Last year, the e-commerce market generated over $5.8 trillion dollars in sales, according to Statista. That’s a staggering figure, particularly given that the entire retail sector brought in around $29 trillion during the same period.
With so much cash being splashed online, it’s possible to get complacent about tapping into it. This leaves businesses in a position where they risk losing ground to competitors with more dynamism in their operations.
One area in which many companies continue to miss out is social commerce. It’s an exciting and potentially lucrative niche within the broader e-commerce market, yet it tends not to be a priority. If you’re unfamiliar with its upsides and opportunities, here’s a primer on all the main talking points, platforms to use, and advantages to unlock once you take social commerce seriously.
The Rise of Social Commerce
Social commerce refers to the fusion of social media and e-commerce and is reshaping how businesses sell products online. It lets users buy directly through social platforms like Instagram, Facebook, and TikTok without leaving their favourite apps.
There are two key things to know about its current significance:
- Growth: Social commerce continues to skyrocket, with data from Deloitte suggesting it is expanding at a rate of 18% annually. This results from people spending more time on social media, a fact businesses capitalized on by integrating seamless shopping experiences in this context.
- Market Significance: Global social commerce sales will surpass $1 trillion by the end of 2024, and creep above $2.9 trillion in 2026. Brands find this approach crucial for reaching Gen Z and Millennials, who prefer quick transactions via mobile devices.
So why should business owners and marketing managers care? Put simply, customers are already hanging out on these platforms, so engaging them where they are is a way of catalyzing conversion rates. In fact, 47% of people in the younger demographic do most of their shopping via the web, cementing the relevance of targeting them in this context.
There are a few reasons behind this relationship. For instance:
- Direct interactions foster trust.
- Influencer partnerships deliver authenticity to up-and-coming brands.
- Embedded "buy" buttons reduce friction in the shopping process.
Being able to scroll through your feed and purchase a product with a tap delivers the instant gratification people are looking for. This shift represents evolving consumer behaviour that demands attention from savvy marketers.
That’s not to say it will be completely smooth sailing, as explained by HelloFresh Chief Marketing Officer, Lydi Siebers.
In an interview she said that, “We have a growth mindset, which means that leaning back is not an option. The company's strong growth, as well as the increasingly data-driven field of marketing, has brought and will continue to bring new challenges in the future.” It’s an indication that even established brands with a good track record of keeping social commerce moving in the right direction need to have a firm vision for the future to thrive.
Source: Pexels
Understanding Social Commerce
Social commerce, in essence, is the practice of selling products directly through social media platforms. Unlike traditional e-commerce, where transactions occur on standalone websites or apps, social commerce integrates the shopping experience within social networks.
Definition and Scope
Social commerce enables consumers to discover, research, and purchase products through their favourite social media channels, such as Instagram Shopping or Facebook Marketplace.
It spans everything from shoppable posts and stories to live stream shopping events. The goal is to minimize barriers between product discovery and purchase.
What sets it apart from traditional e-commerce?
- User Engagement: Traditional e-commerce relies heavily on search engines and digital ads to drive traffic, as well as a range of KPIs to measure the effectiveness of associated campaigns. Social commerce leverages organic engagement through likes, shares, and comments. So, for example, if a user sees a friend’s post about a new gadget on Instagram, they can buy it immediately without leaving the app.
- Seamless Integration: In standard e-commerce scenarios, customers jump between multiple platforms as they move from discovery (social media) to purchase (e-commerce site). Social commerce consolidates these steps into one fluid journey.
Put it this way: Traditional methods of buying online feel like running errands across town, whereas social commerce is equivalent to having everything you need in one all-encompassing retail and entertainment complex. This distinction highlights why understanding its mechanics is pivotal for businesses aiming to wring value from today's state of play.
Source: Pexels
The Social Commerce Landscape
The social commerce ecosystem thrives on several major platforms, each offering unique features to facilitate seamless shopping experiences. Let’s break down what the big players bring to the table:
With Facebook Shops, businesses create customizable storefronts that are accessible via both Facebook and Instagram. This is part of an empire which generated $134.9 billion in the last year alone. Key features include:
- Product catalogues linked directly to ads.
- Messaging integration for direct customer support.
