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Impact of social commerce

Social commerce

Social commerce is a rapidly growing trend that involves selling products and services directly to consumers through social media platforms. This article explores what social commerce is, it’s history, and the growing popularity of social media platforms for business. It also discusses the market size of social commerce and how retailers can leverage social commerce to drive sales and build brand awareness. The article provides seven key strategies for retailers to use to create a comprehensive social commerce strategy and increase their reach and impact on social media.

What is Social Commerce?

Social commerce refers to the use of social media platforms to sell products and services directly to consumers. It involves integrating e-commerce functionality into these platforms so that users can browse and purchase products without leaving the platform. One of the most significant advantages of social commerce is its ability to leverage the vast user base of social media platforms to reach a broader audience. With over 3.8 billion social media users worldwide, retailers have an excellent opportunity to engage with their target audience in a more meaningful way.

History of Social Commerce

The history of social commerce can be traced back to the early days of e-commerce in the late 1990’s and early 2000’s. During this time, online shopping was still a relatively new concept, and social media had yet to take off.

However, as social media platforms such as MySpace, Facebook, and Twitter began to gain popularity in the mid-2000’s, retailers and brands saw an opportunity to leverage these platforms to reach new audiences and sell products.

In 2007, Facebook launched its Pages feature, which allowed businesses to create a presence on the platform and interact with customers. This paved the way for the development of social commerce, as retailers began to experiment with selling products directly on social media.

The first social commerce platform, Payvment, was launched in 2009, allowing retailers to set up online storefronts on Facebook and sell products directly to customers. Other social commerce platforms, such as ShopTab and Beetailer, soon followed.

As social media continued to evolve and mobile technology became more prevalent, social commerce began to expand beyond Facebook and onto other platforms such as Instagram, Pinterest and Snapchat.

In the past years, more and more consumers seek the convenience of purchasing products within the same social platform where they discovered them. The introduction of Facebook Shops in 2016 has been a significant driver of this trend, and Twitter has also joined in by launching commerce features like Twitter card shop buttons in tweets in 2021. TikTok has followed suit with the release of its TikTok Shopping suite that same year. Other platforms such as Instagram, Etsy, Pinterest, and WeChat also feature social commerce, and many new ones have emerged.

Market size of social commerce

The global social commerce market size was valued for $561 billion in 2021 and is projected to occupy a market size of $6,341 billion by 2030 growing at 31% annually to 2030. The increasing number of social media users is driving the demand for social commerce. Globally, 57.6% of the total population are social media users, indicating that more than half of the world’s population uses at least one social media network on a monthly basis. The popularity of major social media platforms, including Facebook, Instagram, TikTok, LinkedIn and YouTube, has attracted the majority of users and have the highest conversion rates for e-commerce, making them valuable tools for retailers looking to expand their customer base. As per a 2021 study, Facebook had 2.89 billion users, YouTube had 2.29 billion, WhatsApp had 2 billion, Instagram had 1.39 billion, and TikTok had 1 billion. Research shows that 74% of consumers use social media to guide their purchasing decisions and 55% of consumers who engage with brands on social media are more likely to make purchases from those brands. By effectively leveraging these platforms, retailers can reach a broad audience and drive sales, making social media an essential channel for social commerce.

How retailers can leverage social commerce

Now that we have explored what social commerce is, its history and the market size, let’s look at several ways retailers can leverage it to drive sales and build brand awareness.

  1. Build a comprehensive social commerce strategy that includes defining your target audience, identifying the most relevant social media platforms, and creating a content calendar that aligns with your business objectives. Your social commerce strategy should also include a plan for measuring success, such as tracking metrics like engagement, click-through rates, and conversion rates;
  2. Build a strong social media presence: Retailers should establish a strong presence on social media platforms where their target audience is most active. This can include platforms such as Facebook, Instagram, and Pinterest;
  3. Create engaging content: Retailers should create content that is visually appealing and engaging to their target audience. This can include product images, videos, and user-generated content;
  4. Enable customer reviews and ratings: Incorporate social proof and user-generated content into your social commerce strategy. This can include customer reviews, social media mentions, and product ratings. By incorporating social proof and user-generated content into your social commerce strategy, you can create a more personalized shopping experience that helps build trust and credibility with your target audience, making it more likely that they will make a purchase;
  5. Collaborate with influencers: Leverage influencer marketing by partnering with influencers to promote your products and services to their audience. Influencers can help build brand awareness and drive sales by creating engaging content that resonates with their audience. When leveraging influencer marketing, it is important to partner with influencers that align with your brand values and have a highly engaged audience. This will help ensure that your influencer campaign is effective in driving sales and building brand awareness;
  6. Live shopping: Live video shopping is a new social commerce trend that involves broadcasting live video streams where viewers can engage with hosts in real-time, ask questions, and purchase products directly from the stream. This innovative approach to social commerce has been shown to increase engagement, drive sales, and build brand loyalty, as it provides customers with a more immersive and interactive shopping experience. With the rise of social media platforms like Instagram and TikTok, live video shopping is expected to become an increasingly important part of the social commerce landscape. Retailers who embrace this trend early on will be well-positioned to capitalize on its benefits;
  7. Utilize social media advertising: Use social media advertising to reach a broader audience and drive sales through social commerce. By leveraging the targeting capabilities of social media platforms, retailers can create highly targeted campaigns that are more likely to resonate with their target audience. Social media advertising also provides retailers with valuable insights into the effectiveness of their campaigns, allowing them to refine and optimize their approach to maximize ROI. Use this data to continually optimize your social commerce strategy;
  8. Offer exclusive promotions and discounts through social media to incentivize followers to make a purchase and create a sense of exclusivity and urgency. Exclusive promotions and discounts can also help retailers build brand loyalty and advocacy;
  9. Offer social shopping features: With social shopping features like “buy now” buttons and “shop now” links, retailers can make it easier for customers to purchase their products directly from their social media pages. By removing barriers and friction in the purchase process, retailers can streamline the customer’s journey and improve their shopping experience. This can be achieved by simplifying checkout processes, offering multiple payment options, and providing clear shipping information.

