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Mar 17, 2022
While scrolling through Instagram, it's easy to catch up on the news and the activities of family and friends. A few posts down, people come across a sponsored post by a clothing brand that features a model wearing what looks like an awesome sweater for the fall. Fortunately, the image includes a "View Products" tag, which will take viewers to a product page with pricing and details about the sweater. Then, they pick their size, tap "Buy Now," and are done with the purchase within the app in a few clicks. And without missing a beat, they scroll through their feed again.
Maybe the person didn't realize it, but they just witnessed social commerce while scrolling.
Social Commerce: What is it?
A segment of e-commerce is known as social commerce. In addition, it allows merchants to sell products directly through social media platforms, where potential customers can interact with brands, browse products and make purchases. In contrast to social media marketing, social commerce allows customers to shop directly from social platforms. Sometimes, the social platform has links that point straight to a retailer's product page, where customers can also complete their purchase.
Learning about social commerce
How does social commerce differ from other forms of e-commerce? Essentially, it represents a shift in power away from retailers and brands to consumers. Social media has accelerated this trend. Unlike big-box retailers, social commerce provides authenticity and trust by underpinning transactional sales with social connections while offering relative anonymity that big-box retailers lack. It truly is a revolution in democratic retail powered by people. It's also highly efficient. But why? Through a single platform, it seamlessly integrates social experiences and e-commerce transactions.
There are three main ways in which social commerce engages users, via brands, influencers, or even individuals themselves:
A content-driven approach: Brands create content, influencers create content, and individuals create and distribute unique content. For instance, shoppers can discover new goods and experiences via shoppable posts on Pinterest, YouTube, TikTok, Facebook, and Instagram, among others.
An experience-driven channel: Experience-driven channels offer consumers a shopping experience, most commonly live streaming, but they can also include AR/VR experiences or gaming. For example, using Obsess's "Shop with Friends" feature, groups of friends can browse virtual stores together.
A networked approach: People are getting in touch with their social networks in order to buy or sell. It could require getting together to negotiate bulk discounts - a model that Pinduoduo in China has employed so successfully that they now have more active buyers than Alibaba10. It could also mean individuals who leverage their influence and network to drive sales and earn commissions. With 13 million+ entrepreneurs, India's Meesho communicates with its customers via social media, including WhatsApp.
Does COVID-19 give rise to Social Commerce?
So, the answer is Yes, COVID-19 has paved the way for social commerce. With the COVID-19 pandemic starting, many consumers raced to the Internet to purchase products that were not available in stores. In addition, many shelters at home orders and a desire to avoid crowded stores in places where they can shop have led consumers to turn to the Internet to purchase necessities such as groceries or toilet paper. According to Statista, global retail e-commerce sites cumulatively received 22 billion monthly visits in July 2020. Social media usage in the U.S. grew in 2020. Therefore, it is not surprising that Digital Commerce 360 found that online sales increased, which provided more opportunities for product discovery online.
All of this is happening much more quickly than expected
Facebook is storming ahead:
Early in 2017, Pinterest launched its shoppable pins before its competitors. Over the years, it has acquired several mainstream brands, including ASOS, Zara, J.Crew, and Topshop.
As of 2017, Facebook has completely dominated the market after re-launching its 'buy now' feature. The U.S. consumer has switched from mostly shopping on Pinterest in 2016 to mostly shopping on Facebook in 2017.
What makes Facebook so successful?
Honestly, it's not that complicated. Social media significantly influences consumer buying decisions, and Facebook has the largest user base. Facebook continues to experience rapid growth, with more than 2.20 billion monthly active users in May 2018, representing a 13% increase year-over-year, and 1.45 billion of those users log into Facebook at least once a day. Thus, social media's influence combined with Facebook's size constitutes a powerful, winning formula.
Is Instagram now changing the game?
Following an initial trial in the U.S. only, Instagram rolled out shoppable posts to 44 countries in March 2018, including the U..K, Australia, Germany & Canada. Many big brands are now using Instagram's innovative tag system to offer seamless shopping experiences to customers.
Instagram's new Checkout feature has triggered what might consider the end of social media retail - allowing users to make purchases on the social media platform itself. Brands can use tools such as Instagram's Shoppable Stories to apply product tags to organic content with information about the items and a URL to an external shopping cart.
What the future holds for social commerce?
Shoppable social media will be a major part of eCommerce growth within the next few years. It appears that social commerce (sCommerce) is moving at a faster rate than anything in recent history, and social networks are continuing to grow in size, which means the potential revenue base will grow. Instagram is already preparing for its next wave of sCommerce. With products tagged directly on both the brand's and influencer's accounts, there is less need to click to buy, which could impact conversion rates significantly.
On April 27, 2021, Mark Zuckerberg revealed that Instagram would launch a new shopping feature, Creator Shops, initially designed for businesses and store owners. The tools will enable creators and celebrities to sell their own products directly to users without leaving the app.
Additionally, Facebook has created a marketplace for brands looking to connect with influencers (similar to TikTok's creator marketplace) and an affiliate program that allows influencers to earn a percentage of sales generated by their posts.
Is it going to go far?
Despite the fact that it is now possible to shop on Facebook, Instagram, and Pinterest, we are still in the early stages of sCommerce, so it will be fascinating to watch how it evolves. In terms of development, Instagram seems to be leading the way at the moment. Native payment integration within an app is a game-changer, and businesses need to ensure that their eCommerce strategy can adapt to the market.
Despite the fact that product placement has never been this explicit, it's so common that people no longer blink an eye at how candid it is. Amazon's one-click technology introduced impulse shopping to a generation of shoppers, and social commerce will have the same effect not just on consumer behavior but the types of brands that become household names. The content creator will increasingly play a more direct role in influencing consumer purchasing behavior.