Social commerce = social media + e-commerce
What is social commerce? Generally speaking, social commerce is a merger of e-commerce and social media, opportunity to buy and sell via messengers and social media networks.
I particularly like the following definition:
“Social commerce is the ability to make a product purchase from a third-party company within the native social media experience.”
Today, especially with all the Pandemic Economy, we are introduced to social media as a tool for a full cycle of shopping.
Companies can spread the word about their goods or services, advertise, create demand. At the same time, customers choose, compare, discuss the products, make the decision, and now — the most important thing — customers PAY. (and later wait for the delivery or are immediately provided with the digital service).
Sales via social media are now soaring thanks to a number of factors:
- Social media adoption and usage rate among various age groups
- Quality user-experience: it is very convenient to promote and sell at the known environment
- Shortened customer journey
- The advantage of spontaneous shopping
- New level of customer service and interaction and community management
- Technology embracement — AR, ML, etc
- New marketing tools
Let’s briefly trace down the evolvement of social commerce.
The term itself was brought by Yahoo! In 2005 and referred to such tools as user ratings, user-generated content, advice services, and so on — word-of-mouth digitalized. Users were eager to share their experiences, rate services, give shoutouts to great products, point at mistakes, provide feedback and ideas for improvement, comment, and ask for help. As online-shopping was evolving, so did the social commerce by combining different features and meeting the demand for social interaction and social approval. By this way or another that’s where the basic social commerce business strategies and business applications have arisen:
- Recommendation services
- Advertising
- P2P-sales
- Crowdfunding and sponsor platforms
- Group buying/split buying
All these incentives were developed into more and more sophisticated and interrelated applications, while also influenced by the factors of mobile devices usage growth. Many analysts name 2014–2015 the time of mobile app as a must-have, geotargeting as the number one marketing tool. Many traditional retailers have started to pave its way into online sales, experimenting with customer engagement and customer retention. The example could be a coupon that you can retrieve from the app, but use in the brick-and-mortar store or a solid discount for the first online purchase.
The ultimate goal was (and remains) to create such a friendly and convenient environment that the customer would not hesitate where to buy or to pay. The storytelling advertising and influence marketing were on the rise exactly for the same reasons — “native” recommendations built more trust than catchy ads. Another trend to become more evident due to the technological spark was the data-driven approach — all those likes, shares and views were and still are used to predict consumer behavior and promote relevant content. Influence marketing, particular customization, and segmentation of the audience were the next issues to mention.
Yet, the major incentive still was to improve customer retention or — to put it simply — how to make it easier to be a customer. That all led to advancements of keeping the customer within the friendly and known environment until the after the checkout — and — voila! — now the checkout solutions are integrated in-app, social media networks allow to sell and buy in its native design finalizing promotional efforts.
A very peculiar and curious experience is social commerce we can witness in China. Mobile internet is ubiquitous, “web is dead”, online shopping is extremely popular and the idea of having everything in one app is so Chinese! So what happens now in China after all the in-stream purchase options and crazy sales festivals? Well, online shopping and social media now blend into one — both try to be more comprehensive and lock user insights into their own ecosystem. E-commerce platforms become more content-based, i.e. livestreaming and KOL engagement (waihun as known in China). Social media are more focused on e-commerce — both for sellers and for buyers introducing payment solutions within the platform. For example, WeChat.
WeChat is not only a messenger, you can have a public account and share thoughts, there is a built-in payment solution that you can use everywhere in China. Ratings, likes and sharings are so last season :)
WeChat has launched its mini-apps solutions in 2017 and is still ramping up its effectiveness. Mini-app or mini-program is a lightweight app within WeChat that doesn’t need to be downloaded or installed.
Now virtually every major app in China has a mini-program in WeChat. You can hail rides with Didi, rent a bike through Ofo or Mobike, order food from Meituan, shop on Pinduoduo, even browse Tantan, China’s Tinder, without ever leaving WeChat.
Tencent, which runs WeChat, announced that its users spent 800 billion yuan (US$115 billion) through its various mini-programs in 2019, a 160% increase from the previous year. Mini programs have over 300 million daily active users, with usage up 45% from last year.
The latest development was the introduction of livestreaming options. With the native WeChatPay solution, it’s not a problem to provide in-stream payments and seamless checkout experience.
Videos are the driver for sales on social media.
Walmart CEO Doug McMillon said earlier that the retailer wants to own part of popular video app TikTok because it sees social media as a huge business opportunity and a powerful way to reach customers.
Facebook’s WhatsApp enables in-chat purchases to sell directly within chats. It’s yet another step of social commerce embracement. In July, the company has launched payments in Brazil for 120M users, embedded QR-codes, and is ready to introduce payments in India.
Instagram, another company that belongs to Facebook now pushes shopping as a key objective. In May Instagram shops were launched since that shopping features are highlighted and extended and tech updates for smoother customer service are constantly being introduced. Adding shopping to Reels brings extra competition to TikTok. It is also reported by various media, that Facebook confirmed plans to “eventually” bring cross-app communication to businesses and developers.
The Verge says:
“2020 has been the year of live shopping for US tech companies. Amazon launched Amazon Live for influencers in July, and Instagram and Facebook launched live shopping features in August. Google’s R&D division, Area 21, also launched Shoploop, which isn’t live but offers shoppable stories, and smaller startups continued their efforts to make live shopping not just a thing, but the future of retail. On every platform, it ends up looking like a modern twist on QVC — but with influencers instead of celebrities, and those influencers getting a cut of the sales”.
3 weeks ago Bloomberg suggested that new shopping-connected features at Youtube also might lead to the platform’s transformation into a “shopping destination”. All the videos could become a catalog of items that users would be able to buy. Also, the company tests a new integration with Shopify Inc.
Shopify has hit headlines with yet another social commerce partnership — with TikTok. The official statement suggests that the deal will make it easier for Shopify’s 1M merchants to reach TikTok’s audience and drive sales. The partnership will eventually expand to include other in-app shopping features, as well, the companies said.
The idea of merging social media and e-commerce has entered the stage of frictionless customer experience. Lucky combination for businesses and customers. I will be delighted to hear your thoughts on social commerce. What’s ahead for it?
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