Hmmm

The Social Commerce Emerging Market Share

Facebook currently reaches more than 1 billion people, but what CEO Mark Zuckerberg really wants is to reach is the whole world. So far, he’s about 6 billion short.

To bridge that gap, Zuckerberg has led his company’s reach into emerging countries that aren’t as familiar with social media, let alone the concept of the Internet. What Facebook is attempting to do through projects like Internet.org is bring affordable Internet to nations where it’s otherwise unobtainable. But Facebook isn’t alone in this mission  – Internet.org is a global partnership run through Facebook, Twitter and Google Plus.

Enabling consumers in emerging markets has become the next big thing, particularly with Internet giants like Alibaba, which has discovered the economic and e-commerce growth benefits that come with entering a region that is truly a greenfield. In emerging regions of Africa, the story is similar where startups like Jumia and Rocket Internet have introduced new mobile shopping options. For Alibaba, connecting farmers in rural China to its online marketplaces has been one of Alibaba’s recent success stories, giving the company a large slice of China’s e-commerce pie. Besides its strong mobile commerce sales on its Tmall and Taobao site, Alibaba has also been a leader in helping use mobile to bring commerce to emerging markets that otherwise wouldn’t have the same access.

By extending Alibaba’s payments reach with Alipay in new villages, Alibaba is attempting to help grow its presence across rural China. To enable Internet access in that region, Alibaba has set up village offices to unify local residents to have access to the Internet and in turn shop online and pay through Alipay. If this sounds a little self-serving, it is. Bringing better Internet connection to those in rural regions means more people are able to shop online, which means a larger e-commerce share for them.

And that’s certainly a bullet point on Facebook’s business plan to mobilize the world. The social network giant has only recently dabbled with the concept of how to monetize Facebook through commerce opportunities. Now, it’s looking to scale that concept globally.

But first they need to connect consumers.

“To serve the entire world, we need to build products that serve our community and allow people to share different types of content with different audiences,” Zuckerberg said. “We need to offer new services and infrastructure at greater scale, but we need to create new tools and innovate to solve fundamental challenges in the places we want to connect.”

Brining people together through technology means expanding Facebook’s reach, which extends its social commerce opportunities by giving people the chance to buy through Facebook. Because mobile advertising is making up an increasing amount of Facebook’s revenue, increasing global connectivity through affordable mobile options is key — particularly in regions where smartphone usage trumps having a computer as a mode of communication. As research from IDC shows, smartphone usage in emerging markets will continue to rise as prices drop; that could be key for social commerce growth that relies on mobile usage.

As Zuckerberg explained in the company’s recent fourth-quarter earnings call last month, Internet.org has launched three services in places like Zambia, Tanzania, Ghana, Kenya, and Columbia to more than 150 million people. Six million of those people now have access to the Internet for the first time. It’s a long shot from connecting the whole world, but it’s beginning to make a dent. Eventually Facebook will have new channels and a wider audience to market its commerce platforms through. You don’t become the 16th richest person in the world, as Zuckerberg has earned, simply by connecting people through social networking; you become that person by knowing how to use that social media platform to make money. So far that’s been about using it as a massive advertising platform – connecting people and brands through advertising. In the future, it could be about connecting people and brands through commerce.

But what does connecting users mean for overall scale of Facebook’s business strategy?

“I do think that over the long term that focusing on the helping connect everyone will be a good business opportunity for us as well,” Facebook CFO Dave Wehner said, describing how Internet.org can benefit the company. “And we may not be able to tell you exactly how many years that’s going to happen and but I think these countries get more connected the economics growth the ad markets growth and Facebook and the other services in our community or the number one and number two, three, four, five services that people are using then over time we will be compensated for some of the value that we have provided but this is why we are here. We are here because our mission is to connect the world and I just think it’s really important that investors know that.”

Bingo.

What Facebook has been able to do is merge its responsibility as a global networking company with its business plans. That’s a formula that Facebook is hoping that investors will back.

Just like any other company, Facebook needs to keep its investors happy and that makes using global connection to generate profit the bottom line. That means capturing a larger share in the growing marketplace. Facebook’s basic mission has, and likely will always be, to connect the world, but there’s always going to be an underlining business motivation driving the move. Social media sites like Facebook and Twitter do a lot to connect the world for networking purposes, and social movements, but no CEO will argue with finding new platforms to expand its advertising reach through. Internet.org has empowered people in those emerging nations to connect to the rest of the world, which includes the wide world of e-commerce for the first time.

Enter projects like Internet.org.

“The goal of Internet.org is to make Internet access available to the two-thirds of the world who are not yet connected, and to bring the same opportunities to everyone that the connected third of the world has today,” reads the project’s mission statement.

Before you can use a platform for commerce, the ability to connect to that consumer must be possible. Those opportunities mean more than just communicating, they mean commerce opportunities, which means advertising dollars and potentially a larger share into the social commerce market depending on how the Buy buttons develop on Facebook and Twitter’s platforms. For now, they remain in small test markets, but once social media sites have a larger presence in emerging markets, those populations have the chance to turn to the sites to shop.

That’s when the world will truly be connected. When a person in a small African village can log onto Facebook and shop, or click on a tweet and become an instant consumer — that’s the definition of real global connectivity. And that is part of the market share that Facebook and the social commerce industry wants to capture.

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