Social Commerce

Author

Kevin Urrutia

Category

Digital Marketing

Posted

February 10, 2021

Potential customers often must take too many steps in their journey towards making a purchase. Each one increases the chance that they will abandon this process forever. One reason that modern retailers have complex conversion funnels is they rely too much on software and other technological solutions to make their sales. This trend can result in an overly great concern over gamify the conversion process with manipulative tactics rather than solving problems for customers.

A successful business only requires two components: a product or service that helps people solve a problem and a streamlined purchase journey. Once you have the first, you’ll need to achieve the second by ceasing your efforts at gamification that cause you to push the purchase with low-value offers and looking for ways to make the customer experience better.

The world’s best ecommerce brands are accomplishing this goal through social commerce, which requires them to understand the motivation and behavior of their customers. The use of social medial to make sales is now very successful as shown by the 1.47 billion daily users on Facebook. Sixty percent of Instagram users find new products on that platform, and 30 percent of all online shoppers will probably make a purchase on a social media platform like Facebook, Instagram, Pinterest, Snapchat or Twitter. Sales from Social Media Messenger are currently outperforming those of email, which has historically had the highest return on investment (ROI) of any digital sales channel.

Social media thus has a large number of users who want to make purchases through those platforms. It no longer makes sense to create extra steps in the conversion journey with gamification techniques that typically provide meager conversion rates. A better option is to find potential customers where they already are by implementing a social commerce solution that leverages their existing engagement on social media into sales.

Overview

Social commerce is distinct from social media marketing. Whereas social media marketing redirects users from a social media platform to an online store, social commerce sells products directly from social media. The primary advantage of social commerce is that it allows users to complete their purchase on the site they’re currently using, resulting in a more streamlined sales journey. Purchases rarely require more than a few clicks on a social media platform due to their like auto fill and checkouts via chat bots.

Social commerce’s purchase journey greatly outperforms that of other approaches like social media marketing because customers can complete their purchases more easily. The need to redirect the user from one platform to another introduces a layer of complexity and uncertainty that discourages many users from completing the process. This is especially true when the actual sales site requires additional steps. In this scenario, digital marketers are competing unsuccessfully with Amazon’s Buy Now button that allows customers to make purchases with a single mouse click. This button now appears on many social media networks.

The removal of a potential source of confusion increases social commerce’s conversion rate commerce. This approach to marketing capitalizes on prospects’ excitement about a product, which is highest when they initially read positive reviews about it. The concept of social commerce isn’t new, although its current level of success is a comparatively recent trend.

History

Most of the large social media networks have been testing and refining social commerce for a while now. These sites include Facebook, Instagram, Twitter and Pinterest.

Facebook

Facebook is currently the largest social media site in the world, with over 2.2 billion users per month. The potential for leveraging such a huge audience is the reason it has already ventured into social media multiple times.

For example, Facebook conducted a test for test buying gifts online for friends in February 2007. However, recipients could only display and use these gifts on Facebook. The social media giants also allowed members to sell products to other users on the network in May 2007. In July 2009, 1-800-Flowers.com started selling its products on Facebook, leading to other companies such as Disney and Pampers doing the same.

Facebook started testing its buy button in July 2014, which allows retailers to sell the products to Facebook members without requiring them to leave the site. It also implemented payments through Messenger in March 2015, providing the parties were friends on Facebook. Additional first for Facebook and social commerce in include implementing a test for shoppable pages in July 2015. Facebook also launched Facebook Marketplace in 2018, which is a direct competitor to e-commerce sites like Amazon, Etsy and Google Shopping.

These events are only the most major milestones in Facebook’s efforts towards social commerce, but there have been many others in recent history.

Instagram

Instagram may have the most potential of any social media platform in terms of social commerce. The images and videos on this site attract many visitors, creating the strong potential to attract customers by featuring products in these media offerings. Like social commerce on other sites, this process requires Instagram to make social shopping quick and easy. Instagram is younger than Facebook so it doesn’t have as much experience in experimenting with social commerce, but it’s still making a strong effort to successfully sell products through its platform.

