Virtual Restaurants and Social-Media a Powerful Competitive Platform

 

At the intersection of the fastest cultural revolution the world has ever seen, and food sales, we find the undercurrent of disruption the likes we have never before seen within the retail food space. Steven Johnson, Grocerant Guru® at Tacoma WA based Foodservice Solutions®, stated, “virtual restaurants selling plant based full-flavored entrees for less, combined with hand-held mobile social media providing instant gratification have the potential to knock the wind out of the sales of most legacy food retailers.”

Today, I want to share an article and report from Accenture Research that should make every food retailer want to reevaluate their business plan moving forward.  Here is the article:

“In just one day in October 2021, two of China's top live-streamers, Li Jiaqi and Viya, sold $3 billion worth of goods¹. That's roughly three times Amazon's average daily sales. This is the power of social commerce. And it’s set to sweep the world, growing into a $1.2 trillion wave of change by 2025². Social commerce offers something radically different from traditional e-commerce by weaving buying and selling into the fabric of everyday life and through a real sense of community and connection.

It's set to revolutionize the way we shop: affording new opportunities for people to participate in the global economy as consumers, creators, influencers and sellers, resulting in a power shift from big to small. This will impact every brand, retailer and platform business. No one can afford to ignore it. This essay explores the scale of the change, what’s driving it, and the implications for companies across industries.

The social planet

The global pandemic has highlighted the importance of “connection” and has forced us to adapt and connect in new ways. Accenture Research³ revealed:

63%

feel connected with friends and family virtually

42%

feel connected using virtual experiences

49%

say communities have found new ways to support one another

62%

feel closer to friends and family, 51% to immediate neighbors and 44% to their communities

Around 3.5 billion people⁴– 44%+ of the world’s population – use social media, with consumers in developing countries more likely to have a smartphone with social media apps than they are a laptop. On average consumers spend two and a half hours a day on social platforms⁵, with more than 300 million new social media users coming online between 2019 and 2020⁶. For many people, social platforms are the entry point for everything they do online - news, entertainment, and communication. Now commerce is in the mix too. And it could soon become so powerful as a destination in its own right that it starts to threaten the dominance of e-commerce and search giants.

"It’s word of mouth on steroids"

— SANDIE HAWKINS, TikTok’s GM of North America Solutions⁷ on social commerce

People want to buy products and services based on recommendations and inspiration from people they trust. That could be family, friends and communities, and it can also be authentic influencers they follow on social media. They want to feel inspired, informed and confident in what they buy. Social commerce serves these needs, providing an enhanced shopping experience that sparks discovery, enables personalization and leverages individuals’ expertise and authenticity to build trust. All of this is already playing out in China, where social commerce on platforms like Taobao Live, Xiaohongshu (Little Red Book), and others generated more than $400 billion in sales in 2021 alone⁸.

Understanding social commerce business

So, what makes social commerce so different? Fundamentally, it represents a real shift in power from retailers and brands to people. And it's being turbocharged by the rise of social media. In contrast to the relative anonymity of big-box retailers and transactional emphasis of e-commerce behemoths, it's commerce available where people choose to spend their time and underpinned by the authenticity and trust that social connections provide. It's nothing short of a people-powered democratic retail revolution. And it's incredibly effective. Why? Because it seamlessly blends social experiences and e-commerce transactions through a single path to purchase, all enabled by a single platform.

Social commerce engages in three principal ways, via brands, influencers or individuals themselves:

1.       Content-driven: Unique content created by brands, influencers or individuals drives authentic discovery, engagement, and action. For example, social media users are discovering new goods and experiences via shoppable posts and in-app stores on Pinterest, YouTube, TikTok, Facebook, and Instagram to name a few.

2.       Experience-driven: These experience driven channels enable shopping within an overall experience, most commonly livestreaming, but could also include AR / VR experiences or gaming. Look at Obsess's "Shop with Friends" which enables groups to visit virtual shops with their friends⁹.

3.       Network-driven: People are harnessing their existing social networks to buy and/or sell. That could mean getting together to procure bulk discounts – a model used so successfully by Pinduoduo in China that it now has more active buyers than Alibaba¹⁰. Or it could mean individuals using their influence and network to drive sales and earn commissions. India’s Meesho now has 13 million+ entrepreneurs who connect with their customers on social media platforms such as WhatsApp¹¹.

