of built-in back-end infrastructure for social commerce means customers are often redirected to third-party websites (marketplaces and webstores) where they enter a whole new funnel, resulting in a high-friction experience.
Having said that, social commerce does get some things right and e-commerce is taking notes. A big draw is that social commerce facilitates two-way communication between customer and seller.
E-commerce platforms are striving to offer similar engagement elements such as Q&A sections and improve management of customer reviews. We also foresee that management platforms will expand to include social media channels for a holistic digital marketing strategy.
As the e-commerce market expands, more brands and businesses will have to incorporate a social approach for maximum customer experience and engagement. Perhaps by the end of this decade, social commerce will become the shopping choice of the future.
Adrian Tan is country head for Thailand of Anchanto, a multichannel e-commerce sales solutions provider.