Reddit, Wall Street Bets and the insanity of GameStop illustrate the shift of how the mechanics of social networks 2.0 are here and growing. Individuals, because of the free and open distribution of the internet, can be as as influential and powerful as companies. Right now, a person living in their basement can inspire millions to buy a stock (check out part 1). Or through YouTube, you can gain make $Millions opening up toys (wtf…why did we go to B-school?!). We’re learning that individuals have major influence.
Nevertheless, Social networks 1.0 based off of — friends, follows, news feeds, views — all built for advertising that have been a mainstay for over a decade. Yet, the next gen social networks are shifting beyond eyeballs to action (i.e., invest, shop).
TikTok’s move to social commerce is a prime example. By partnering with Shopify, they’ll allow people to buy goods from merchants. However, this is only a half step. Like Insta — it allows Merchants to sell their products. Social Commerce 2.0 allows individuals to promote and sell products — and make money 💰.
$1.7T E-Commerce Opportunity
China is the clear leader (Goldman Sachs says so). Companies like XiaoHongShu, Pinduoduo, WeChat, and others are leading the way. Check out this article from Forbes picking up on a huge trend of “Key Opinion Leaders” that are the 21st century infomercial entertainers (Top 10 Funniest). They produce live shows of products, answering questions, showcasing products, and (of course) selling! Chinese platforms have built ecosystems that “place people, rather than products, at the center of the purchasing process”. Currently, social commerce is about 11.5% of all retail sales, potentially growing to 15% in 2023 (worth $474BN. With a ‘B.’).
The company, Ruhnn, is on the Nasdaq 🤯 (let’s start a reddit thread). Sh*t is cray!
If you’re interested in the Chinese market, read more here, here, here, and here.
India is another up and coming juggernaut in the social commerce space propelled by Jio offering unbelievably cheap ($.09 per GB, USA = $8, 👎 ) internet bringing millions of Indians on to the internet. Social Commerce is set to explode. Already, 90% of SMBs sell directly on WhatsApp (> 4x than Amazon and Flipkart). Huuuuuge opportunity exists for incumbents (Facebook, Amazon) and new platforms to tap into this potential.
How About US…A
Well we lag, but it’s coming. A clear difference is what we said before — our incumbent social networks (compared to China) want eyeballs not action. Nevertheless, with TikTok🕺🏾 and WhatsApp moving into social commerce a new frontier of competition is being created. Livestreaming is a crucial aspect — acting as a personal, direct, and, deep sales channel. Amazon released livestreaming capabilities as well as QVC and HSN; in addition, startups are getting on board — talkshop.live is poppin’.
Here are a bunch of other cool, global startups that you likely never heard of.
Social Investing💸
So you can buy stocks online (etrade, Robinhood, webull, etc.), and you can talk about stocks online (Stocktwits, reddit, scutify, etc.), but you really can’t buy and discuss in the same site…(you can actually trade on Robinhood on Stocktwits, damn, hopefully on Reddit soon).
Just like shopping, investing has turned to a whole new level. Although it’s still very immature, in the coming decade we’ll see a host of incumbents and startups bringing the discussion board and investing platform together. Something akin to Public, or maybe crazier.
(BTW - they just raised $65M in December, and on Friday another $100M. AND, they stopped taking payments for order flow info b/c of the backlash to Robinhood).
Other social trading niches are coming up, but they don’t seem that fun — more for people who don’t think active investing is a game. Boooooo! (Etoro, myvoleo).
Either way, top influencers and platforms across that will offer great experiences to individuals will move markets (literally and figuratively)!
What does Social 3.0 look like?
We’d be billionaires if we knew… 🤷. How about you tell us!