Instagram introduced its Shop Now button in June 2015, which is similar to the button that Facebook uses. It also implemented product tags in November 2016, allowing users to quickly identify the products and their prices displayed in ads. However, product tags were only available for a small number of brands when Instagram introduced this feature.

Instagram also integrated BigCommerce and Shopify into its site in October 2017, creating the possibility of many other merchants selling their products through Instagram Shopping. Instagram’s Shoppable Posts went live in March 2018, which gives retailers the ability to provide tags for their products in posts. Clicking on a tag brings up a new page that leads the visitor a checkout.

Twitter

Twitter never made a profit until the last quarter of 2017, which makes it seem as if it would be particularly aggressive in pursuing social commerce. However, the social media site is actually trailing behind the others, although this company is quick to convert its social commerce strategy into ads.

Twitter’s experiments with online shopping began in April 2010, with the introduction of sponsored Tweets. This feature has been a success and has led to the development of many paid ads on Twitter. The social media company also introduced its Buy Now button in September 2014, which allows visitors to buy certain products directly from Tweets. Twitter later expanded its partnerships on the Buy Now button, but removed this feature entirely in January 2017.

Pinterest

Pinterest primarily contains visual content, making it similar to Instagram in this regard. Successful selling on Pinterest also requires merchants to making their products visually appealing, which requires the right tools to turn engagement into sales. This is especially true given that 80 percent of the pins on Pinterest are repins rather than original content.

Pinterest started offering original versions of its buyable pins for some brands in June 2015, allowing them to add a buy button to their pins. The company also made these pins available for more brands in March 2016. Pinterest added a shopping cart to its side in June 2016, making it easier for shoppers to buy products from more than one merchant in a single order.

Current State

The current state of social commerce is that all of the major social media platforms have experimented with it, but none have really made it work for them yet. Twitter experienced so much difficulty with this marketing approach that they have given up on it altogether. At this time, only Facebook, Instagram and Pinterest are conducting social commerce of any type.

Social commerce isn’t a mainstream sales channel yet, but it’s coming closer with each test and improvement. It’s now possible to see how social commerce can become the biggest revenue driver for e-commerce, although the major social media networks are still the biggest obstacle. Each of these companies is still limited to their own platform, which restricts the usefulness of social commerce for the end-users.

All of the major successes in social commerce and use third-party solutions to generate leads, including tools like Many Chat. Marvel also uses jumper.ai to automatically check out customers by using a chatbot. This process allows customers to buy event tickets directly from social media posts, which creates a very streamlined purchase experience. Very few of the current experiments in social commerce use the native solutions from social media networks, but there’s little reason for avoiding this approach. Not only are native solutions providing positive results, but customers are also providing strong signs that this is how they want direct sales to work on social media.

The most telling indication of this trend is that 23 percent of shoppers report social media recommendations influence their purchase decisions. Furthermore, a slim majority of millennials are likely to make purchases over social media, which is especially significant given that this demographic will soon be the largest online buyers. In addition, 84 percent of shoppers examine reviews from at least one social media site before making a purchase. Selling products directly from the same site where these customers are looking for reviews is clearly a winning strategy for digital marketers.

Even though social commerce is still in its infancy, it’s already making a big impact in e-commerce marketing. In addition to selling products, customers will also use these tools to research their decisions as they become more sophisticated. As a result, social commerce should become a major sales channel within the next decade.

Future

The e-commerce market in China is the driving force behind the dominance of social commerce in the near future, which has been growing exponentially since 2017. Major shopping holidays clearly illustrate changes in customer behavior, which include Black Friday, Cyber Monday, the Christmas season and Valentine’s Day in North America. However, the combined sales of all these holidays pale in comparison to the sales during Single’s Day, which is the largest shopping holiday in China.

Mobile devices are the most popular sales channel in China, although shoppers really aren’t using mobile browsers. Instead, they engage with brands on social media at every step along the purchase journey. Furthermore, the rate at which they’re doing this is much greater than in the West.

