What is the market outlook for China's social e-commerce industry

Major listed companies in the social e-commerce industry: Pinduoduo (PDD.O), Jingdong (09618.HK), Yunjie (YJ.NASDAQ), Meituan (03690.HK), Mushroom Street (MOGU.NYSE), Shutterbugs (01024.HK), China's Youshan (08083.HK), Weimeng Group (02013.HK), among others.

Core data in this article: user scale, transaction scale, investment and financing amount

Industry development overview

--Definition

On February 22, 2021, the China Association of Trade in Services approved the release of the "Social E-commerce Enterprise Business Service Specification" and its implementation on the same day, which clearly states that: social e-commerce is an e-commerce activity based on interpersonal relationship networks, using Internet social tools, engaging in the sale of goods or services and obtaining legitimate benefits. Social e-commerce covers the whole process of e-commerce such as information display, payment and settlement as well as express logistics, which is one of the important forms of new e-commerce.

--Industry chain analysis: a wide range of industry chain participants

Social e-commerce is defined as a branch of retail e-commerce, which narrowly refers to the use of social networking sites, microblogs, social media, and network media communication channels, and social interaction and other means to carry out the purchase and sales behavior of goods. In a broad sense, social e-commerce includes group-buying, member distribution, community group-buying, shopping guide, content, live broadcasting and so on. In addition, social e-commerce service providers are also involved in the social e-commerce industry chain.

The main representative platforms of the shopping category are Pinduoduo, Jingdong shopping, Jingxi, Suning shopping, Taobao special edition, goose shopping, Gome store, squirrel shopping, etc.; the main representative platforms of the membership distribution category are love inventory, zebra membership, shellfish store, fenxiang, peanut diary, the future of the bazaar, etc.; the main representative platforms of the community group purchasing category are Xiaohongshu Mall, baby tree, koala selection, rice cake mom, there are good stuff etc.; shopping guide class mainly represents the platform what is worth buying, a Tao network, Huihui network, save money Express, fold 800, rebate network, 55 Amoy network, rice fold, easy to buy network, etc.; content class mainly represents the platform has a small red book, etc.; live broadcasting class mainly represents the platform has jittery voice, fast hand, Taobao live, etc..

Industry development history: the industry has gradually entered a period of stable development

Driven by the combined forces of many development factors, China's social e-commerce industry is growing rapidly, and has gradually entered a period of stable development from the exploration period.

2011-2014 is the exploration period of China's social e-commerce industry, in this stage, with the user base of WeChat expanding, the circle of friends, public number, WeChat payment and other functions continue to improve, the rapid development of micro-merchants groups in the form of individual purchasing and teaming distribution as the main form of merchandise sales through WeChat, which is the initial form of social e-commerce, with the same time violent brush screen, The proliferation of fake goods, brainwashing marketing, quality and safety issues are frequent, and consumer trust continues to decline.

2015-2016 is the market start-up period, the industry has structural adjustment, a number of good at creating personal brand of net red / V with quality content to bring together the fan traffic through the e-commerce cash, KOL / content e-commerce rise. At the same time, through the platform carrier for the stationed merchants/individual agents to provide the whole industry chain services and complete the transaction on the platform closed loop platform-type social e-commerce model appeared, social e-commerce refinement of the operation opened.

2017-2018 is a period of rapid development, Tencent, Pinduoduo successive layout, a number of social e-commerce enterprises piled up listing shows that a number of tracks run out of the head players, business model molding, follow the trend of many people, the overall industry ushered in the integration and competition.

2019 so far for the stable development period, the market and the government two-dimensional standardization of social e-commerce. The release of the e-commerce law represents the national level's recognition of the importance of this emerging field and support for the development of social e-commerce into a new stage of development and regulation, openness and security.

Industry policy background: the policy gradually from encouraging the development of the direction of standardized development

With the rapid development of the social e-commerce industry, the state of the relevant industry's attention is also increasing, and has introduced a series of policies to encourage the development of the industry at the same time to make clear the responsibilities of the relevant departments, and to regulate the development of the social e-commerce industry. The promulgation of relevant laws and regulations on the one hand provides a reference basis for industry practitioners to comply with the business, and at the same time helps to break down the public's prejudices and concerns, and build a positive image for the industry. From the tendency of relevant policies promulgated by the state, the industry development policy has gradually progressed from encouraging development to standardizing the direction of development.

Specifically, as of March 2021, China's social e-commerce industry related development policies are planned as follows:

Industry development status: industry scale is rising year by year, and the investment heat is unabated

--Users Scale: rapid growth in user scale

In recent years, the user scale of social e-commerce has gradually increased incrementally, and the user scale has risen by 28.54% from 473 million to 608 million from 2017 to 2018. According to the "electric number treasure" e-commerce database, the user scale will reach 780 million people in 2020.

--Transaction scale: the transaction scale is rising year by year

According to the database of e-commerce of NetScience, the market scale of social e-commerce in 2020 will be 2,300.5 billion yuan, with a year-on-year growth. 2,300.5 billion yuan, a year-on-year growth of 11.62%. Among them, from the point of view of the growth rate, the growth rate in 2016 was as high as 98.19%, the year-on-year growth rate in 2019 was 71.71%, and the growth rate was downward trend due to the impact of the epidemic, the growth rate in 2020 was 11.62%.

--Capita consumption scale: the per capita consumption scale is rising year by year

From the point of view of the per capita consumption, according to the data of China's social e-commerce market scale and social e-commerce user scale in 2016-2020, 2016-2020 China's social e-commerce industry per capita consumption into a rising trend of change year by year, in 2016, China's social e-commerce users per capita consumption of 863 yuan, 2020 rose to 2949 yuan, an increase of 2086 yuan.

