A year after its launch as a WeChat mini-program, Xiao’e Pinpin was officially upgraded by Tencent into a full-fledged app in its own right.
Introduced as a not-so-obvious imitation of the exceptionally popular Pinduoduo platform, Xiao’e Pinpin has slowly gained traction in China’s cutthroat arena of ecommerce, avoiding the fate met by Tencent’s earlier ventures.
Since both sites incorporate key features of social commerce into their shopping models, the success of Pinduoduo, as well as the arguably unexpected breakthrough of Xiao’e Pinpin, provides an interesting consideration for the ecommerce titans of Southeast Asia.
Social commerce: Not just an upgraded Groupon
Mention Pinduoduo or Xiao’e Pinpin in any conversation and most online shoppers will effuse enthusiastically about the bargain discounts (yes, I’m one of them) that they have secured by forming groups to bulk purchase products. Yet, while bulk buying is the most prominent element, it’s only a snapshot of what social commerce is really about
Read similar article: Community group buying in China
(To clarify, group buying takes on many forms in Asia and Pinduoduo’s bulk-purchasing model is arguably its best-known iteration. To find out more about group buying, do look out for our Blooming ecommerce in Indonesia report which comes out in June!)
Think of social commerce as the retail experience dreamt by social media visionaries, where the people in our finely-tuned social networks not only share the same interests but also support the same brands.
Simply put, social commerce focuses on shopping as a social experience, with platforms ultimately aiming to facilitate social interactions and cultivate exclusive social networks among their online shoppers.
In plain business terms, it means lower customer acquisition costs.
What made Pinduoduo’s original “team purchase” model so successful, beyond the billions of dollars spent on subsidies, was the monopolised social networks it tapped upon. Since Taobao links were banned on WeChat (Tencent also happened to be Pinduoduo’s biggest investor), the latter became an uncontested channel for Pinduoduo and its products when consumers took to social media to form buying groups.
Tencent had tried to monetise its vast consumer traffic with its own ecommerce ventures before, and all of them ended in failure. It even caused some tech commentators in China to argue whether Tencent lacks the ‘ecommerce gene”.
Xiao’epinpin is a new attempt and we believe it is not exactly used to compete against Pinduoduo, but more to fend off ByteDance’s own ecommerce efforts. Early numbers of Douyin (Chinese version of TikTok) sellers that we have seen look very promising.
Tencent, as the biggest consumer traffic generator in China and facing the challenge of ByteDance as an upstart, would obviously not want to put all their eggs in one basket.
The stage is set … (right?)
How about Southeast Asia, where TikTok is also experimenting with ecommerce?
For group buying at least, the groundwork has already been set. Both Lazada and Shopee have already experimented with bulk purchases in their shopping model, having included a group buy feature, similar to Pinduoduo and Xiao’e Pinpin, into their respective apps.
Yet, despite the promise of social commerce and the foundations in place, we remain doubtful over whether Shopee and Lazada will make any significant forays into the area.
The reason is simple: There isn’t a super app quite like WeChat, which combines elements of e-commerce and social networking, in Southeast Asia.
Like other social media platforms, WeChat possesses integrated chat functions, live video feed, and other features that allow users to share with their networks and discover other social networks.
At the same time, WeChat, with its unique ecosystem of mini programmes, also fulfils the functions of e-commerce, since it can be used for a diverse range of online transactions, including monetary transfers, payment of bills, and online shopping.
Because of its integrated features, WeChat creates a more frictionless environment for e-commerce compared to Facebook, Whatsapp, and other chat platforms popular in Southeast Asia.
This friction between social media and ecommerce matters because ecommerce platforms such as Shopee and Lazada cannot generate traffic by themselves – they can only consume the traffic generated by and redirected from social media platforms. In other words, for Shopee, Lazada, or any other platform in Southeast Asia to properly do social commerce, it would take much more effort.
Unfulfilled promise or pipe dream?
Although social commerce has grown rapidly in the past few years, we believe that it still requires time to further mature. Despite the foundations in place, there remain too many unanswered questions for e-commerce platforms in Southeast Asia.
As such, while social commerce does hold promise, the jury remains undecided about whether Shopee and Lazada will dive headfirst into this retail trend.
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Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].