It might appear at first glance that the Chinese ecommerce market is fundamentally different. After all, it’s the most populous country in the world and has a more homogenous culture than any Western country. However, the same developments in social media that have allowed social commerce to succeed so well in China should be able to work in other countries.

This trend is already underway, as most of the social commerce features in Facebook were initially implemented by WeChat, China’s largest social media platform. For example, one of Facebook’s most recent social commerce features is called Processing Payment Transactions Using Artificial Intelligence Messaging Services. However, WeChat offered this feature first, making it appear as if Facebook is trying hard to emulate WeChat with respect to social commerce.

This is good news for digital marketers in the West because it shows that the biggest social networks are taking the potential of social commerce as a sales channel seriously. The major investment of time and money into social commerce shows that these networks expect to receive a positive ROI within 10 years. Digital marketers therefore need to capitalize on this trend now to get a head start before social commerce really takes off.

Tactics

Social commerce has already come a long ways towards becoming a viable sales channel, as indicated by Facebook’s practice of copying WeChat. While its future appears promising, effectively implementing social commerce is challenging at this time. This process involves the use of several specific marketing tactics, especially while you’re just getting started. The following practices can help ensure you get up and running with social commerce as quickly as possible.

1. Focus on low-cost products.

Shopping isn’t currently the primary reason that people use social media. They’re typically there to enjoy themselves with engaging content such as communicating with friends, checking up on their favorite celebrities or learning more about their favorite hobby. As a result, social media users are only likely to make impulse purchases directly on the site, especially if they’re related to the content they’re currently experiencing.

A review of social commerce campaigns shows that the products they sell usually have a relatively low price point, typically less than $100. Furthermore, the average order value (AoV) for social networks is about $50.

2. Foster customer relationships for big ticket items.

Customers wanting to purchase an expensive product will rarely do so after a single interaction on a social media platform. That doesn’t mean you can’t use social commerce for these items, but it does require you to adjust your sales funnel compared to items costing only a few dollars. You need to nurture your relationships with these customers and build their trust in you before you should ask for the sale. Social commerce isn’t ideal for selling expensive products, but you can do it effectively.

The key is to sell them something less expensive first, typically no more than $50. This initial purchase converts a prospect into a customer, helping to generate trust in your store. You should then follow up immediately on that sale with a request for the customer’s email address, allowing you to nurture that relationship with newsletters and offers. Some of these customers will begin making progressively larger purchases until their trust reaches the point that you can actually sell them the expensive product, which was their original goal. This purchase journey is obviously longer, but the customer’s long-term value (LTV) is also higher.

3. Manage social commerce with an ecommerce platform.

Ecommerce platforms like BigCommerce aren’t social commerce tools in themselves, but they do allow you to integrate your store with multiple sales channels and manage your digital marketing strategy. Furthermore, BigCommerce has many tools that can help you integrate products with your store on social media, including Facebook stores, Instagram tags and Pinterest Pints. These tools can assist you in successfully launching your social commerce campaign.

4. Create automated checkouts.

Automated checkouts are an essential requirement for making the customer’s journey as easy as possible in social media. Jumper.ai has a chatbot that provides automated checkout built into it, which only takes a few minutes to get up and running. You can use this tool with almost all social platforms due to its many native integrations.

5. Improve engagement with Facebook Messenger.

You can engage customers on Facebook more effectively with tools like ManyChat, which use Messenger to provide chatbots. This approach drives customer engagement through Messenger, which is highly beneficial for implementing social commerce on Facebook. However, you’ll need Zapier integrations to integrate your store on other social media platforms.

Analysis

Metrics such as likes, shares and traffic aren’t very useful for measuring your success in social commerce. It’s generally more important to focus on user behavior that directly improves revenue, rather than vanity metrics. The success of social commerce depends on your social media campaign’s effectiveness. You should therefore look at engagement first, before focusing your social media account on sales.

