The landscape of online shopping and e-commerce is going through a big change. Customers are no longer limited to marketplaces and online stores like Amazon, Alibaba and eBay. In the past few years, social media networks like Facebook, Pinterest and Snapchat have started to introduce “Buy” buttons to allow their users to make purchases directly on their platforms. While social media is still far from becoming the preferred online shopping channel, it has the potential to completely revolutionise the online shopping experience.
According to Global Web Index, the global population spent an average of 2 hours and 22 minutes a day on social media in 2018. Considering the global daily average internet use of 6 hours and 42 minutes, an average person spends about 35% of their online time on social media.
Based on these statistics, it makes perfect sense to assume that businesses should be scrambling to set up social media storefronts. What exactly is social commerce? Will it put e-marketplaces out of business? Are online shoppers happy to buy directly on social media? What are the opportunities for your business?
Is Social Commerce Overhyped?
More than just a “Buy” button, social commerce actually encompasses the entire customer journey, which includes product discovery, research and reviews. While social commerce isn’t a new concept, it only started to really develop in the past few years.
In July 2014, Facebook began testing their “Buy” button functionality, allowing users to make purchases without leaving the platform. Twitter introduced their version later that year, with Pinterest introducing Buyable Pins in 2015. Was this the solution that online shoppers have been looking for? Is this the answer to the long-standing issue of cart abandonment? Yes and no.
The journey for social commerce wasn’t smooth sailing – Twitter announced the end of their social commerce endeavour in 2017, and according to data from SUMO Heavy in 2018, 82% of consumers did not complete transactions on social media.
The marriage of social media and e-commerce seemed like the perfect amalgamation of the digital age. What happened? Why aren’t millennials furiously clicking away on the lovechild of Facebook and Amazon? Here are a few reasons:
Consumers have a love-hate relationship with social media. While they love consuming and sharing content, they abhor sponsored content, turning to ad-blockers to tune out sales pitches and promotions. Flashing a big “Buy” button while a user is trying to enjoy their favourite cat video will only earn the business a place in the block list.
2.Security and privacy concerns
The infamous Cambridge Analytica debacle has made users wary of disclosing personal data to social networks. Completing a purchase on social media would require credit card information, contact details, delivery addresses and a traceable record of the user’s purchase history. Layer that on top of content consumption, preferences and demographic data, and it’s no surprise that users are wary of clicking that “Buy” button.
3.Fear of the unknown
Unlike e-commerce giants like Amazon and Alibaba, social networks are relatively new to the game. Users do not know if the buying process is as seamless and hassle-free as what they’re normally used to. The checkout process, delivery, shipping and returns come standard for e-commerce, but how would they work on social commerce?
4.Wrong state of mind
Users on Twitter and Facebook are generally not in the mood for shopping. They are usually looking to consume videos for entertainment, get updated on current affairs, or stalk their high school crush. If they are looking to buy something, they are usually in the discovery or consideration stage in the user journey and would merely be conducting research.
Gaining Traction in 2019
Even though social commerce functionalities have stalled for some platforms, they seem to be picking up on others. After 5 years of testing, Facebook finally decided on the perfect place for their “Buy” button – Instagram. The platform rolled out shoppable posts and stories in 2018, with several global brands already claiming that the platform has contributed to increased traffic and online sales. Snapchat has been introducing new functionalities on their camera app, recently testing visual product searches on Amazon directly from the camera.
Pinterest has continued to develop their shopping features to include “Shop the Look” pins, identifying products in organic pins and serving up links to complete purchase. The effort put into these developments must be paying off, as Pinterest reported a 60% increase in revenue from 2017 to 2018, and went IPO in 2019.
Other than Facebook and Instagram, it appears that the checkout and fulfilment process still lies with their pioneers – e-commerce platforms. Unless these social media companies can afford to invest in developing seamless purchase processes and extensive logistical networks that can rival e-commerce heavyweights like Amazon and Alibaba, it seems likely that social commerce will remain as a source of product discovery and research.
For now, social commerce and e-commerce are considered to be complementary services that work hand-in-hand in a user’s journey to purchase. It remains to be seen if Instagram’s one-stop solution for discovery to fulfilment will strike a chord with global consumers.
Social Commerce for Businesses
Almost every company in the world has a presence on social media. Every year, brands have been channelling billions of advertising dollars into creating snazzy social media pages, gaining followers and spreading awareness. Thanks to recent advancements in social commerce, you can now leverage on your spruced up social media profile and a loyal audience to generate actual monetary returns, not just clicks and website visits. Your sales pitch can be exactly how you want it to be, without the restrictions of online marketplace banner dimensions.
Right now, there aren’t any proven benefits of selling directly on social media. You could wait to see some statistics before deciding to join the fray, or you could have the first-mover advantage and start selling before anyone else does.
Either way, business owners will need to keep an eye on this rising trend. If you are thinking about setting up shop on social media, here are a few things to consider:
1.Are users looking to buy something when they’re on the platform?
As previously mentioned, information-heavy platforms like Facebook and Twitter may not be your best bet. Visually-driven platforms like Instagram and Pinterest tend to set the user in the mood for making an impulse purchase
2.Do you have a proper fulfilment process in place?
Before you start listing your products, make sure that you have delivery, shipment, return policies and after-sales processes covered. Social media has a global audience. If you’re unable to sell globally, make sure that you state it clearly in your product information.
3.How capable is your customer service support?
Unlike e-commerce portals where reviews and recommendations are limited to the product page, social media reviews and recommendations are published for the world to see. Make sure that your customer service is on-call 24/7 to address unhappy customers who feel like airing their grievances with their social network.
The online shopping experience has never been more diverse. Customers are now spoilt for choice, given the vast range of options that range from marketplaces, to live chats and now, social media. Making a purchase is rarely an immediate decision. As a business, it would be in your best interest to have that “Buy” button available across all your channels and platforms, including social media.