The warp speed of mcommerce and social commerce adoption during the COVID-19 crisis

Grégoire Toussaint and Sophie Rassendirane, on behalf of Edgar, Dunn & Company, provide insights into the adoption of social commerce and mcommerce in times of crisis

The COVID-19 crisis has expedited significant changes in consumer behaviour. Mobile commerce and social commerce are no exception, as the number of users has increased considerably in only a few months. 

Initially considered a sub-segment of ecommerce, mobile commerce or mcommerce leverages the use of mobile phones and tablets to purchase products and services online, and it has now become a principal sales channel for merchants. The increased development of innovative apps has paved the way for more mobile users of social commerce, allowing merchants to leverage social media platforms to promote and sell goods. Social media platforms (such as Facebook, Instagram, WhatsApp, and TikTok) and super apps (such as Line, Baidu, PayTM, and Chinese players Alipay, Tmall, and WeChat) are major social platforms that have integrated social commerce capabilities. 

The COVID-19 pandemic has created an unprecedented global context that has encouraged innovation and enabled mcommerce to strengthen its market position. The restrictions imposed to prevent the spread of the pandemic have promoted online ecommerce (although overall consumption has decreased), creating growth opportunities for mcommerce. In certain countries, such as the UK, mcommerce sales are expected to overtake ecommerce retail sales by end of 2020. 

Moreover, the pandemic has been a catalyst for the demise of cash payments, as social distancing measures have boosted the use of contactless payment methods in-store, via cards and mobile wallets such as Apple Pay or Google Pay. In addition, many countries have increased contactless card payment thresholds, such as the Netherlands, where the limit doubled – from EUR 50 to EUR 100. In France, contactless card transactions saw an increase of 45% in June 2020 (compared to 2019), and Mastercard indicated that 78% of all transactions across Europe were contactless in April 2020. This change in behaviour towards cashless payments has also benefited mcommerce and social commerce, as consumers are more at ease with using their card and/or phone to complete transactions. 

Merchants have also been forced to innovate and strengthen their omnichannel capabilities. They have been required to rethink their strategy to create new points of interaction, address consumers’ concerns, and facilitate a safe customer journey. Customers are indeed looking for a new experience online or in-store (click and curbside pickup, for example). This is especially important in a context where limited physical interaction is becoming a new norm.

Case study: social shopping across different platforms

Facebook introduced several options within its different platforms to make purchases

Source: Facebook 

• Facebook shops enable merchants to create an online shop accessible within Facebook or Instagram with the look and feel of their brand. Customers can browse products, save carts, order, and pay – all within the app. 

• Instagram also provides access to shoppable stories and posts with stickers, enabling customers to browse products and be redirected to a merchant’s mobile website to finalise purchases. 

These examples illustrate how social platforms are supporting commerce, leveraging their large customer base and the significant time spent on their platforms. Consequently, social commerce is expected to take an increasing share of ecommerce and mcommerce in the coming years.

Alipay launched a livestream programme

Alipay has launched a programme that enables merchants to offer different incentives such as coupons or discounts during livestream advertising. Therefore, Alipay users can watch the livestream advertising on the Taoboa channel via their app, during which they can directly make purchases. This is an example of impulse buying directly linked to videos, which has potential to be a successful future use case. Technological improvements leveraging artificial intelligence will create innovative use cases that merchants can build on to develop new strategies and sales channels. 

Mcommerce offers many benefits to both merchants and customers. For example, merchants can target specific mobile centric customer segments such as Millennials and Gen Z. It is also a channel that merchants can use to provide additional convenience to consumers, allowing them to purchase where and when they desire, with a range of payment methods that meet their needs. Therefore, enhanced online experiences could challenge in-store services (in-app customer service in Messenger of WhatsApp vs. face-to-face customer service, for example). However, with the rise of digital payments, merchants will also face specific constraints, and they must comply with data protection and customer authentication measures. After the COVID-19 crisis, the biggest change will not be what merchants, payment service providers, and technology vendors have achieved in the last few months. There has been a transformational change in consumer behaviour as a result of the pandemic. This normally takes years, and in some cases it can take a generation to change customer behaviour. What we have seen in the last few months is a change in consumer behaviour – and the ‘new normal’ is digital transformation. Customers will now increasingly expect a digital-first and mobile-first customer experience, from product search to self-service checkout. Social commerce is expected to develop at meteoric pace – and as more consumers subscribe to platforms, such as TikTok, which has reportedly been downloaded over 2 billion times worldwide, entirely new customer behaviours will emerge. 

This article was published in our Payment Methods Report 2020, an extensive overview of what’s new in how people pay in the most relevant ecommerce markets.

About Grégoire Toussaint

Grégoire Toussaint is a Director at Edgar, Dunn & Company with responsibility for the Paris office and co-leads EDC’s Travel practice globally. Grégoire has more than 15 years of consulting payments experience with EDC in business strategy for financial services clients in Asia, Europe, Middle East, and the Americas. 

About Sophie Rassendirane

Sophie Rassendirane is a Manager at Edgar, Dunn & Company based in the Paris office. Sophie has more than 8 years of strategic and management consulting experience, focusing on payments and financial services with a wide range of organisations, including international card networks, banks, acquirers, large merchants on a variety of projects. 

About Edgar Dunn & Company 

Edgar, Dunn & Company (EDC) is an independent global payments consultancy. The company is widely regarded as a trusted adviser, providing a full range of strategy consulting services, expertise, and market insights. EDC expertise includes M&A due diligence, legal and regulatory support, fintech, mobile payments, digitalisation of retail financial services, and ecommerce.