A new platform developed by a former L’Oréal brand manager wants to make e-commerce social by letting users shop online in groups.
More than $413 billion of goods will be sold through social e-commerce in China by 2022, an almost fivefold increase from $90 billion in 2017.
Squadded Shopping Party hopes to bring this concept to the West by letting its users go shopping together on fashion e-commerce sites, as if inside a virtual mall.
Online group activities like Netflix Party and Instagram Co-Watching have caught on during the pandemic as peer-to-peer connection becomes more crucial in consumers’ lives.
For teens who miss shopping with friends, Elysa Kahn hopes to provide a solution. The former L’Oréal brand manager has launched a new social platform called Squadded Shopping Party that encourages users to shop online with people in their network.
Kahn, along with her father, created the platform by building a browser extension that allows its users to go shopping together on fashion e-commerce sites like Asos, Boohoo, Missguided, Na-kd and Pretty Little Thing. These retailers most resonate with Gen Z customers between 15 and 25, Kahn’s target audience.
“The idea of being able to talk to my friends and get an authentic review when I go shopping is very important for me. That element is missing online,” she explains from her home in Israel.
Peer-to-peer connection continues to be a powerful driver of shopping decisions: 54 per cent of individuals interviewed by research firm Nielsen said they increased expenses in unplanned shopping in 2019, 80 per cent of which said social recommendations like friends’ suggestions and social media groups stimulated those impulse purchases.
“People tend to have a higher probability to buy when with another person or a group [because] a friend affirms decisions that one might not make when shopping alone, so the shopper has a reduced risk perception of the purchase which makes the activity more careless,” says Max H. Brüggemann, director of customer engagement at Capgemini Invent.
A few people, alone in their homes, chatting and browsing without looking at each other, can still feel a sense of togetherness, says Kahn. The pandemic has prompted cultural change in how people shop and spend time together: the popularity of live streaming, which has similar benefits like providing trust and transparency that e-commerce has traditionally lacked, has made its way from Asia to other countries globally. Group shopping could be the next shopping habit to make the leap.
Big in China
More than $413 billion of goods will be sold through social e-commerce in China by 2022, an almost fivefold increase from $90 billion in 2017, according to consulting firm Frost & Sullivan.
For Domenica di Lieto, chief executive of Chinese marketing consultancy Emerging Communications, this form of shopping is inherent in Chinese culture and the way people behave. “There are a lot of groups on WeChat and other social platforms in China, where people with the same interests will congregate and become a community,” she says.
Squadded Shopping Party
© Squadded Shopping Party
Founded in 2015, the Shanghai-based firm Pinduoduo, which roughly translates as “together, we get more”, encourages users to form shopping squads on social media to group-buy items — the more buyers, the lower the price. The app is the second most popular e-commerce platform in China after Alibaba’s Taobao with a seven-day retention rate of 77 per cent, the highest of any shopping website in the country.
Data from research institute Jiguang shows that more than 60 per cent of Pinduoduo’s user base is from China’s less-developed cities and rural areas. “Pinduoduo’s success is largely driven by the significant subsidy it provides. The extremely low prices meet the needs of price-sensitive consumers from lower-tiered cities and rural areas,” says Amie Song, senior specialist of APAC at Gartner.
During the Covid-19 pandemic, JD.com has seen a boost in group shopping. According to Jiarui Liu, head of JD’s social group e-commerce initiative, sales in social group e-commerce, which it tracks separately from sales on its websites, in the first quarter of 2020 has exceeded that of the entire year of 2019.
In April, JD.com partnered with China Youth Travel Service, one of China’s leading travel agencies, on a programme that offers tour guides, many of whom have been furloughed, part-time roles as “JD shopping guides” in WeChat groups. Guides recommend products at competitive prices to friends or people nearby; over 3,000 tour guides registered to be part of the initiative.
“The shared shopping experience provides more credibility for a product and word of mouth has always been a strong driver for purchase,” says Song.
Online group activities have caught on during the pandemic: March saw the launch of Netflix Party, a feature launched by the streaming service that lets users watch shows simultaneously with friends, and Instagram’s Co-Watching feature, which lets people on the social media site virtually scroll with followers.
Retail is the natural next step. Bridesmaid brand Birdy Grey has explored ways for customers to collaborate and is launching a new social shopping tool for bridesmaids to pick their favourite styles, track each other’s purchases and share pictures of how they would look in a dress via a virtual try-on. “The bridal studio enables women to shop together and enjoy all the same benefits of an IRL interaction, but in virtual form,” says Birdy Grey founder and chief executive Grace Lee.
Backed with funding from Lemon Ltd and Ben Amoyal, chief executive at Premia Capital, Squadded Shopping Party launched the first week of May and now has about 100 users. According to Kahn, the service is currently free, but she intends to eventually make money through affiliate links and charge retailers a monthly fee of around €3,000 (about $3,239). Kahn believes that a virtual mall is what consumers need in order to connect during lockdown. Squadded Shopping Party allows users to interact not only with their friends, but with all members currently online.
“If I go on Asos now, there are probably lots of people shopping at the same time as me, but I don’t know that they’re there. It really removes from the experience,” she says.
Brüggemann believes that the idea of group shopping already has a place in Western culture. “Groupon was based on a group shopping activity — several people show interest for one item, and therefore they get a discount,” he says. “Offering a price discount can foster usage. A simple example is a 2-for-1 meal offer at local restaurants.”
But other observers are still skeptical of whether online group shopping can translate to a Western market. “That’s generally not the way people do things here,” says di Lieto.
“Covid-19 might have accelerated digital transformation, but Western consumers are overall still much less sophisticated in online shopping,” adds Song. “During and post-Covid-19, when consumers are generally more conservative with their spending, there are opportunities for group shopping platforms to acquire users by providing competitive prices in necessity categories.”
One of the biggest challenges, however, remains. “In the West, there’s no such all-in-one omnipresent social commerce app,” Song continues. “There are significantly higher barriers for sharing behaviours since the integration is not as seamless and people’s social interactions are not as consolidated. This might be one of the most significant challenges for Western group shopping platforms. Without a social platform like WeChat, it’s much harder to quickly scale the user base.”
“If it does happen, it is the consumers who will change how things happen, not the brands,” says di Lieto.