Retail brands that use social commerce

There are several well-known retail brands that use social commerce to engage with their customers and drive sales. Here are a few examples:

  • Clothing brand Asos Fashion has successfully used social commerce to integrate user-generated content (UGC) into their e-commerce strategy. The brand encourages customers to share photos of themselves wearing ASOS clothing using the hashtag #AsSeenOnMe, which is then featured on their website and social media channels, creating a sense of community and social proof. ASOS also allows customers to shop directly from their Instagram account by tagging product links, making it easier for customers to purchase items they see on social media. Additionally, the brand has implemented a “try before you buy” feature to reduce the risk of purchasing clothing online;
  • The beauty brand SEPHORA is an excellent example of social commerce in retail. Their “Beauty Insider” program rewards customers for purchases and engagement on social media. Sephora showcases user-generated content on social media using hashtags like #SephoraHaul, and they have a mobile app feature called Virtual Artist that uses augmented reality technology to allow customers to try on makeup virtually. Overall, Sephora has created a personalized and engaging shopping experience for their customers through social commerce;
  • The apparel retail brand Everlane effectively uses social commerce by encouraging customers to share user-generated content with the hashtag #EverlaneIRL, featuring the photos on their website and social media channels, and offering transparency about their production process and costs. Everlane also offers a “Choose What You Pay” feature that creates inclusivity and transparency with their customers.

These are just a few examples of retail brands that have successfully integrated social commerce into their marketing and sales strategies.

Top-10 Social Commerce retail trends that you need to know

Here are the social commerce trends that retailers should be aware of. By staying on top of these trends, retailers can better connect with their customers and create a more personalized shopping experience that drives sales and builds customer loyalty.

  1. 5G connectivity will enable XR experiences across connected devices: With the rollout of 5G networks, social commerce is expected to leverage extended reality (XR) experiences across connected devices to enhance customer engagement;
  2. Micro-influencers to continue helping brands increase reach: Micro-influencers are expected to remain an effective marketing strategy for social commerce brands, as they can help increase reach and engagement with their target audience;
  3. Social polls and quizzes will help collect zero-party data: Social polls and quizzes are expected to be increasingly used by social commerce brands to collect zero-party data directly from their customers, allowing for more personalized and targeted marketing strategies;
  4. Conversational commerce now an essential element in social commerce: Conversational commerce, which involves using chatbots and other messaging tools to engage with customers, is expected to become an essential element in social commerce as it can help enhance customer experience and drive sales;
  5. More use-cases of AI, ML and AR in social commerce: Artificial intelligence (AI), machine learning (ML), and augmented reality (AR) are expected to be increasingly used by social commerce brands to enhance customer experience and drive sales;
  6. Voice technology and conversational shopping continue to increase in popularity: With the increasing popularity of voice assistants like Alexa and Siri, voice technology is expected to be increasingly used in social commerce, allowing customers to shop through voice commands;
  7. Live streaming poised to grow further: Live streaming is expected to continue to grow in social commerce as it can help increase engagement and drive sales by providing a more immersive and interactive shopping experience;
  8. Specialist social network marketplaces will continue to help the expansion of social commerce: Specialist social network marketplaces, such as Depop for fashion or Tophatter for auctions, are expected to continue to help the expansion of social commerce by providing more targeted and specific shopping experiences;
  9. Low-priced products will continue to sell well on the social platforms: Low-priced products are expected to continue to sell well on social platforms, as social commerce users tend to be more price-sensitive and are looking for deals and discounts;
  10. Better and more integrations among social commerce and ecommerce platforms: In 2023, social commerce and eCommerce platforms are expected to integrate more seamlessly, allowing for a more unified shopping experience for customers.

In conclusion, social commerce has emerged as a powerful tool for businesses to reach a broad audience, engage with customers, and drive sales. With the global social commerce market projected to grow rapidly, retailers can no longer afford to ignore this trend. By building a comprehensive social commerce strategy, establishing a strong social media presence, creating engaging content, enabling customer reviews and ratings, collaborating with influencers, embracing live shopping, and utilizing social media advertising, retailers can leverage the power of social media to drive sales, build brand awareness, and create a more personalized shopping experience for their customers. As social media platforms continue to evolve and innovate, retailers who adapt quickly and embrace new social commerce trends will be well-positioned to succeed in the digital marketplace.

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