1/ “Social Commerce” is a hot buzzword

The broader theme is the blurring of lines between ads and transaction/subscription models

While social commerce is still nascent here in the West, the industry in APAC is already 80%+ penetrated

East vs. West - how is it different?
For years, US internet names monetize via 2 distinct ways – ads OR transactions/subs (NFLX: 100% subs; META: 100% ads)

Ads companies focus on engagement vs. Transaction-driven names prioritize reducing frictions

The Problems?
- Ads (way) overloaded
- Subscription fatigue
China has been the opposite:

- No clear cut between social vs. commerce
- No (other than WB) pure-play monetization model
- 40% of online ads $ is generated by e-commerce
- Ads is 2% of Meituan's GMV

Increased mindshare = lower CAC
Less annoying (mobile!) ads
4/ Latest (super exciting) developments in the US:

Social -> commerce: "Shops" (FB, PINS, SNAP)
E-commerce -> social/ads: AMZN "Video Creative Builder"
Transaction -> Ads + Subs: DASH, UBER

The blurring of lines we've been waiting for is finally happening!

(chart from GS)
5/ How is it (still) different from the East?

A) Ads -> E-commerce:
- Closed-loop vs. open
- Take rate (& ads) vs. just ads
- Dramatically different conversion rates...

Consensus of social commerce GMV (2023e):
- Meta (3B MAU): $10-$100B
- Kuaishou (500M MAU): $200B

B) E-commerce -> social:
- Early days for video ads (US) vs. video+gamification+live streaming (China)
- Efficiency (US) vs. engagement (China)

East: Companies fighting hard for users to stay longer.

West: AMZN proudly announced, "28% of purchases are done <3min!"🤯

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More from @FredaDuan

30 Dec 21
1/ Some takeaways on global e-commerce:

E-commerce’s business looks super simple (for 3P, just GMV * take rate), but a lot can be learned on the key assumptions:

- GMV (gross vs. net)
- Take rate (gross vs. net)
- Upside from Ads (%? when?)
- LT profitability (5%? really?)
2/ Big Picture

- E-comm is a $5trn market globally
- Est. 30% is 1P
- Online penetration varies: US 16%; China 30%; LatAm & SEA: 10-15%
- Growth varies

- #1 market leader typically captures 50% (AMZN 40%; BABA 60%) of the market but can enjoy 2-4x the amount of profit dollars
3/ Big Picture (con'd)

1P vs 3P

- 3C + FMCG
- Brand matters, consumer preferences are uniform
- Win on quality, price, and service (logistics) quality; not on SKU variety

- Beauty + Apparel; Suitable for long-tail merchants
- Easier to scale; win on selection/variety
Read 8 tweets
17 Dec 21
1/ BABA 2021 Investor Day Takeaway

No guidance was provided for FY23E.

"Investing" was the theme of this year.

New segmentation for its business segments (see below) was provided. International commerce, local services and Cainiao used to be all lumped under "China Commerce".
2/ Taobao/Tmall: a more mature, lower growth business going forward

- It will take some time to counter "market uncertainties", i.e. changing consumer behavior and competition

- "1+X" strategy to address more shopping scenarios and product categories (home décor, groceries)
3/ Deals/Taocaicai/Local Services: in investment mode as the company plays catch up

- New investments will be focused on multiple areas: lower-tier cities, grocery, international, Cainiao, and cloud

- Expect losses to gradually narrow as scale increases
Read 4 tweets
17 Dec 21
1/ China’s e-commerce, with the highest online penetration (30%+), serves as a playbook of how the industry might evolve:

Search-based -> Social E-comm (2018) -> On-demand (2020) -> Live Streaming (2021+)

The industry, though very mature, has become MORE fragmented over time
2/ Where’s the rest of the world following China’s playbook:

- US: early days for Live Streaming E-commerce (all big platforms plus start-ups)
- SEA and LatAm: social e-commerce (Shopee)

Globally, the line between online media and e-commerce platforms is blurring...
3/ Key stats of China's Live Streaming E-commerce:

- 400mm users (50% of total e-commerce users)
- Already a $200bn market (15% of total e-comm), expect to take 30% market share by 2025E
- Growing 3x faster vs. industry
- Top platforms: Taobao Live + Douyin + Kuaishou
Read 4 tweets

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