- Live shopping events where users purchase products in real-time.
Known for its visual appeal, Instagram Shops enables product tagging in posts and stories. Highlights include:
- Shoppable posts allowing users to buy without leaving their feed.
- Checkout feature within the app simplifying transactions.
- Influencer collaborations boosting product visibility.
A treasure trove of inspiration, Pinterest Shopping leans heavily on discovery-driven purchases. Its notable features are:
- Product Pins with real-time pricing and availability info.
- Shop tab, providing a personalized shopping experience based on user activity.
With this system, users can browse mood boards and instantly buy items they love. It’s this pivot that’s responsible for the platform’s recent rapid growth, with experts stating that delivering integrated shopping is helping it connect with Gen Z consumers in particular.
TikTok
This platform merges entertainment with commerce through TikTok Shop and continues to rival Instagram as a platform for marketers to focus their efforts. Standout elements include:
- In-feed shoppable videos directly linking viewers to products.
- Creator-based shopping portals for users who want to monetize their following.
- Straightforward partnership setups that allow businesses and influencers to collaborate on e-commerce launches.
Understanding these platforms' offerings lets businesses tap into their unique strengths. From Facebook’s robust ad ecosystem to TikTok's viral video potential, knowing where your audience spends time can tailor your approach effectively.
Source: Pexels
Benefits of Social Commerce for Businesses
We’ve touched on a few of the advantages that social commerce offers companies. Now, let’s get down to the nitty gritty of discussing specifics and looking at some examples of how to do this well.
Enhanced Customer Engagement
Social commerce can create genuine relationships with followers, creating opportunities to convert them into paying customers. This is achieved via:
- Direct Interaction: Social platforms encourage real-time engagement through comments, likes, and shares. Customers feel more connected to brands in this context.
- Community Building: Creating spaces where customers share experiences promotes trust and authenticity.
For example, tech giant Samsung has found continued success with its TikTok campaigns, the most recent of which earned it a 40%+ target audience penetration rate, and a 71% improvement in the typical costs it encountered to get people to add products to their cart. This was particularly noteworthy as it focused on the use of local creators as a means of community-building, as regional Head of Digital Marketing, Ciha Bayture, said that, “With the integration of content from creators, there was a marked rise in brand awareness as well as an increase in the number of people being driven further down the marketing funnel”.
Increased Sales Channels
Expanding sales avenues beyond traditional e-commerce brings your products to where your audience already is, which of course, means on social media. There are already around 5 billion people on social platforms, so it’s a serious global phenomenon.
- Broadened Reach: Selling directly through social media taps into massive user bases effortlessly.
- Convenience Factor: The seamless shopping experience keeps consumers within their preferred platform, reducing the chances of cart abandonment compared to traditional sites.
Take the example of the outwear brand Barbour, which set up an Instagram store and saw a 42% spike in sales and a 98% uptick in the number of people heading to its primary website after clicking through from Instagram.
According to the brand’s Global Digital Communication Manager, Laura Dover, “Instagram offers customers unequalled access to product information, as well as a way to learn more about what our brand represents and the history that supports it”.
Data-Driven Insights
Utilizing the robust analytics offered by social platforms refines marketing strategies like never before. Platforms provide insights into customer behaviour, including what they click on, how long they view posts, and much more besides, enabling precise targeting.
For instance, Starbucks uses data analytics to tailor Instagram promotions based on user preferences and interaction history. This results in more effective marketing campaigns, including recent examples based around star signs.
With these advantages—enhanced engagement, diversified sales channels, and actionable insights—businesses can cope with the dynamic shift towards integrated digital retail experiences. And since McKinsey data shows 71% of people now see personalization as a must in any brand interaction, it really is a case of keeping pace or facing reputation damage.
Source: Pixabay
Final Thoughts
We’ve explained what social commerce is, why it benefits businesses that embrace it, and what some of the biggest brands around do to make the most of it. This is a good start and should inspire you with a few ideas for your own entry into this market.
However, it’s important to restate that the level of competition in this space is high, and you need to go all-out with your efforts in order to stand a chance. Social media users are very savvy and will sniff out half-hearted or amateurish attempts to add e-commerce to their online presence. With that said, the next steps are yours to take.
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