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When it comes to commerce tech, China is in its own world of innovation—one that much of the Western world hasn't even started catching up to.

Ecommerce is currently a trillion-dollar industry in China, and over half of the world’s eCommerce transactions take place in China. 

Meanwhile, in 2021, the U.S. saw $870 billion USD in eCommerce sales. Canada saw slightly over $53 billion USD.

China’s leading tech innovation is a top reason for its place as a global commerce leader. Many of the world’s most popular social media and commerce platforms started in China first and then moved westward.

The most prevalent example: TikTok. 

TikTok, first known as ByteDance and now Douyin, had hundreds of millions of users in China before it ever launched in the U.S. and Canada.

Social media and commerce apps that started in the U.S. or Canada have also pushed to innovate based on successes in China.

For example, the Chinese instant messaging, social media, and mobile payment app, WeChat, motivated Facebook’s bid to become a one-stop messaging service. You can also trace a direct line from Alibaba’s Taobao Live in 2016 to the recent success of the technology “rapidly spreading to the United States,” according to McKinsey.

While it’s true no one has a crystal ball for commerce tech, it’s not a stretch to say we can look directly to China to predict future trends. Let’s take a closer look at what we can learn from the ones exploding in China now.

1. Social Commerce

Social commerce in China is built primarily on Alibaba and Tencent. Alibaba is a do-everything company in Chinese eCommerce roughly equivalent to Amazon (if Amazon were also a major player in American finance). Shenzhen-based Tencent is a multimedia company providing social commerce platforms to creators around the world.

Together, these two companies have merged social media, product discovery, and digital payments into a single, smooth experience—and comprise 90% of all eCommerce in China.

According to Alessandro Bogliari, founder of The Influencer Marketing Factory, two chief reasons China is ahead in social commerce are the success and ease of its SuperApps (i.e., apps that provide multiple services) and the popularity of livestreaming.

A staggering 78% of people aged 16-24 in China use the SuperApp WeChat. It makes sense why. 

“On WeChat, you can do everything,” says Bogliari. “You can follow your favorite influencers. You can send money to France, you can interact with people, and you can also buy things. You can even pay bills through WeChat. In other countries, you have to jump around different apps to complete these different functions.”

Bogliari also notes that livestreaming from influencers plays a huge role in social commerce in China. In China’s main social commerce platforms, it’s incredibly easy to buy items during a livestream right on the platform. In the Chinese SuperApp experience, it’s not uncommon to do everything from one home screen, and it’s the same on livestream platforms.

Bogliari says livestreaming purchase events on social media work well in China because they come with all sorts of incentives. It’s “normal to see discounts, promo codes, and time-sensitive offers on livestreams,” says Bogliari, which is “something rare in the U.S.” 

Livestream shopping could double its value in the U.S. within a few years, but it has some catching up to do given there isn’t a “SuperApp” comparable to China’s WeChat.

There’s an opportunity for the U.S. to make headway in livestream shopping. But to head in the right direction, the U.S. will have to remove as much friction as possible—including making it easier to shop and redeem promo codes without additional steps in third-party apps.

2. Interactive commerce (icommerce)

Interactive commerce uses technology like augmented reality (AR) to give online shoppers an experience that feels more like it would in the store. It also works in reverse by giving in-store shoppers more enhanced information—like using a live AR screen to show shoppers what different outfits from various brands might look like on them. 

Sharon Gai, general manager of China at Pattern, explains it well. She says, “Ecommerce is starting to have more interactive elements. Some fashion sites enable the user to see a 3D model of a shoe, for example, flipping it back and forth—instead of a 2D photo. With AR, customers can preview products on their faces, wrists, or feet from a mobile app.”

Chinese companies like Pinduoduo are ditching the old “search for your product” model of eCommerce and moving to icommerce. Pinduoduo’s goal is to create a virtual bazaar. 

Customers can use the app to scroll personalized feeds, share products with friends, and even redeem incentives for inviting social contacts to shop with them. A “team purchase” recreates the virtual bazaar experience by letting customers negotiate lower prices when they get others to purchase, too.

The U.S. is starting to see some icommerce trends as well, particularly in the world of AR. Zenni, for example, has a “virtual try-on” feature for its glasses that lets shoppers preview as many frames as they want. 

What the U.S. isn’t doing as well as China is giving users enough reason to embrace augmented and virtual reality. According to TechCrunch, companies like Apple and Meta haven’t opened up enough innovation to third-party applications, forcing users to rely on what the mainstream platforms choose to provide.

In China, AR is so popular it’s even outpacing the growth of virtual reality. That’s in spite of VR having a head start since 2019.

But according to Gai, even China has yet to tap into the potential of interactive commerce fully. “Icommerce will really start to take shape in the metaworld such as the Sandbox,” says Gai. “In Sandbox, users can go in and walk around, pick up products, and chat with store associates.”

In the West, customers still have a clear itch for physical retail. But is that simply because there aren’t as many icommerce shopping options? 

