Beyond the traditional e-commerce site, retailers are increasingly tapping into the power of social media to reach customers and sell their products. We discover what’s hot and what’s not on this growing channel.
As consumers spend more time on social media, social commerce is evolving beyond being just a smart marketing tool, into a valuable extension of e-commerce.
To help understand the significance of this rapidly growing platform and what it means for the industry, global data and measurement-driven media agency Essence has released the findings of its first-ever social commerce report.
The report highlights the significant opportunity social commerce presents to brands, with three out of four people surveyed saying they are likely or highly likely to buy through social media in the future.
It also forecasts that social commerce will account for 13 percent of total e-commerce sales in China this year and 41 percent of respondents worldwide have made purchases or intend to make purchases on social platforms.
Although social media has always been an environment where buyers and sellers can interact, this survey shows a significant shift towards organised commerce on these platforms as they develop, allowing further discovery, browsing and purchasing without needing to visit external websites or apps. This seamless shopping experience results in fewer clicks but more potential revenue and conversion rates.
Aniket Basu, Senior Director of Technology and Ecommerce at Essence, expects the future of online shopping in general will be discovery-driven.
“Customers tend to be exposed to new and innovative products as they browse more on social media or encounter algorithmically mediated recommendations from friends and family on social platforms. E-commerce is maturing as a field, with social media giving brands and retailers new ways to reach audiences and new growth opportunities. In this environment, social commerce serves as a key future-proofing method for the next five years and beyond.”
And as social channels increasingly stand-in for storefronts, social commerce is becoming “the digital equivalent of walking into a store”, says Etienne Merineau, Co-Founder of Heyday by Hootsuite.
This means brands need to “leverage their ‘social real estate’ to the maximum of its capabilities: by assisting customers and delivering value at every step of their journey”.
“Social commerce provides a two-way street for consumers to not only be the audience but co-creators who want to join and shape the conversation. These changing dynamics are forcing brand teams to re-evaluate their strategy and work in more integrated ways, blending marketing with e-commerce and customer care teams – if social channels are the new storefronts, then the digital equivalent of walking into these stores is to slide into a brand’s DMs to ask a question.”
China is leading the way in the social commerce sphere with the Essence survey finding that almost 80 percent of consumers in China had purchased items on social media. This trend is closely followed by Singapore, India and Indonesia with 50, 49 and 48 percent, respectively.
France, Germany and Japan showed the lowest purchasing intent via social platforms at 22, 27 and 24 percent, respectively. Despite that relatively low percentage, interest in social commerce is growing in Germany with almost half (44 percent) of Gen Z customers in Germany indicating they purchased or intend to purchase using social platforms.
Here in New Zealand, NZ Post reported in its Online Spotlight Report that online e-commerce spend for November 2021 was $893 million – a 40 percent rise from the year before.
“Time spent on mobile in 2021 increased 10.5 percent year-on-year according to Global Web Index and we have seen an amazing 51 percent growth in online purchase activity since the beginning of the pandemic according to eMarketer,” says Robert Leach, General Manager, APAC, Kargo.
“With an average of 260,000 transactions and nearly $30 million spent online each day, November 2021 was the biggest online spending month we’ve seen since we started looking at the data, over four years ago.”
Another trend that is seeing exponential growth is TikTok which, according to the Hootsuite Social Trends 2022 survey, has experienced a 700 percent year-over-year increase in the perceived effectiveness of the platform for reaching business goals.
“With TikTok continuing to have widespread cultural influence, rising user numbers, and massive commerce activity, it’s time to get your business on board,” says Etienne.
Live shopping and streaming
Virtual shopping has become more popular due to innovations in social media. Replicating in-person interactions, live shopping and conversational commerce experiences have shown to increase the number of purchases made on social media. Four out of five Essence survey respondents said they are likely to buy something on social media if they have watched a livestream or had a conversational commerce experience. Live streaming has also found a niche presence in luxury social e-commerce.