You can accomplish this goal by examining your brands to ensure they’re doing everything possible to maximize engagement. Use this strategy to create a template for updating your products, which will seem odd if you’re accustomed to focusing on revenue and sales. The goal at this stage is to generate enough traffic to conduct effective A/B testing, rather than simply increasing the number of likes on your account. Higher traffic and increases the reliability of your results, which is essential for assessing your social commerce campaign’s effectiveness.

Current Trends

Social commerce isn’t a completely new marketing channel at this point, but it’s just now gaining serious attention as an alternative to traditional e-commerce. This new awareness is increasing the methods of customer engagement and other trends in social commerce. The tactics described above benefit your marketing campaign’s mechanics, but you still need to understand the current trends to remain competitive in social commerce.

1. Social Proof.

A compelling social update is rarely enough to make a complete stranger purchase a product. Prospects on social media will treat your promotions with healthy skepticism because they’re well aware that you profit from each sale. While this is true to some extent for influencers of all sizes, reviewers have a much higher level of credibility for consumers.

Obtaining positive reviews that users trust has always been difficult on social media. The general solution to the problem of generating social proof is to conduct email campaigns, but this strategy requires the email to get past standard spam filters and the recipient’s own customized filters. It also depends on recipients reading the email at a time when they’re feeling receptive to your request to leave a review. The combination of these factors results in a low conversion rate for traditional social proof e-mails.

Social commerce can accomplish this task more effectively through engagement, resulting in user generated reviews that prospects believe. These reviews routinely receive a very large number of likes and views that tell other users the product in question is worth their attention. The comments on these reviews aren’t user-generated content in the traditional sense, although they portray your brand in a positive light.

Each of these brand mentions is from consumers who have nothing to gain, which is similar to word-of-mouth marketing. As a result, they’re more credible than any paid promotion, as 91 percent of their readers trust other consumers. Social commerce is thus able to promote your brand in the form of user input such as comments, shares and likes. Furthermore, the success of this approach continues to increase over time.

2. Smaller influencers.

The marketers of ecommerce brands have historically sought out the most popular celebrities, athletes and world authorities to endorse their products. However, this goal is difficult to achieve due to the competition for their attention. Even if you do manage to get an endorsement deal to promote your brand with one of these A-list influencers, it will probably be very expensive.

This marketing strategy isn’t necessarily a bad one, but today’s consumers are becoming more concerned with the authenticity of endorsers. Celebrities may have little in common with celebrities, who rarely have to deal with the ordinary struggles of life. As a result, many consumers are turning away from blatant advertising and relying more on smaller influencers they have more of a connection with.

Influencers with fewer than 35,000 followers have an engagement rate of 5.3 percent, which is the highest of any group. While they don’t have the reach of larger influencers, the higher engagement rate allows you to attract the type of customers you can form long-term relationships with. The trend towards smaller influencers is definitely one you should take advantage of.

3. Impulse buying.

Social media users are primarily interested in social interaction such as communicating with their friends or catching up on the latest trends in their fields of interest. As a result, they’re not initially interested in making a purchase. This mindset means that the sales resistance of social media users is quite high, especially for expensive products. You therefore need to modify your standard marketing tactics, usually by making offers that are highly eye-catching and engaging.

This tactic may result in some success by itself, given the current trend towards online impulse purchases. This buying behavior is particularly prevalent among younger people, who are more likely to engage in social interaction online. The combination of frequent social media use and the tendency towards impulse buying provides a strong potential for successful social commerce, especially with younger demographics.

Social commerce is effectively a two-stage conversion funnel in this scenario. It capitalizes on the impulses of prospects by providing them with direct checkout within content that already interests them. The success of social commerce will increase as this trend continues.

4. Communication.

Communication within the context of social commerce is trending towards the greater use of multiple channels. Traditional e-mail has a very high ROI, with transactional triggers that allow for considerable automation of customer communication. However, email as almost entirely a one-directional form of communication, meaning that you’re speaking at your prospects rather than speaking with them.

