Where should social commerce sit on the path to purchase?
Social commerce might be the flavor of the month, but it's an industry cooking on gas without any real recipe. With only two basic ingredients, social media and e-commerce, it is easy to underestimate the complexity of combining the right quantities of shopping and checkout capabilities with social platforms to drive conversion.
Is social commerce finally finding its place?
It is also tempting to conclude from its current $89.4 billion valuations, not to mention its position on the right side of history as consumers retreat online to shop through the pandemic, that social commerce has finally found its place. Has it really though? The e-commerce market is worth some $4.9 trillion, so in comparison, that's only about a four percent share.
More than four billion people use social media worldwide
Meanwhile, more than four billion people use social media around the world, spending roughly 15 percent of their lives on social platforms. If anything, social commerce is underperforming given its potential to enable interactive, social shopping experiences built on trust and knowledge-sharing.
Leading social media platforms and their shopping features
Much of the hype surrounding social commerce currently comes from the leading social media platforms' implementations of shopping features. Instagram has made its content as shoppable as possible, enabling users to purchase products from photos and videos across the app. Facebook has long focused on ads and sponsored posts, along with the introduction of features such as Facebook Marketplace and Facebook Shop.
Brands eager to reach consumers on social media platforms
Pinterest provides shoppable pins, giving brands the chance to upload product data from their catalogs to add to product groups. TikTok has partnered with Shopify enabling merchants to push video ads to drive users through to their stores to checkout. All of these are, of course, appealing to brands who are eager to reach consumers on the platforms where they spend the most time.
How appealing are these advertisements to consumers?
The question is, are they equally as appealing to consumers? Such implementations of commerce features assume that people want shopping pushed into their social activity and miss one essential point: social platforms are first and foremost communities. When people originally joined these social networks, they did so to meet and chat with their friends.
Consumers do not sign up to give away personal data
They did not knowingly sign up to give away their personal data to be tracked and analyzed by advertisers selling them products, though a more wise, jaded, and weary consumer base now knows this to be the case.
Earlier, social media's role in commerce started higher up
Long before social platforms started adding shopping features, there was a sense that social media's role in commerce started higher up the funnel, platforms were places for people to discover products and find inspiration. This headline from Business Insider back in 2013 perfectly sums up this perception: "Social Commerce Is About Inspiring Shoppers, Not About Getting Customers To Immediately Click And Buy."
What did the article say about social commerce?
The article pointed to the then failure of Facebook's Gift Shop to argue that social commerce should coax consumers down the purchase funnel, but forget about its ambitions to drive direct click-to-buy.
In reality, social commerce can mean a number of things
The problem with all of this is that it assumes social commerce means pushing commerce into social-first platforms. In reality, social commerce can mean a number of things, but arguably its real value comes from building e-commerce-first platforms that embed social interactions into their DNA. When someone visits an e-commerce site they are at a highly targeted moment in the customer journey.
Need to look at the intent, purchase, and engagement phases
They are open to considering products to buy and those that find what they want may go on to purchase. Those who enjoy the experience may convert into engaged, loyal, and hopefully repeat customers. You need to look further down the funnel at the intent, purchase, and engagement phases to find the real sweet spot for social commerce.
This is how social networks should target customers with products
These are the moments in the customer's journey where they actively want to be targeted with appropriate products. Social networks provide the power to serve those, not through data tracking and advertising and any number of invasive psychological tools, but through the most valuable kind of social content that brought people to social platforms in the first place - genuine communication with their peers.
Young consumers are likely to see ethical issues before buying
Consumers want to feel good about their purchases and the best environment to nurture those feelings is one with transparency, authenticity, and accountability. Young consumers, in particular, are more likely to see ethical issues, such as social responsibility and sustainability, as key factors when considering what to buy. They use social media as their mouthpiece to spread their values and share knowledge and recommendations.
Social media is also a medium for organic word-of-mouth
Social media is a medium for spreading something far more powerful than advertising: it's a medium for organic word of mouth. Some 92% of people trust recommendations from friends and family over any type of advertising, and 74% of consumers identify word of mouth as a key influencer in their purchasing decisions.
Social commerce is served best by sourcing authentic content
Social commerce is a dish served best by sourcing authentic word-of-mouth content from social media and feeding it into e-commerce at the purchase and consideration phases of the customer journey.
Word-of-mouth-driven apps in the Asian markets
Asian markets have long been ahead of the curve with word-of-mouth-driven social commerce and apps. With the app Little Red Book (Xiaohongshu), users can research, recommend and buy products, and with Pinduodou, consumers can make collective purchases and collaboratively negotiate the best prices. These are examples of trusted shopping platforms with successful implementations of social media.
YEAY app is gaining traction across the US and Europe
While such social commerce concepts are yet to enter the mainstream in western markets, apps, such as YEAY, which is gaining traction across the US and Europe, show that things are changing. People record recommendation videos via YEAY and once those videos have been passed through a peer-review process, the creators can earn performance-based rewards in the form of cryptocurrency, the WOM Token.
This is how e-commerce platforms use recommendations to target consumers
E-commerce platforms can then pull these recommendation videos through to their product pages to target consumers at exactly the right moment with valuable user-generated content during the intent and purchase phase. They can also integrate web recorders into their sites to encourage satisfied shoppers to make their own recommendation videos in exchange for rewards that boost ongoing engagement and loyalty.
Forecasters predict social commerce sales will double by 2024
Judging by the success of such e-commerce-first social platforms in the Asia Pacific region where forecasters predict social commerce sales will double by 2024 to $4 trillion, social commerce apps, such as YEAY, are likely to become the blueprint for western retail innovation.
Social commerce's power lies in letting consumers make their choices
Back in 2013, we weren't sure whether social commerce could really convert to sales, but today we are realizing that social commerce isn't about pushing commerce onto social networks. Rather, the real power of social commerce lies in letting consumers pull social content to them when they want it, to make their own choices.
