Social commerce has been the “next big thing” in digital retail for a number of years now. It’s a concept that, it seems, nearly everyone agrees has the potential to be a game-changer in online shopping.
Offering consumers the opportunity to discover, browse, research and ultimately buy goods on the same platform they talk to friends, read and share news, plan social activities and more sounds like a logical next step in the relentless pursuit of convenience in commerce.
If marketplaces like Amazon can condense inspiration, search, research, payment and fulfilment into the same platform, social media companies can go one better by offering all of the above in the same place consumers share, recommend and discuss potential purchases.
So where exactly are we today with social commerce? Wunderman Thompson Commerce has just published a new paper, Social Commerce Fundamentals, tackling just that subject and, more importantly, offering practical advice to brands and retailers on how they can jump onto the social opportunity right now.
And here’s why you think you should.
From Social Marketing to Social Commerce
Social media already plays a big role in digital commerce, of course, and has done now for a decade or more. Social marketing is a huge industry in its own right, one that has fuelled the growth of Facebook in particular into a digital colossus that now sits at the same table as the likes of Google, Amazon, Microsoft, Apple and the rest.
With Facebook and its sister platform Instagram boasting four billion active users between them, if you want to be seen these days as a brand, you simply have to be on social. That’s why, globally, brands spend billions on advertising and other marketing activity through social media - and the amount just keeps on increasing. Global social media ad spend was up a staggering 60% in Q1 2021 compared to the previous year.
Yet marketing yourself on social media is a different thing to selling directly on social media. For brands and social media companies alike, this has long been the holy grail, the true meaning of ‘social commerce’. Rather than consumers seeing a post or an advert they like and then having to click elsewhere to buy it, on-platform social buying would allow consumers to complete the purchase there and then.
It’s a vision of a short, seamless, supremely convenient social shopping experience that neatly fits in between checking your news feed and messaging your friends.
The On-Platform Dilemma
According to our Future Shopper 2021 survey into online consumer trends, the biggest we’ve yet undertaken covering 17 countries around the globe, 44% of consumers have made a purchase via a social media platform, which is a considerable amount.
Yet, when we asked digital shoppers where they spend their money online, we found that just 6% of consumer spend goes through on-platform social buying channels. That compares to 19% spent through Amazon alone, and 21% through other marketplaces, including those owned by Chinese eCommerce giant Alibaba.
So, what’s standing in the way of social taking a bigger share of consumer digital spend?
The key phrase here is on-platform social buying. This is important because, with a lot of what still passes for social commerce, there is a degree of smoke and mirrors. With Facebook Shop, for example, it might feel to the end user that, as they browse their account, they can come across a brand they are interested in, go to its Shop page, scroll through their product ranges, make a selection and then complete the purchase, all without leaving Facebook.
But this isn’t really the case. Facebook Shop and a host of similar social commerce offers allow brands to create a digital storefront within the platform. But what is actually happening is that this storefront is connected to the brand’s own eCommerce channels. When you enter the store, you’re actually leaving Facebook (probably without realising it) and going to the site of the brand or retailer. When you make a purchase, you’re not purchasing ‘on platform’ through the social site, but through the checkout of the brand.
This might seem like a small point. But it lengthens the customer journey and can compromise the experience. The difference with Amazon, for example, is that everything, right through to payments being processed and delivery being arranged, is done on the same platform.
Acknowledging this, the social media giants are working tirelessly to catch up. Now, given the fluid and organic nature of social media, where the majority of content is user generated, they face a number of challenges in achieving the on-platform buying goal. How, for example, do you make sure that images of products shared peer to peer provide the same options to browse and buy as a standard product listing?
Who Will Make the Social Commerce Breakthrough?
Facebook made a big step forward in tackling these challenges in 2019, not through Facebook itself, but with the roll out of Instagram Checkout. Unlike Facebook Shop, Instagram Checkout is a true ‘native’ social commerce offer, with the whole shopping journey, including payments and shipping, handled on platform by Instagram itself. It has even launched an innovation called ‘shoppable tags’, so brands can link product images to the Checkout engine, meaning the browsing and buying options follow the user wherever they are shared.
Instagram Checkout is presently only available in the US yet the results are encouraging to say the least. Facebook itself claims that participating retailers have seen an 84% increase in orders, almost 83% more revenue, and an impressive 6.47% increase in conversion rate compared to previous commerce offers since Checkout was launched.
Some of the most interesting developments in social commerce have emerged far away from the Facebook-Instagram axis, in China rather than the US. TikTok, known in China as Douyin, already offers native in-app purchasing in its home country, as well as other options such as the ability to link stores from the Taobao marketplace directly to it.
The short-form video sharing app is now making serious inroads outside China – recently opening its first UK store - and is the fastest-growing social media platform in the world. It is also exporting its social commerce successes - owners ByteDance have already signed a deal with Shopify for users of the eCommerce hosting site to directly link their stores to the app, while rumours are that an in-app purchasing platform is on its way outside China.
Already recognised as a social commerce innovator for the ways it allows brands and influencers to embed purchase recommendations into their videos, if TikTok Shop has the same impact globally that Douyin Store has had in China, the results could be spectacular. In our Future Shopper 2021 report, we found that social media overall accounts for 12% of consumer digital spend in China - double the global average, and higher than the share spent through brands’ own and retailer sites.
And of that share, Douyin accounts for a huge two thirds (68%) of all social purchases.
Plan Your Next Steps in Social Commerce
With Instagram Checkout, TikTok Shop and a whole battery of other innovations to come, the smart money is on social commerce kicking on in a very big way over the next couple of years. In a post-pandemic world where there is an even greater premium placed on digital convenience than before, the world-at-your-fingertips convenience and connectivity that social media offers is an opportunity brands and retailers cannot afford to miss.
From getting your technology stack right to add social channels to what sort of product ranges to prioritise, download Social Commerce Fundamentals now to get the lowdown on how to optimise your social offer.