If the U.S. opens up offerings like Pinduoduo, facial recognition technology, and third-party augmented reality, these innovations could pave the way for the next generation of interactive commerce.

3. Livestreaming commerce

In 2020, Viya, a popular influencer in China, went live on Taobao to an audience of 149 million viewers for a two-day shopping event. This appearance generated approximately $719 million USD in sales.

That’s not a misprint. 

This single event demonstrates the power of social commerce in China. Social sales in 2022 are expected to jump more than 33% from last year, to $363 billion.

Livestreaming commerce is a natural extension of more social and interactive shopping. “About 20% of total eCommerce sales are executed this way,” notes Gai. And the trend may be heading westward.

Of all the disparities in commerce tech, livestreaming may have the widest gap. Statistics suggest a $500 billion market in China, but only a $25 billion market in the U.S. by the end of 2023.

Why the disparity? For one, Western platforms in the U.S., Europe, and the U.K. have been slow adopters, and popular platforms like TikTok have only introduced livestream-style features within the past few years. TikTok has also shut down some eCommerce features, making it more difficult for the U.S. to catch up.

Even with the West lagging behind, the data suggests users are quick learners. “Just three years ago [livestreaming] was almost nonexistent in the West,” notes John Koetsier for Forbes. “And [it] was a small segment of commerce, just 3.5% of all retail eCommerce, in China.” 

By 2023, that number should jump to 19.4%. As eCommerce gets more active, livestream shopping is becoming more appealing, explains Gai.

“[Livestreaming] has been successful because it’s a lot more interactive than a regular old eCommerce site,” says Gai. “There's someone who is talking about a product live. As a user you can type questions and interact with the host who can read your questions out loud and answer them. You can then comment as a user. The back and forth this creates increases the investment that a user will have when viewing the product.”

Using China’s success as a roadmap, it’s clear people enjoy livestream shopping. It seems like a slam-dunk investment for anyone trying to stimulate more interactive eCommerce—especially with incentives in place like livestream-exclusive discounts. What remains to be seen, however, is whether platforms like TikTok will offer the eCommerce experiences necessary for U.S.-based shoppers to get on board.

4. Virtual influencers

Luo Tianyi, wearing a blue dress and a white bow in her hair, has five million followers on Weibo. She hosts livestream shopping on Taobao. She’s even appeared with Lang Lang, a famous piano player, live in concert.

But here’s the thing: Luo Tianyi doesn’t exist.

Not in a conventional way, at least. Luo Tianyi is a virtual influencer, the property of Shanghai Henian Technology. And while Luo Tianyi is obviously a character, some companies blur the lines between virtual and real influencers. Take Ayayi, a hyper-realistic virtual influencer. Though she looks perfectly real, like Tianyi, she is the wholesale creation of a brand.

Reaching a $960 million market in China in 2021, virtual influencers seem to be no less effective than real people. They also present an advantage for brands who would rather own the rights to a virtual influencer outright.

“A brand who wants to have one of these livestreamers work with them will pay a basic service fee,” says Gai. “The livestreamer will take around a 5-25% commission off the total GMV [gross merchandise value] generated in a session.”

With a successful virtual influencer, the math tips back in favor of the brands. 

As eCommerce technology blurs the line between online and in-person shopping, virtual influencers may blur other lines. And they’re already establishing a foothold in the West. 

Take Miquela, the Los Angeles-based robot with three million followers on Instagram. Brands who avoid virtual influencers because they’re afraid their brand won’t come across as authentic may be surprised to find other brands succeed with virtual influencers.

5. Phygital

Walk in, grab a product, and leave. What once might have been a recipe for a shoplifting arrest is now the business model of Amazon Go stores. How is it possible? It’s the result of phygital integration—physical and digital—to create a seamless shopping experience.

But what separates phygital from omnichannel?

“Phygital is a more recent term more associated with the metaworld—augmented, virtual, and mixed reality,” says Gai. Gai cites the example of NFTs combining limited-release tokens with physical goods as demonstrating the possibilities of phygital retail in the West.

It’s a trend that’s been in the making for a while. Regardless of where they end up, most purchases now begin online. In China, some KFC restaurants allow customers to complete payments with AI-driven facial recognition technology. 

Phygital retail is an approach that’s found traction in the West. At Rebecca Minkoff stores, customers can approach touchscreen “mirrors” to see what’s available on eBay. 

As retail spaces compete with each other to lower buying friction and increase convenience, they can learn from what’s happening in China, where augmented reality and AI are making phygital retail a reality.

How to play catch-up with Chinese eCommerce

In some ways, companies in the U.S., U.K., and Canada are fortunate that China has demonstrated these trends’ efficacy because they can learn from them. And although livestream shopping has yet to grow to the outsized impact it has in China, the upward trend clearly shows that Western customers are more than happy to check it out. 

Now’s the time to start investing in the future. In China, they might call it the “present.” But in the West, it’s possible to skip a few time zones to see where the eCommerce winds are pointing us.