In its early days live streaming for commerce purposes mostly occurred in the Asian market but it has now spread to the rest of the world. Luxury brands including Hermès, Louis Vuitton and Burberry all launched their Fall or Winter 2021 shows by live streaming worldwide.
This is partly because of the ease with which social media allows brands to communicate and interact directly with its audience, influencers and salespeople which in turn drives sales of luxury items online and offline.
The local market
Back home, Antony Young, co-founder of The Media Lab, says that last year alone 380,000 more New Zealanders became active on social media and increased the time they spent scrolling by two hours.
One of the advantages of selling on a social platform is that the consumer is already spending time there he says making it one of the best venues for discovering new brands.
“Instagram reels (Instagram’s video platform) is todays home shopping channel. Instagram tags are social media’s version of product placement. In the end the consumer may choose to buy via the social media’s platform, click to their online shop or visit a physical store, or on different occasions use the channel that they prefer. Having an omnichannel strategy is allowing the consumer to purchase the way they want, when they want,” he says.
It’s been proven time and time again that the most powerful form of advertising is a recommendation from family and friends he says and social media is essentially this word-of-mouth plus scale.
“That’s what social media is bringing. The average follower or network of an average person is around 500. A micro-influencer 2 to 5,000. And if you happen to be Kylie Jenner, it’s 300 million!”
Tapping into this market
Antony says currently Instagram offers the most shoppable posts and Facebook offers a similar feature with its product tags – both of which can be linked with Shopify’s back end.
“Brands can sync their Shopify shop and Pinterest pins that are discoverable across their platform and retarget Pinners who have viewed their products on the platform. And with the rise of TikTok they are adding shopping features and introducing livestream shopping and other services.”
So why aren’t more brands chasing the social commerce dollar? It all boils down to tradition Antony says.
“They seem to see the world in traditional retailer and manufacturer lanes. Marketing see their role as different to sales.”
He says that to thrive in today’s competitive market “you have to throw the traditional play book out the window”.
“Small, independent brands are leading the way in social commerce, because social media is their main marketing channel to consumers.”
As a result countries like China and Brazil are leading the way, as they don’t have the legacy systems that exist in New Zealand, Antony says.
“For more mainstream brands, integrating social commerce channels should be a no brainer.”
For Ryan Newton, General Manager at social-led agency Culture, it isn’t a case of social media being more or less useful for retail – more that it serves a very different role.
“Traditional [media] gets your message out there, normally a sales message, really wide to the masses. I think it’s also good for brand positioning and building brands over time, which then leads to sales down the line.”
However he says traditional media can be a bit “one dimensional” and “shouty” when it comes to retail.
Instead, social commerce in a retail context allows brands and businesses to showcase different parts of the business as well as communicate that to different audiences.
“Social allows you to be hyper targeted, which makes it cost effective, so you can be present more often with messages to different audiences. But, socials biggest strength when it comes it retail, is really in conversion, and connecting social to your online store.”
At Culture, Ryan works with some of New Zealand’s biggest retail brands such as Rebel Sports and Briscoes – two companies that share Culture’s belief in the power of social media he says.
“They trust us to bring our expertise to the table and make a real difference to their business, which we’ve done for them.”
With a sale on almost every weekend, Culture’s job is to spread the word and share those messages. The rest of the time is spent with the agency showcasing products in ways that “drive inspiration and engagement”.
“It’s a really close working relationship, there’s no red tape as we have access to their suppliers and their buyers. So it’s quite different to a traditional agency, where the relationship would have lots of layers or hoops to jump through.”
As for other retailers considering elevating brands through social commerce, Ryan believes the first thing to do is to “protect the channel”.
This means thinking about what your audience wants and what the platform can do and create content around that.
“It doesn’t need to be a hard sales message the whole time, it could be other types of content which might inspire or educate, which is going to lead to a sale. In saying that, retail is all about sales, so any product or sales messages you do post, try and make it as easy as possible for people to buy using the platform functionality like ad formats or product tagging.”
This article was first published in the 2022 June/July issue of NZ Marketing magazine.