E-commerce is officially making its way into consumers’ social media and video feeds creating a phenomenon known as social commerce. Social commerce blends ecommerce and social media best practices as an exciting, lucrative evolution in retail marketing. Social media has evolved tremendously over the past 12 months and is now playing a key role in the democratisation of e-commerce. Retailers are increasingly realising that social media is no longer just about keeping in touch with family and friends. It’s becoming a way to shop.
Australia’s 20.5 million social media users coupled with the growing ecommerce market made the Australian market ripe for social media companies to make new products and tools available to Aussie retailers. It started with Facebook, introducing Shops in May 2020, which enables merchants to set up a virtual storefront, giving them exposure to global audiences on both the Instagram and Facebook platforms. The announcement also cited an intention to help small businesses struggling with the economic impact of COVID-19 as a major motivation for the rollout.
With Facebook and Instagram Shops, small business owners are able to host product pages and make sales within the social media platforms. Integrating ecommerce with social media enables consumers to discover products they usually would not look for on an ecommerce platform, and retailers to have a much bigger reach. As such, customers discover new products, browse, and make purchases without having to leave the app.
This discovery phase through social content is particularly important for smaller, niche brands that are up and coming but may not have large advertising and marketing budgets.
More social media players to follow suit
The competition is quickly picking up speed. TikTok recently announced it is entering the social media ecommerce market to contend with Facebook and Instagram. We can expect other social media platforms such as Pinterest to join this trend as consumers already use it to “pin” photos of things they like. The next step is a no-brainer.
Facebook Shops now has over a million active e-commerce outlets and over 250 million shoppers are interacting with the online outlets through Facebook Shops each month. And the numbers will not slow down with the global social commerce market predicted to grow at a rate of 31.4 percent by 2027.
Bringing together online connections and the shopping experience
The rise of social media storefronts signals social platforms are going beyond discovery, enabling retailers to do more than simply pay for ads that redirect shoppers to a website. Rather, they have more control over the entire shopping experience as social commerce is enabling e-commerce businesses to make meaningful connections with consumers. The customer journey may be longer for smaller brands, but they also have more time and opportunities to create a unique shopping experience, for the customer to get to know their brand and build loyalty for the long run.
According to Instagram, 70 per cent of shopping enthusiasts turn to the image-based platform for product discovery, through influencers and video blogging that have been co-created with specific brands and products in mind. This is a great opportunity for brands to tap into this captive audience by cultivating an online presence and building customer relationships on social platforms, so that when users are ready to make a purchase, they don’t have to navigate away from the place where they regularly connect digitally.
Social commerce puts impulse buying on a hair-trigger
Peer pressure and fear of missing out (FOMO) are prevalent on social media, especially with the rise of influencers. More and more brands are turning to influencers to promote their products on social media platforms. It does not take much for a new product to be branded as a must-have. In fact, according to a 2019 study from Rakuten Advertising, 87 per cent of shoppers admit that they have been prompted to make a purchase by an influencer and 84 per cent of marketers believe it’s an effective marketing strategy.
Impulse buying is becoming a significant part of the social media experience, and social commerce taps directly into it. Being able to buy directly from the social media platform means users can skip numerous steps and go straight to the immediate purchase. It limits the user’s chance of changing their mind midway in the sales funnel and pushes a faster close to the deal, leading to improved conversion rates for merchants.
Shaun Broughton is managing director – Asia Pacific at Shopify.