Social commerce

Social Commerce – the new retail touch point

Nearly 15 years ago, shopping was merely a social activity where friends and family got together in shopping malls and commercial streets. Thereafter, the presence of online stores made the social elements disappear as customers could shop online from the comfort of their homes. Now, the emergence of social shopping has made the experience social again. E-commerce methodology in which the shopping experience is shared with a social network of friends and contacts is referred to as Social Shopping or Social Commerce. The term ‘Social Commerce’ was first used by Yahoo in 2005 with its early attempt to dive into the social shopping space through ‘Shoposphere’ that offered a set of online collaborative tools such as shared “Pick Lists” allowing users to review products in the lists and offer or get advice, information and support on those products from other users.

Today, with more than 3 billion users worldwide, social media platforms are no longer a means for only social connections. Sites like Facebook, Instagram, Pinterest, Twitter and many local sites are increasingly being used to check news, follow trends, and to even shop. These sites have adapted themselves to meet the requirements of businesses as well as consumers rather than just being the digital spaces that they used to be. Marketers are slowly realizing the power of these sites and cultivating their social features to best suit their campaigns.

Several surveys and studies have established the fast growth of social commerce. It is estimated that the value of social commerce market in 2015 was about USD30 billion and it is growing at a healthy CAGR of over 30%. A survey by Sumo Heavy Industries found that about 50% social media users in the US agreed to social influencing their purchase decisions and 62% even have shared information about products and offers on social sites.

Majority (66%) of retailers had a social commerce strategy in place in 2014, up from 60% in 2013 and 48.5% in 2012. According to a 2017 point-of-sales solution survey of 1,164 US business owners conducted by Square and Mercury Analytics, nearly 25% of business owners are selling through Facebook and 40% are using social media to generate sales. Marketers seek to target Gen Z and millennials with their offerings as they are twice as influenced by social media than by simple sales or discounts.

Sellers on social media drive traffic to their sites not only through organic means but also via paid media advertisements. Data Analytics enables sellers to perform individual customer analytics, track customer behaviour over a period of time and then customize its message and recommend appropriate products. Sellers have access to granular data that can be used to monetize their functions and optimize their marketing.

Almost all leading social media sites now offer a selling / shopping feature. A 2017 research conducted by loyalty analytics company Aimia shows that Facebook is the most popular site for direct purchasing, with 19% of all respondents selecting the platform, followed by Twitter (10%). Next were those wanting to be able to buy from Instagram (9%), Pinterest (7%) and Snapchat (5%)

  • With more than 2.2 billion active monthly users (as of June 2018), Facebook has a great influence on shoppers. Research conducted by University of Massachusetts Dartmouth in 2017 shows that 77% of millennials make a purchase online and in-store after viewing something on Facebook. In 2017, Facebook launched Collection Ads which allows its users to explore products on mobile, without having to leave the application. It also relaunched its ‘Marketplace’ feature in 2016 in order to surpass Craigslist as the largest peer-to-peer online seller. The feature had got little attention in the first 9 years since it had first appeared in 2007. In May 2018, Facebook reported 800 million monthly active users on ‘Marketplace’ compared to 86 million monthly Craigslist users
  • With seven times more engagement than Facebook and Twitter, Instagram is also an emerging social commerce contender. In March 2018, it launched ‘Shoppable Instagram’ feature which is helpful for the brands wanting to entice customers with visual appeal while simultaneously making a sale. The feature is simple to set up and most importantly reduces the barriers to purchase by helping customers to direct their focus only on the products displayed within the post rather than overwhelming them with too much choice or selection. Users can click on the tags where they can see additional information about the product including price and product description. An important thing to note is that Facebook owns Instagram and their main aim is to help businesses grow on both platforms thus, increasing sales and revenue for the brands
  • Twitter helps companies with content marketing and brand/product awareness than getting sales. But when it launched its ‘Buy’ button for retailers in 2014, it became an online marketplace and leveraged its users to make purchases right from the application. Another benefit which Twitter provides is of direct engagement i.e. one can read anyone’s Twitter conversation – a feature that can help businesses to increase sales by searching the keyword, the result will be of people who have mentioned the keyword in their twitter conversations; the businesses can then tap on the potential customers/users.
  • Snapchat has its own media channel to sell exclusive Snapchat merchandise and in December 2017, released its Lens Studio, allowing its users to create their own AR shoppable experience. The feature includes three components – the seller’s website, video and an Install to its AR lens. The video component allows customers to click on the content such as “how to” videos. The install feature guides customers to install the seller’s app or open it. Finally, the website feature leads the customer to the seller’s website. There, the customer may be led to a product, landing page or to a subscription form
  • Pinterest was one of the first sites along with Twitter to use social shopping to its advantage when it started adding buy buttons to pins in June 2014. Pinterest business users already have access to its analytics feature launched in 2014 and can use their accounts as direct sales platforms, if they are approved by ‘Buyable Pins’, a feature allowing the user to buy products they discover without leaving the app

Businesses can capitalize on the benefits of social media platforms also keeping in mind their respective limitations.

# monthly active users (As of  Sep’18) 2.2 billion 1 billion 335 million 300 million 250 million
Year of launch 2004 2010 2006 2011 2010
Year of launch of shopping feature 2015 2018 2014 2016 2014
Strengths ·  Targeted advertising based on demographics, location and interests

·  Quick insights on performance of the ad/post

·  Can be used for discovery as well as purchase

·  Highest level of engagement among all social sites

·  Images make a greater impact for brand awareness

·  Can be used for discovery as well as purchase

·  Most popular for following brands and opportunities for networking with industry experts

·  Most preferred among all social sites for content marketing

·  Direct communication between brands and consumers

·  Time-bound stories to advertise

·  Location-based interaction with consumers

·  Traffic can be directed easily to seller / brand website

·  Images make a greater impact for brand awareness

Limitations ·  Recent breach of data security has led to exit of users

·  User can be directed to product page on Facebook only and not on seller / brand website

·  Clickable links to brands are not allowed in posts making it hard to drive traffic to the seller / brand website

·  A mobile-only app. Posting is not supported on PC

·  No feature to “sell” or “buy” directly on twitter

·  Limit of 280 characters per tweet

·  15% accounts are fake

·  No feature to “sell” or “buy” directly

·  No option to re-share a post that limits prospect  engagement

·  Time-boundation  leads to lower  retention of information

·  68% of its users are females, making the platform less suitable for male audience 

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