 

From powerhouses to people-powered

What these three have in common is that they are all driven by the creativity, ingenuity and power of people. Any individual can monetize their network. And plenty are already doing so in a complex, thriving and fast-growing ecosystem (see graphic below). Our research found that in China, 463 million people are already making money through social media. It’s not just celebrities parlaying their popularity into dollars through big-brand partnerships; there are millions of individual creators, influencers and resellers using their chosen platforms to earn money. And as the competition between social platforms intensifies, each platform is offering creators incentives to grow their user base. As their networks grow, these influencers are seizing control from established brands.

 

Any brand, large or small, can sell via social commerce, and any individual can now become or create a 'brand' of their own and reach a market directly. This has hugely positive implications for small businesses and entrepreneurs as they are able to reach potentially massive markets that were simply not available to them before. The math is changing dramatically. Rather than a handful of big retailers and brands selling to mass markets of millions, we're now seeing millions of individuals and smaller businesses selling to one another within a vast social commerce ecosystem. The result is that big brands will continue to face growing competition from thousands of smaller businesses. One example? Independent beauty brand Glow Recipe. It only joined TikTok’s shopping program in April 2021 and now 90% of the traffic it generates are first-time buyers. The brand first hit the headlines when its sales surged 600% after it was featured in a TikTok video by an influencer with over 7 million followers¹².

I've definitely been finding a lot of smaller shops and I feel like the more that I shop on Instagram, the more these types of shops are recommended to me.

In a Battle for Share of Stomach

Are You Playing to Win or simply Survive

— INSTAGRAM SHOP USER, Accenture Research social commerce shopper interviews

Embracing social commerce tools for business

So, what does this all mean for brands, retailers and platforms? One thing's for sure: social commerce is a model they must embrace. For platforms, it opens up new revenue streams just as growth in digital advertising is expected to slow. For retailers, there are opportunities to develop new types of shopping experiences, connect in new ways and engage influencers/creators. And for brands it means embracing the shift from big to small, empowering small businesses and engaging directly with consumers through social platforms.

While still in early stages (at least outside of China), we're already getting a glimpse of what the future may look like. Nike, for example, is showing what brands can achieve. It's created a community-based app, NbG, (Nothing but Gold) that will bring together content on style, sport and self-care for GenZ consumers, and enable them to shop directly within the app¹³.

Among retailers, US apparel business Express is empowering both influencers and regular shoppers to become "Style Editors", set up Express storefronts and be rewarded for attracting new customers and driving sales¹⁴.

Influencers have been able to harness the power of social platforms to establish and monetize their own brands. Take Item Beauty, a beauty and cosmetics brand that's been built around the social media following of breakout TikTok star¹⁵.

Welcome to the democratic republic of social commerce

The social commerce opportunity will nearly triple by 2025. Globally, sales made through social commerce in 2021 are expected to reach $492 billion. Growing at a CAGR of 26%, the social commerce opportunity will reach $1.2 trillion by 2025¹⁶.

$1.2T

Social commerce opportunity by 2025

This accounts for 16.7% of the $7 trillion e-commerce total spend. China will remain the most advanced market both in size and maturity, yet the highest growth will be seen in developing markets such as India and Brazil. In these markets, social commerce has the potential to leapfrog e-commerce as new business models allow for greater participation in digital commerce across all spectrums of society. And in the US, social commerce will more than double, reaching $99 billion by 2025, with the largest opportunities in apparel, consumer electronics and home decor. But this is just the start.

Social commerce is a democratizing force, opening up new avenues of opportunity for individuals and small businesses. For example, 59% of social buyers say that they are more likely to buy from a small business when shopping through social commerce versus online. And 44% are more likely to buy a brand that they have not previously encountered¹⁷.

Yet everyone stands to gain from social commerce. The implications cut across every consumer category, across products and services, and will impact every platform, brand and retailer, as social commerce will grow three times faster than traditional e-commerce on a compound annual basis. These players need to put “people” at the heart of their strategies and embrace this rich ecosystem with new partnerships and business models. Look at, for example, a large retail company working with Tiktok¹⁸ on livestream shopping events, or how L’Oréal and Meta¹⁹ have combined their capabilities to create a new way for people to try on make-up on Instagram via augmented reality.

If they work together, sharing data, insights and capabilities, businesses will be able to create the right incentives for users to drive their own best experience within a dynamic ecosystem of platforms, marketplaces, social media, brands, resellers, creators, and influencers.”

Research matters, business models matter and Accenture Research can pay dividends if you use it. We think more foodservice companies should add it to their marketing and biz dev tool kits.  

For international corporate presentations, regional chain presentations, educational forums, or keynotes contact: Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions.  His extensive experience as a multi-unit restaurant operator, consultant, brand / product positioning expert, and public speaking will leave success clues for all. For more information visit GrocerantGuru.com, FoodserviceSolutions.US or call 1-253-759-7869