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Walmart and Facebook are taking social commerce cues from China

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Last week, Walmart announced its plan to join Microsoft in purchasing TikTok, causing understandable confusion as to why a retailer is interested in acquiring a video-sharing app. But Walmart's decision makes a lot more sense when looking at how TikTok's Chinese counterpart Douyin has embraced social commerce.

retail social commerce sales in China and the US 2019 2023
eMarketer

In 2018, the app partnered with Chinese ecommerce giant Alibaba to introduce a shopping feature, allowing creators on the site to promote and sell products via their videos; more recently, the app introduced even more ecommerce elements like native storefronts and product search features. Walmart's potential plans for TikTok would follow a business model that's already proven successful in China.

And Walmart isn't the only one—Facebook's Shop rollout introduced a live shopping element similar to China's Taobao Live. Last Tuesday, Facebook began its rollout of Facebook Shop, a dedicated ecommerce section within the app. But the shopping itself isn't where Facebook could be taking cues from China—it's the integration of shopping with Facebook's existing social features, most notably Facebook and Instagram Live.

The new Live Shopping feature will let businesses go live on either platform and feature products from their Shops, which customers will be able to purchase directly from the video. It's similar to Alibaba's live streaming service, Taobao Live, which has seen incredible growth during the pandemic. During the peak of China's lockdown in mid-February, streaming events on Taobao Live more than doubled, up 110% year over year, according to Alibaba data provided to Caixin.

Because social commerce is still not as popular in the US as it is in China, there's significant room for growth. This year, we expect US retail social commerce sales to reach $23.26 billion—less than a tenth of China's $242.41 billion. But the category is growing quickly, especially with so many businesses spurred to digitize their operations due to lockdowns. We expect US retail social commerce sales to accelerate significantly next year, growing by 34.8%, up 15 percentage points from the 19.8% growth we expect this year. 

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