Social Commerce in Taiwan Now Outpaces Traditional Ecommerce
Market now worth US$ 8.39 billion still held back by lack of regulation
Since the COVID pandemic, Social Commerce (making purchases within social media platforms), has become more profitable than many major e-commerce marketplaces in Taiwan. I spoke with Mike from the Social commerce community platform, Arkbeez about the current state of the market in Taiwan.
Social commerce is successful because it seamlessly merges retail with social content. Social platforms attract millions of regular users as destinations for entertainment and engaging with others, they already have the eyeballs. Most sales come through influencers or KOL, who can act as advocates for brands or products on their social feeds. Alternatively, they can sell through fan line groups, live streams, or flash-sales campaigns.
The last two years have shown the power that top influencers now command in Taiwan retail. For example, in June 2022, influencer Miya Jhang sold over NT$ 10 million(US$328,000) worth of products in a single 5-hr LINE Livestream, a record for the platform.
Arkbeez- Taiwan’s Airbnb of Social Commerce
Arkbeez data shows that in 2022, revenue from Social Commerce was projected to hit US$ 8.39 billion(NT$253.8 billion), which was more than twice the GMV of the countries leading e-commerce platform, momo.
Arkbeez pitches itself as the Airbnb of social commerce. Arkbeez uses AI data analysis patented technology to create the first platform in Taiwan that matches"suppliers" and "community sellers". There are nearly a thousand suppliers and more than 30,000 sellers.
Arkbeez gives in-depth granular data on influencer performance. Brands and agencies can use Arkbeez platform to learn which types of products sell well for each influencer. Influencers can also use this data to understand and improve their performance.
In this report, we discuss the current state of play and the potential for Social Commerce in Taiwan.
Social Commerce Fits a More Fragmented Taiwanese Internet
In earlier years of the internet, people were going to similar places to find information. In 2023, the internet has become more fragmented and people are congregating in a range of different places such as Discord or podcasts As internet users gravitate to their digital culdesacs, there is an opportunity to make retail more intimate and targeted, through social commerce.
Influencers, KOL or experts, or even media, are trusted by consumers for their expertise in a specific domain. This is why they are more effective at selling products to their niche marketplace.
Leading Social Commerce Channels in Taiwan
Facebook has the highest sales conversion rate of all platforms.
Instagram
TikTok is growing traction with younger consumers.
LINE is becoming more important, especially because of its live-streaming and selling to private group functionality. LINE is also very popular with over-50’s consumers
Taiwan Influencers Outpace Marketplaces
KOL are more connected to their audience and are often savvier in selling products than marketplaces or even brands themselves. Top influencers will only choose to sell quality products, which creates assurances for their fans and this trust translates to sales.
The ability to generate more revenue, has, in turn, meant that they will now commonly get exclusives on new products or promotions. They will also be able to command better retail margins than some of the marketplaces.
Social Commerce has moved from being a fringe-revenue source or promotion tool to an essential channel in the brand’s Taiwan retail strategy.
Case Study: 85% of Visitors to an Influencer’s Group Buy Event Make a Purchase
Many successful influencers don’t directly sell through their social media, and instead, use private traffic groups and events to sell products.
Arkbeez gives an example of one male influencer(name withheld) who only sells through group-buy pre-sales for selected products to his community. He never posts any commercial content on his own feed.
His pre-sales community is 3,435 people in a Line Group
For each pre-sale event, he can expect to sell out and make between NT$ 300-400 K per item sold(US$10-13K).
He has an 84.5% conversion-to-sale rate for anyone who clicks through to his event. The Taiwan e-commerce leader, momo, has a rate of 3%
Arkbeez says that the reason this influencer can generate so much revenue is that his community trusts him and also his taste in products. Not selling on his main Instagram feed, makes his fans feel that he is not completely commercially driven.
What’s Next for Social Commerce in Taiwan?
Social commerce is inescapable and growth is certain, but the question remained of how it will grow in Taiwan.
1. Push for Regulation
The biggest challenge to social commerce in Taiwan is that there is a lack of trust all around. Influencers are often burned by brands that don’t pay them the expected commission. At the same time, brands find it hard to make sure that influencers will actually make the agreed contracted effort.
From the consumer side, buying from an individual influencer creates a higher level of risk than buying from a recognized brand, retailer, or e-commerce platform. If the seller does not send the agreed products or they don’t match expectations, there is much less of a path for recourse.
This means that the biggest obstacle to mass adoption in Taiwan is effective regulation. This is kind of understandable, as in just a few years, social commerce has ballooned from being relatively niche to commanding twice the revenue of the largest e-commerce platform in the country.
A lack of regulations also means that sellers can manage to evade taxes, which gives a greater impetus for the government to take initiative.
2. Following the Professional China MCN model
The epicenter of social commerce in the world is currently China. In 2021, the market for social commerce in China reached over US$ 374 billion.
As the market has grown in China, so has the professionalism of the social commerce industry. Celebrity influencers who are able to shift millions of dollars in stock are often first chosen, trained, and managed by Multi-Channel Networks (MCNs).
MCN’s in China work directly with brands and help them to pre-screen influencers. They also provide the influencer with training and resources so that they can improve the quality of their content and grow their audience. They are the talent factories and professional agencies for the booming social commerce industry in China.
Mike from Akrbeez envisions that as the market grows, Taiwan will soon follow the China MCN model to groom domestic influencers. This is a win-win as the influencer can get introduced to bigger brands and brands are able to ensure quality and professionalism from the influencers they work with.
Interesting , so we should all become influencers or managers. Great insights