--Investment and financing status quo: industry investment fever

In 2020, social e-commerce is still the focus of public attention. Pinduoduo, Jingdong, Ali and other e-commerce giants continue to power, while many social e-commerce companies such as Dream Rate Group, Pink Elephant Life, Fenxiang, Fenlai, Play Acres, Spell GIRL, Little Tiger Group and so on have also received considerable financing. According to the "electric number treasure", from January 2020 to December 2020, the domestic social e-commerce industry *** occurred 18 investment and financing events, with a total financing of more than 650 million yuan. The platforms involved include: Dream Rate Group, Pink Elephant Life, Hey City, Fenxiang, Fenlai, Playing Acres, Spelling GIRL, Xiaohu Tuan, Hikari Culture, and Chengyu. As of August 2021, seven investment and financing events have occurred in the domestic social e-commerce industry***.

From the distribution of investment and financing rounds, of the 18 investment and financing events that occurred in the social e-commerce industry in 2020, there were 4 angel rounds and A-level each, 1 B-level and C-level financing each, and 5 Pre-level financing. From the point of view of investment rounds, the investment in social e-commerce field is mainly dominated by early stage investment.

Industry Competition Pattern: Intense Competition within the Industry

Currently, there are three main competitors in China's social e-commerce industry, one is the entrepreneurial enterprises represented by WeChat, the second is the traditional e-commerce giants represented by Taobao and Jingdong, and the third is the brand owners.

At present, in the field of social e-commerce, the original online enterprises have occupied a certain market position, coupled with the impact of unfavorable factors in the external environment, the market "cake" in the short term in the shrinking, with the offline enterprises have to turn to the line, the "cake" of the people! In January 2021, the E-commerce Research Center of Nethersphere and the Social E-commerce Desk of Nethersphere released the "2020 China Social E-commerce "Top 100 List". The list is as follows:

Specifically, in the top 100 list, there are 15 listed companies, 6 unicorns, 16 community + e-commerce companies, 6 community group-buying companies, 18 membership companies, 10 distribution companies, 11 shopping guides, 5 shopping groups, and 13 service companies.

Industry development prospects and trend forecast: stabilizing employment, promoting the development of the function of the gradual emergence of the transaction scale of about 2026 exceeded 10 trillion yuan

--Stabilizing employment, promoting the development of rural areas will gradually appear

--Stabilizing employment, promoting the development of rural areas will gradually appear

From the field of e-commerce, in 2020, the epidemic accelerated the changes in the consumption habits of the population, the online channel has become the main way of shopping, e-commerce has also become an important part of the retail ecosystem. 2021 will focus on e-commerce top-level design, to do a good job of the "14th Five-Year Plan" planning, to promote digital business policy landing, to promote the formation of a new development, and to promote the development of a new business environment. business policies, and promote the formation of a new development pattern. We will also focus on online consumption, effectively connecting e-commerce poverty alleviation and rural revitalization, and promoting the quality of the domestic macro-cycle. Grasp open development and promote the smooth flow of domestic and international double circulation. In the governance of the effectiveness of e-commerce development, do a good job of risk assessment of the e-commerce system and online security, and promote the Ministry and provincial data **** enjoyment, and promote the safe development of the industry.

--The transaction scale in 2026 is about to break through 10 trillion yuan

For social e-commerce, in recent years, with the transformation of users' consumption habits, social e-commerce has become an important trend of retail e-commerce development in the Under the "14th Five-Year Plan", the function of social e-commerce to stabilize employment and promote growth in rural areas will also gradually emerge.

Benefiting from the improvement of Internet infrastructure, the construction of global logistics network, strong policy support to promote and reform and innovation, as well as the gradual cultivation of consumers' online shopping habits, China's social e-commerce market scale is increasingly expanding, under the dual promotion of policy, demand, and technology, China's social e-commerce industry is expected to gain a larger increase in market size. Social e-commerce outbreak momentum is strong, the market rapid volume, has become China's online retail scale growth force.

Social user scale, from the data released by the net economy, in recent years, China's social e-commerce user scale in 2018 after experiencing rapid growth, 2019-2020 user scale growth rate shows a downward trend, mainly because in China's major cities social e-commerce user scale has been nearly saturated, and part of the countryside by the economy, Internet penetration and other multi-factors It is difficult to popularize the impact of the economy, Internet penetration and other factors, coupled with some of the older consumers on the social e-commerce platform use rate is low, a combination of factors lead to social e-commerce user scale is difficult to continue to maintain high growth. According to the net economy estimates, in 2021, China's social e-commerce user scale of about 795 million people, the year-on-year growth rate of only 2%, if this growth rate, 2026, China's social e-commerce user scale of about 878 million people.

Social e-commerce transaction scale, according to the net economic data, 2016-2019, China's social e-commerce transaction scale rapid growth, the growth rate is as high as 70%. 2020, by the impact of the epidemic, the transaction scale growth rate has declined, only 12%, predicted that the growth rate of 2021 rebounded to 24.56%, about 2865.1 billion yuan, an upward trend. However, taking into account the policy impact, in recent years, China's social e-commerce industry development policy gradually from encouraging the development of the direction of standardized development, so, in the development of the next few years, social e-commerce transaction scale is also difficult to return to the high growth rate before the epidemic. If the 30% growth rate is measured, in 2026, China's social e-commerce transaction size of about 10 trillion yuan.

The above data refer to the Prospect Industry Research Institute's China Social E-commerce Industry Market Outlook and Investment Strategy Planning Analysis Report.