The Rise (and Rise) of Social Commerce
We are entering the era of the rise of social commerce. It is going to change the way we shop forever. By 2020 the number of people using social media reached 3.8 billion, almost half the planet’s population. It shows no sign of reaching a plateau, and it has become totally rooted in our lives. Globally, users spend 2 hours and 24 minutes on social media sites every day.
While it began as a way of keeping in touch with friends and family, it has evolved into so much more. It is now a vast source of news, information, advertising and marketing. As we’ve become slowly addicted to social media, it has increasingly informed our decisions. What clothes to wear, what cars to buy, what food to eat and what tech we have to own.
However, until relatively recently, while social media influenced our shopping behaviour, purchases were largely made off-app on the retailer website (or even in store, remember them?). But that’s now changing rapidly as the social media platforms move to enabling the entire shopping experience, from browsing to purchase, to take place solely on their app.
Social media is no longer just a place to talk to friends or seek entertainment; but has become a significant retail channel too.
What is Social Commerce?
For the uninitiated, it simply refers to when a consumer’s shopping experience takes place on a social media platform. It can be basic in format, with the user seeing a post with a product or service they want to buy, clicking on it and making a purchase via a built-in payment method, or it can be far more complex, as seen with the user-generated livestreams and online group shopping in more developed social commerce markets such as China.
What’s Driving the Rise in Social Commerce?
Firstly, while the market in the West is only really emerging, it has a very attractive model to follow in Asia, particularly China. Social commerce is huge there; the group-buying app Pinduoduo is valued at over $100 billion and Tencent’s WeChat app had social commerce sales of $115 billion in 2019. The market is also far more advanced than the West. In the UK, while you might see a post on Facebook and end up buying the product, you likely won’t chat to your friends about it at the same time.
In China, it’s much more a community experience. Pinduoduo is a great example – a retailer might offer an item for sale at £50, but if 10 people join together and buy one, the price could drop to £35. Pinduoduo then encourages the buyer to message friends and family on the app to get them to join the deal, achieving the group discount.
From a Western retailer’s perspective, the numbers being achieved in Asia makes selling directly through social media channels an extremely attractive proposition. Certainly, users staying on a social app to make purchases offers a smoother experience for them, so the chances of shopping baskets being filled up only to be abandoned is lessened.
The potential shopper numbers can’t be ignored either; in the UK alone, recent figures show that 66% of the population (45 million people) are social media users. And with 32% of UK consumers saying they’re ready to start buying via social media, it’s a no-brainer.
Social Media Giants Are Keen..
The social media platforms are also driving the rise, and why wouldn’t they be? It keeps their users held within their network without ever needing to leave to go to a third-party site. Their users will be more engaged and reliant on them and it also opens up another revenue stream in the form of a cut of all sales that take place on their app. That’s not only attractive in its own right, but in an era where social media giants are facing increasing pressure from regulators and regular major brand boycotts, the more diverse the revenue streams, the better.
When you add in the surge in social media use and likely long-term behaviourial changes driven by COVID-19 over the last year, social commerce is clearly an idea whose time has come.
Last year saw big players take major steps into the world of social commerce; here are some of the top platforms getting involved.
- Facebook – the big daddy of the social media giants launched Facebook Shops in early 2020. The platform allows small and medium businesses to create free online stores where they can sell inventory direct to Facebook users. A test-bed to be rolled out to bigger brands if successful.
- Instagram – retailers have been advertising products on Instagram for years. It’s visual nature, strong influencer culture and young market makes it an ideal platform for them. Instagram Shopping already allowed products can be showcased and users sent to product pages and off-site to make purchases; they’ve now added Instagram Checkout, where purchases are made without leaving the app.
- TikTok – this platform surged in the West during 2020. They are making rapid developments in the social commerce sphere too. Given their experience as a Chinese company it’s no surprise they’re making quick progress. In 2019 they were testing shoppable posts and last year they rolled out shoppable ads where purchases can be made in-app. They’ve got the savvy to make the tech work and have partnered with Shopify and Walmart. Make no mistake, they will be a formidable player in this field.
There are others developing options too; YouTube have created a “merch shelf” which allows platforms with 10,000+ subscribers to showcase up to 12 products for purchase under their video content. Pinterest continue their strides in the arena and Snapchat are investing too. Meanwhile, gaming platform Twitch allows users to shop direct from video broadcasts.
The rise of social commerce is going to be a gamechanger for retail as we know it. Social media has already embedded itself in our lives while digital platforms such as Amazon have raised the bar in terms of consumer expectation. Speed, ease of use, user reviews, payments and delivery are now expected to be in one convenient place. Meanwhile, COVID-19 has pushed more of us online to communicate and to consume. Social media is uniquely placed to meet the evolving shopping habits. With the technology coming into place to meet the demand, the future for social commerce is extremely bright.