Stretching the boundaries with social commerce
Nearly one-tenth of all eCommerce spend comes via social commerce and it’s expected to grow to 17% within the next three years.
According to a new report from Accenture – Why Shopping’s Set for a Social Revolution – social commerce offers something radically different from traditional e-commerce. By weaving both buying and selling into the fabric of everyday life, it gives a real sense of community and connection between brands and customers.
The $492 billion global social commerce industry is predicted to grow three times as far as traditional eCommerce by 2025 and is being driven primarily by Gen Z and Millennial social media users, who will account for 62% of all social commerce spend.
Just under two thirds (64%) of social media users surveyed said they made a social commerce purchase in the last year, which Accenture estimates to reflect nearly 2 billion social buyers globally.
And, in just one day in October 2021, two of China’s top live-streamers, Li Jiaqi and Viya, sold $3 billion worth of goods. For comparison, that’s roughly three times Amazon’s average daily sales.
What is social commerce?
Social commerce means a person’s entire shopping experience, from product discovery to the check-out process, takes place on a social media platform.
This definition from Big Commerce sums up social commerce simply.
“Social commerce sells products directly through social media networks. It differs from social media marketing as you’re not redirecting users to an online store, but offering them the ability to checkout directly within the network they’re using at that moment.”
At its core, it’s about making it easy for users to complete their purchase. It’s about removing the potential for confusion and thus abandonment.
“Social commerce is a levelling force that is driven by the creativity, ingenuity and power of people. It empowers smaller brands and individuals and makes big brands re-evaluate their relevance for a marketplace of millions of individuals,” said Oliver Wright, global Consumer Goods and Services lead at Accenture.
“Getting social commerce right will require creators, resellers and brands to bring their products and services where the consumer is, and will be, rather than the other way around.
“It means working together within a dynamic ecosystem of platforms, marketplaces, social media and influencers to share data, insights and capabilities to deliver the right incentives and best consumer experience across an integrated digital marketplace,” he added.
Social commerce generally occurs and engages with people through three ways – via brands, influencers, or at an individual level.
- Content-driven: Through the use of unique content created by brands, influencers or individual consumers, it drives authentic discovery, engagement and action through purchase. For example, social media users discover new goods through shoppable posts and in-app stores on social media platforms including Facebook, Instagram, Pinterest, YouTube and TikTok etc.
- Experience-driven: These drive customers through channels where they can take part as they shop, i.e. through live-streaming events, or through Virtual or Actual Reality experiences and via gaming platforms. Mark Zuckerberg recently revealed Facebook’s new name Meta as part of this expanded digital experience.
- Network-driven: People are using existing social networks to buy and/or sell i.e. through things like Facebook Marketplace. But individuals are also using other social networks like WhatsApp11 to connect with customers.
Why is social commerce on the rise?
Simply put, the pandemic has changed people’s buying habits. With more people working from home and with lockdowns in operation across the globe, the internet and digital platforms became a lifeline to the outside world.
Social commerce has been around in one form or another for the last 15 years and while it’s been on the rise for the last five years, the COVID-19 lockdowns accelerated growth massively.
NYU’s Professor Scott Galloway said: “The percentage of retail done on digital channels has gone up one percent each year. And as of 2020 it was at 18%, and then in eight weeks it went to 28%! We had a decade in eight weeks.”
The 2020 lockdown in the UK saw ecommerce responsible for 40% of retail sales, excluding groceries. The main trends shaping the growth of social commerce are all roughly using the same objectives:
- Reducing friction in the buying/selling journey;
- Creating a rich and compelling brand experience;
- Selling anything everywhere.
As the purchasing power of both Millennials and Generation Z continues to increase, social commerce will also grow in importance with 47% of those age groups having some level of trust for social media influencers – one of the primary sources for social commerce.
Both Facebook and Instagram have made purchasing without leaving the platform increasingly easy. Checkout on Instagram was put out in a beta format in 2019 and Facebook Shops launched the following year.
Pinterest also introduced a visual search feature in 2019 which added Shoppable Pins to its existing feature where people could use Google’s Lens camera search to snap a photo offline and then Pinterest would tell them what it was and where to find something just like it.
If you see it – online or off – you can shop for it and big brands like IKEA have been working with Pinterest since 2015 to bridge the gap between online and offline using innovative paid campaigns to bring back the magic of shopping.
Joy Kelly, media manager for IKEA Retail US said: “We will continue to watch the advancements Pinterest makes in visual search to help IKEA customers find the products they love and be able to purchase them when they see it.”
Rich Pins – including Product Pins – make it easier for platform users to see things like pricing and availability and Buyable Pins enable customers to buy products without ever leaving Pinterest.
In the US, the company has also introduced Try On For Home Décor. Taking advantage of development in AR technology, it allows users to virtually place items from US retailers including Walmart, West Elm, Wayfair and Crate & Barrel, in their home using the Lens camera to try before they buy using the home décor inspiration they find on Pinterest.
Jeremy King, SVP of Engineering, Pinterest, said: “Since the pandemic began, we’re seeing more digitally savvy shoppers than ever before, as millions of people now expect virtual and mobile options to try before they buy, see personalized recommendations, and gather information as part of their decision making process.
“These behaviors are happening across Pinterest every day, which is why we’re continuing to advance technologies like AR Try On and make Pinterest a full funnel shopping destination that takes people from inspiration to purchase anywhere in the app.”
Data changes are driving social commerce
Elliott Davidson, founder of UK digital agency Contrast, believes this will only continue as more ecommerce businesses leverage data from an in-house perspective.
“In-house marketers are able to make a lot more strategic business decisions and really delve into the data to see what’s working and what isn’t. Data analysis is going to become a staple requirement for businesses to make any future ecommerce decisions.”
What does this mean for brands?
For social media platforms social commerce opens up new revenue streams at a time when growth in digital advertising is being predicted to slow down.
For retailers and other businesses with services to offer, social commerce gives new opportunities to develop innovative shopping experiences, connect in new ways with existing and potential new customers and look at the possibility of using influencers.
For brands it means fully embracing the shift in buying power from big to small, empowering small and medium enterprises to engage directly with their customers – and sell – through social platforms.
We’ve already seen how big brands are using social commerce. Nike has created a community-based app NbG (Nothing but Gold) which brings together content on style, sport and self-care for Gen Z customers and which lets them shop directly within the app.
But this also has huge implications for small business and entrepreneurs who are able to reach markets which weren’t available to them before. Any brand, large or small, can sell via social commerce, and any individual can now become or create a ‘brand’ of their own and reach a market directly.
Social commerce is set to revolutionise the way we shop: affording new opportunities for people to participate in the global economy as consumers, creators, influencers and sellers, resulting in a power shift from big to small.
Get started with Veracity
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