The prevalence of e-commerce and social media hatched social commerce, where goods were promoted, listed, and sold. Unlike traditional e-commerce platforms, consumers are encouraged to interact with others and create their unique content in the process of shopping. Using social network platforms as a way to bridge merchants, influencers, and potential consumers, social commerce will potentially lead the future of China's e-commerce.
China saw sheer growth in its social commerce in the past five years. The number of social commerce users reached 713 million in 2019, while its market size was estimated to surpass two trillion yuan. The social commerce industry created around 48 million jobs in China in 2019, and the number would continue to grow.
The phenomenal success of Pinduoduo marked a new era of social commerce in China. Founded in 2015, the online group-buying discounter made its way to the top 20 most valuable companies globally in 2020. The success of Pinduoduo came from its unique "team purchase" model. Users could unlock a better price by inviting their friends and family to join the purchase.
While the majority of Pinduoduo's users were based in third and fourth-tier cities in China, young females from the first and second-tier cities were obsessed with Xiaohongshu. With 300 million users, the shop-and-share platform allows its users to post content and interact with others.
Social commerce is not only the battlefield of unicorns. Traditional e-commerce giants Alibaba and JD.com also joined the competition to blaze a new trail in the saturated e-commerce market. Taobao, the biggest B2C online shopping platform under Alibaba, launched its live commerce channel to attract users, while JD.com published Jingxi, a Pinduoduo-like group purchase WeChat mini program.