the future is now

Forget Silicon Valley, on social commerce you need to look East Asia

The roadmap and the future of Social Commerce are clearly set by the Asian players. For us in the West the race has only just started, and it will be interesting to see who will be the winners and even more so with which business model

di Alfonso Emanuele de Leon *


4' di lettura

Buried amongst the various updates in the latest IOS 13 refresh from Apple, there is a new function called Business Chat. It is a small function that pops up when you search a company on the web and on the maps and it suggests the icon “message” to chat directly with the company instead of ringing them. At today, the very first ones available for trial are companies like Burberry or the hotel chains like Four Seasons, Hilton and Marriott.
It was about time that companies pursued more modern and efficient ways to engage and interact with their clients, replacing the impersonal mass spam emails and the long waits at the call centers with something a bit more immediate and personal.

However, beyond optimizing the efficiency of the relationship with their customers, in reality with the Business Chat Apple is taking the very first baby steps in what is called Conversational Commerce and Social Commerce, trying to catch up with some Asian players who are probably ten years ahead of Silicon Valley. Who are these Asian benchmarks?


The first one is the most known one, the Chinese monster-app WeChat, with more than a billion users in China, basically covering 100% of the Chinese netizens. Born only in 2011 from Tencent, one of the three Chinese digital mega-groups (not to be confused with Alibaba), WeChat was originally the Chinese version of Whatsapp, but very soon it started bundling in thousands of functions making it a monster-app. Here's WeChat great innovation: within one single app there are embedded more than 600.000 mini-apps to allow every day 170 million of Chinese people search and purchase products and services, manage their daily life, payments and social relationships.

To better understand the vertical integration of the WeChat ecosystem, it is really worth spending few minutes to watch the New York Times video which explains how WeChat managed to basically bundle in a single app all the functions that in the West we find on multiple apps. It is like merging in one app Whatsapp + Instagram + Facebook + Paypal + Skype + Uber + A mazon and so many more functions that don't even exist in the West. The video is staggering, don't miss it.

But if you really looking for the world class benchmark of Social Commerce, you need to go a bit further east in South Korea and discover the app that at today may show the way of what Facebook and its own Whatsapp could become one day. Ladies and Gentlemen, please allow me to introduce you to Kakao Talk and Kakao Gift. Kakao Talk was born in 2010 and it quickly became the most common messaging system, expanding then into Kakao Stories (their equivalent of Facebook) and becoming so popular and pervasive to the point that in South Korea it opened a dozen of mono-brand freestanding stores selling their emoji merchandising.

Kakao Talk (200 million users and 49 million active users every month) not only covers 100% of the South Korean population, it has become an international brand, translated in 15 languages. The innovation that also makes Kakao the world class benchmark in Social Commerce is their small e-commerce division Kakao Gift. Born almost as a fun venture, in few years Kakao gift has become a 2 billion dollars start-up and its beauty lays in the simplicity of the business model based on impulse purchase on the Kakao Talk messaging app. How does it work?

In some ways Kakao Gift is the online and e-commerce version of the old Hallmark gift cards, it's all about occasion gifting. Did a friend of yours did a small favor to you or you just want to give him a small thought? You can gift him a Starbucks coffee through a voucher delivered on the Kakao Talk messaging app. One of your team members stayed up late working last night? You can have delivered at his/her place a “Stress Fix” essential oils kit to relax. You just received an alert that it is a friend's birthday and you want to send him or her a present? Kakao Gift can solve the problem in one click.

Instead of interacting on an unknown app or website, where we need to key in our address and the one of our friends, where we need to trust them our credit card number hoping that it does not get cloned, etc… in Kakao Gift all of this happens with one click on the app we already use every day, and the charges are processed through our regular phone bill. The two key words to explain the innovation and success of Kakao Gift are simplicity (one click ecommerce) and intimacy to perform this though a platform we use every day via an invoicing system already set and trusted by us.

From this point of view WeChat and Kakao Gift are way ahead in Conversational and Social Commerce not only of Whatsapp, but even of the first timid steps of Facebook and Apple. So, if there is so much white space to develop and conquer, what are the opportunities in our markets in the West?

1. In first place the opportunity is clearly there for e-commerce companies to link up with emerging chat apps to develop impulse purchase leveraging their natural traffic.
2. Conversely I also see an opportunity for local companies that already own large databases of users with whom they have a regular invoicing relationship. I am thinking about phone and cable/pay tv companies, banks and, why not, also every kind of utility company.
3. And in general whichever company or app that has a solid daily traffic could start testing and learning in social commerce in partnership with emerging chat apps.

The roadmap and the future of Social Commerce are clearly set by the Asian players. For us in the West the race has only just started, and it will be interesting to see who will be the winners and even more so with which business model. And for once for the inspiration we will need to look East rather than at the Silicon Valley.

* Alfonso Emanuele is partner at FA Hong Kong Consulting

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