Tencent Can Only Go Far in China’s Social e-Commerce
- On August 24, 2020
- China social e-commerce, social e-commerce
Tencent has repeatedly run into walls in the field of social e-commerce, causing lots Chinese to not be optimistic about Tencent’s development in China social e-commerce. However, perhaps only Tencent can go far in the field.
The social e-commerce industry has been growing for many years, but few outstanding ones. In the past 6 months, Tencent has invested a lot of resources in social e-commerce, such as the Goose groupon for social group purchases, and WeChat small stores.
Based on the social e-commerce environment, Goose groupon has taken a different path from Pinduoduo. From the perspective of product experience, it is very similar to Pinduoduo, but from the perspective of industry development trends, consumers do not want a new Pinduoduo.
The interests of all parties to the transaction
What transaction value can social e-commerce bring to consumers? Or in other words, why don’t users go to Taobao Jingdong to buy things, they have to come to social platforms to buy things?
When consumers are faced with shopping choices, if the benefits are the same, the cost is the only consideration. If the costs are the same, high returns are better than low returns. Of course, it would be better if low cost can be used to obtain high income. Therefore, when it comes to transactions, what consumers care about is the comparison of costs and benefits.
If you can use less time or money to obtain goods of the same quality as Taobao Jingdong, or even better than Taobao Jingdong’s quality, then this will be irresistible to consumers.
In a nutshell, the motivation for consumers to choose new platforms must be because users can obtain high-quality goods at a cost.
Low decision cost
Low decision-making costs include two core measurement units for users: time and money.
Low cost in time is the efficiency of user selection. Compared with Taobao Jingdong, a search-based centralized recommendation e-commerce company, users need to spend a higher time cost and certain purchase risk behind the purchase. Social e-commerce relies on social relationship chains, and acquaintance endorsements solve the problem of choice and trust in the purchase process. Acquaintance endorsement comes in two ways, one is that acquaintances actively recommend to consumers, and the other is that consumers see what they are using.
The monetary cost is the monetary price that users need to pay to purchase goods. This is a necessary condition to divert consumers’ attention from Taobao Jingdong, and it is also a value standard for measuring acquaintances. Once found to be deceived, the relationship loses the value of endorsement.
Providing high-quality goods is the meaning of the resource allocation of the trading platform, and it is also the fundamental purpose for consumers to choose the platform, and it is the key point for competition with other e-commerce platforms. Combining the low decision-making cost given to consumers by the advantages of social relationships, social e-commerce platforms do not need to over-pursue better than other e-commerce platforms in the supply of goods, as long as the products are not bad, they can build attractiveness to consumers.
Therefore, the demand of consumers is to use the least time or money to obtain goods that are not inferior to other platforms. This is the value of the existence of the new trading platform.
Since social e-commerce relies on acquaintances to endorse, why are acquaintances willing to endorse? Willing to act as a platform promoter?
The motivation for this behavior is interest-related. The benefits here may be to help save money, earn extra money, and earn commissions.
There are two key words here: relying on social relationships and gaining benefits.
Friends believe that behind the trust endorsement of the promoter, the personal credit of the promoter is protecting. For each individual, the relationship that can play the role of trust and endorsement is limited, so the profit channel of the promoter is in the limited relationship chain.
Since it is a limited chain of relationships, reuse is an inevitable requirement. If you want to reuse existing relationships, you must focus on two aspects: social image and relationship maintenance.
Social image is to create personal credit and is the basis for the trust endorsement of friends. The social image is the different levels of social interaction, like the level level and the level below oneself.
The same level refers to the level where the living environment, consumption ability, and consumption concept are similar to oneself. Needs are determined by people’s desires, and desires come from the living environment, personal abilities and concepts. Friends at the same level often have similar needs.
You can endorse acquaintances at a lower level because people worship the strong. The consumption pursuit of excellent people is often the social norm.
Relationship is based on personal credit and image, which profoundly affects the behavior of friends. The transmission of personal credit helps to strengthen the trust of friends in individuals.
For the promoter, whether he is for the purpose of saving money or sharing money, he is benefiting from a limited trust relationship. This requires the reusability of relationships, and the need to continuously strengthen the construction of social images and social relationships.
The existence of promoters only solves consumers’ demands for lower decision-making costs in terms of time. In terms of money, low cost and good product quality also depend on the product supply chain.
So what are the interests of suppliers?
Traditional e-commerce is based on search and takes a centralized recommendation route. The inevitable problem is the Matthew effect, which is the top effect of the Internet. At this time, the unremarkable supply chain value cannot be fully reflected, which has caused most of the suppliers to be buried in this era.
Regardless of the type of supplier, it is necessary to find a sales channel that is different from traditional e-commerce and is visible to everyone. For non-brands, it is looking for a way out. For suppliers, the core demands are: sales volume increase and cost control. Cost control is the basis of profitability.
4. E-commerce platform
The purpose of the e-commerce platform is to gather as many consumers and suppliers as possible to trade on the platform. The way to achieve this goal is to satisfy the interests of all parties and improve the matching efficiency between the supply and demand sides, that is, the management of the supply and demand relationship. This is reflected in three aspects:
- Satisfy consumers’ demands to purchase high-quality goods at low decision-making costs.
- Help suppliers increase sales and cost control.
- Create social value for promoters.
In such a transaction relationship, the important work of social platforms is to integrate the supply of suppliers, make good use of promoters, and serve consumers.
The entry point of social e-commerce platforms
1. What will happen to users’ purchasing needs in the future
Behind how consumers buy is the pursuit of reasonable purchases. Reasonable buying is not a partial pursuit of low prices, but an optimal solution that fully combines one’s own needs, product value, and reasonable price. Behind reasonable buying is the pursuit of high cost performance.
2. What service does the supplier provide
Demand determines production. Since users pursue reasonable purchases and pursue cost-effectiveness, the platform should integrate the supply chain from this perspective.
The essence of trading is to allocate market resources. The use of resources must pursue high efficiency. Good products must be sold at a good price to promote the healthy development of the supply chain. On the issue of cost performance, not only consider the demands of consumers, but also the sustainable benefits of the supply chain.
The essence of e-commerce transactions is to pursue the optimal allocation of resources, and in addition to algorithmic empowerment, the most effective way of resource matching is to rely on social relationships. The social relations of acquaintances have the characteristics of gathering things together and dividing people into groups. This acquaintance relationship is more reliable than the algorithm in matching accuracy and demand forecasting ability.
Although all social e-commerce platforms are relying on social relations for promotion. Purely using the social environment to make transactions is not good for the promotion of the social image and the construction of social relationships. This is precisely what Tencent’s WeChat is good at, and it is also the key to the inability of other social e-commerce platforms to compete with it.