Social commerce—purchases made directly on social networks—is taking off and is expected to grow three times faster than traditional e-commerce, reaching $1.2 trillion by 2025.
In Australia, this trend is gaining significant traction, driven by the widespread adoption of social media platforms, and changing consumer behaviours. As retailers navigate this evolving landscape, the supply chain plays a crucial role in ensuring seamless operations and delivering a superior customer experience.
Developing sales through social networks via product placements or popular influencers is nothing new. However, selling directly on social networks is a more recent phenomenon. According to a report by We Are Social Australia, as of 2023, Australians spend an average of over two and a half hours per day on social media, highlighting the growing influence of these platforms in daily life. Additionally, nearly one in three internet users visit social networks to look for information about brands and products.
The role of supply chains
The rise of social commerce presents unique challenges and opportunities for supply chain management. Traditional supply chain models, designed for brick-and-mortar or standard e-commerce operations, need to adapt to the dynamic and fast-paced nature of social commerce.
Inventory management and forecasting are crucial aspects in this new landscape. Social commerce can lead to unpredictable demand patterns, driven by viral trends and influencer endorsements. Retailers need robust inventory management systems that can quickly respond to spikes in demand. Real-time data analytics and AI-powered forecasting tools can help retailers predict demand more accurately and adjust inventory levels accordingly.
Speed and flexibility in fulfilment are also paramount. Consumers expect fast and reliable delivery, especially when shopping through social media. Retailers must optimise their fulfilment processes to meet these expectations. This may involve leveraging a network of local fulfilment centres, utilising same-day delivery services, and employing advanced logistics solutions. Partnering with third-party logistics providers (3PLs) can also enhance flexibility and scalability.
Seamless integration with social platforms is another critical factor. To capitalise on the potential of social commerce, retailers need seamless integration between their e-commerce systems and social media platforms. This integration ensures that product information, inventory levels, and pricing are consistent across all channels. Moreover, it enables efficient order processing and tracking, enhancing the overall customer experience.
Enhancing the customer experience
In social commerce, retailers must focus on delivering an exceptional post-purchase experience, including transparent communication, reliable shipping, and hassle-free returns. Implementing customer service chatbots and AI-driven support can improve response times and resolve issues promptly.
Leveraging data and analytics is essential in this context. Social commerce generates vast amounts of data, offering valuable insights into consumer preferences, behaviour, and trends. Retailers can use this data to optimise their supply chain operations. By analysing social media interactions, sales data, and customer feedback, retailers can identify popular products, anticipate demand shifts, and tailor their supply chain strategies accordingly.
Impact on supply chains
Social commerce represents a new direct-to-consumer sales channel for retailers, one that should not be overlooked in terms of fulfilment strategies and the shopping experiences it provides customers. The direct engagement with customers can create logistical challenges for retailers. Retailers must ship single units to numerous individual locations while maintaining the consumer promise of timely delivery.
The direct-to-consumer approach of social commerce demands greater agility and flexibility in customer experience and service. Retailers must respond quickly to customer queries, comments, and problems related to orders, deliveries, and product returns. This must be managed seamlessly to provide a personalised experience to each customer, tailored to their preferred communication medium—whether that’s email, phone, social media, or chatbot.
Order management must also adapt, drawing on the advantages of unified warehouse, transportation, and point-of-sale networks. Offering customers various delivery options—from home delivery to click & collect, buy online collect in-store, curbside pickup, or delivery to a pickup point—needs to reflect the broad range of choices consumers now expect.
What’s next for social commerce?
As social commerce continues to grow in Australia, retailers must prioritise supply chain innovation to stay competitive. The integration of advanced technologies such as AI, machine learning, and blockchain can further enhance supply chain visibility, efficiency, and security. Additionally, fostering strong partnerships with logistics providers and leveraging data-driven insights will be crucial in meeting the evolving demands of social commerce.
As the lines between social media and e-commerce continue to blur, a robust and agile supply chain will be a key differentiator in the competitive retail landscape.
Raghav Sibal is managing director for Australia & New Zealand at Manhattan Associates.