A social commerce revolution is underway in China food and drink market
In China, like many places in the world, COVID-19 has accelerated the shift to online shopping. In fact, China is the fastest-growing and largest e-commerce market in the world, the development of e-commerce has started prior to Covid-19. Besides offering products from online shopping websites, the e-commerce in China has taken up the power of social commerce and evolved to social commerce, it comes a new online retail business model combining online shopping and social activities.
Mintel data reveals that 53%of Chinese consumers* purchased food and drink products through a social commerce platform in 2020.
Social commerce, which is among one of the most popular new commerce types, has unleashed huge consumption power by leveraging people's networks on social media. It is a new business model based on enhancing consumer experiences, triggering shares and, in the end, conversion to purchase.
This shift in the retail landscape is causing brands to change the way they operate. Innovation, positioning, communications and retail strategy have had to adapt.
Disruptor brands rising through social commerce and by leveraging the 'internet thinking'
The rise of social commerce brands has paved the way for a new consumption trend. Their business models are focused on social media engagement, enhancing the consumer experience, making it becomes a part of modern life to follow, triggering posts and shares and conversion into purchase the latest trendy or trending products via ecommerce.
New disruptor brands, which are good at leveraging social commerce to engage consumers through social media, are enjoying strong sales performance and pose a threat to market leaders; this new breed of company is winning in the digital sphere. In fact, Mintel data shows that 50% of Chinese consumers** have purchased food and drink products they have learnt about from social media.
Innovation for social commerce is high frequency, novel and content driven
To succeed in the social commerce channel, a product/brand must focus on:
- high volume of online traffic; the universe of users of the particular app
- number of fans or followers of a brand or key opinion leaders
- a feature that prompts the product to go viral, ie is widely shared
Mintel’s data shows that 43% of Chinese consumers* think innovative products would trigger them to share on social media. To do well, social commerce brands have to create waves of viral content on social media platforms such as Little Red Book or TikTok. Food and drink innovation is evolving beyond typical satisfaction of hunger, thirst and cravings. Instead, it aims to function as social currency on social media for people to share and post. The pace of innovation has sped up; products created for social commerce possess viral feature(s), such as unique, impactful aesthetics, novel flavours or formats, and are launched with high frequency to fuel an online buzz
Co-branding is one of the most effective tactics to generate buzz
Products unite the features of both brands to create unconventional/interesting viral products. It also maximises the audience by combining followers. For instance, Lay's co-branded with three brands and combined the distinctive food flavour of other brands to potato chips, which triggered consumers to spontaneously share and post them on social media.
Meanwhile, Co-branding opportunities abound in categories beyond food and drink. The tactic enables both parties to extend their influence to each other's target consumers. Food and drink brands are embracing out-of-the-box co-branding with beauty and personal care, apparel and apps brands to become more active on social media.
Lay's co-branded with three brands to launch sticky rice dumpling, milk candy and duck neck flavour potato chips
Innovative packaging triggers interactions on social media
Interactive features are very effective in triggering spontaneous shares on social media. Hankow Er Chang, a domestic soda brand, generated viral spread with its Cherry Blossom Bottles. The bottle used thermodynamic ink, which shows hidden words or expressions of love after heated to body temperature.
It also launched city-themed bottles with landmarks printed on the packaging. The intention was for people to take and share pictures with the real city landmark.
What we think
Social commerce has started a new era in product innovation, retail and consumption in China. Fueled by China's developed ecommerce infrastructure, social commerce has huge commercial potential by leveraging the power of people's online networks. Product developers now need to design products specifically for this new retail environment, while the focus of communications will continue to shift away from mass-marketing and become more dynamic and content-driven.
Heytea x Kiehls avocado yogurt boboa drink // Hankow Er Chang's cherry blossom love expressing bottle
*Data source: Mintel report - Social Commerce - China - August 2020Base: China: 3,000 internet users aged 18-49Source: KuRunData/Mintel
**Data source: Mintel report - Attitudes towards KOLs - China - October 2019Base: China: 3,000 internet users aged 18-49Source: KuRunData/Mintel