While prospects may eventually respond to email, it can take hours or even days to receive the feedback you need. Furthermore, those users must also wait to receive a response from you, which can be a critical delay in social commerce. Today’s consumers want immediate answers when making a purchase decision. This strong trend is one of the most important in social commerce, which you can only achieve with automated chatbots. Customers who want to interact with your brand on social media need this capability if you are to successfully implement social commerce at this time.

5. More video.

Video is an increasingly popular media on the internet, especially on social media. Autoplay videos have become routine for influencers of all sizes, allowing you to see a demonstration of a product you’ve just read about. Clips of movies and TV shows are another common way of using video to influence purchase decisions on social media.

Video is far more effective than words in obtaining the engagement with prospects that’s so crucial in social commerce. You’ve heard the old saying that a picture is worth a thousand words, but Forrester Research has shown that a video is worth 1.8 million words. More importantly, another study shows that 84 percent of consumers who watched a video about a product that interested them were willing to buy it.

Social Commerce Campaigns

Tactics and trends are certainly useful for learning social commerce, but you need to see it in action to understand how it works. Some of the most successful social commerce campaigns include those implemented by PinDuoDuo, Marvel and Jordan.

1. PinDuoDuo.

China is well ahead of the Western world when it comes to social commerce, which is particularly evident in the PinDuoDuo fund-raising campaign. This mobile app is still new in the Chinese market, but it’s already doing some interesting things with social commerce. It allows the user to make group purchases, such that the unit price decreases as the number of buyers increases. PinDuoDuo integrates with the major social media networks in China like WeChat, making it particularly effective for reducing costs for end consumers.

The executives at PinDuoDuo have been particularly creative about the way they have established and organized their app. For example, they focus on low-value products, including non-brand items. They also rely on their own process to help them grow, resulting in sales of almost $15 billion in its first two years. PinDuoDuo has also raised $1.6 billion in funding during this same period.

It’s important to note that PinDuoDuo is capitalizing on social media to help them greatly increase their sales and market reach. Their focus on low-cost items is essential for the impulse buys that are so critical in social commerce. PinDuoDuo also takes advantage of social media users’ motivation to have fun by gamifying their marketing process to an extreme degree.

2. Marvel.

Marvel is one of the biggest film studios in the world, but even they wanted to use social commerce to increase ticket sales. The company created a simple automated checkout bot with jumper.AI, which the user can trigger from both paid and organic promotions on social media. Once the user comments on a post by using a specified hash tag, the chat bot takes over the direct message (DM) screen and takes the user through the checkout process. Marvel ran this campaign for both Avengers: Infinity War and Ant-Man and the Wasp, resulting in an unbelievable conversion rate of 50 percent.

The extraordinary success of social commerce in selling tickets to these films is due to several factors. For one thing, the tickets were a low-cost item that aligns with social media. Marvel also created a simple, focused conversion funnel that displayed the Marvel personality through images. Furthermore, Marvel effectively re-engaged users that it failed to convert on previous engagements.

3. Jordan.

Few brands match Jordan when it comes to shoes, and the company made the most of its reputation when it decided to sell its Air Jordan III Tinker on social media. Nike and Snap formed a partnership to promote the shoes, causing the shoes to sell out in 23 minutes after an NBA All-Star game. Fans who attended the game’s after party received Snap codes that opened a Snapchat session, from which they could buy the shoes.

The keys to success for this social commerce campaign included its capitalization on a real-life event. This strategy bridged the gap between social media and the daily life of its users, guaranteeing an engaged audience. Jordan also recognized the need of social media users for instant gratification by providing same-day delivery. In addition, the company focused on mastering the single sales channel of social media, rather than attempting to sell their shoes through multiple channels.

Summary

The driving factors behind the rise in social commerce include the near ubiquitous use of mobile devices to access the internet and social media. The continually shortening attention span of consumers also favors social commerce as a sales channel. Small brands weren’t able to even dream of using this tactic only a few years ago, the cost of a social commerce campaign is no longer prohibitive for any business, largely due to tools like jumper.ai and ManyChat. Social commerce is now poised to make a giant leap forward that will allow early adopters to outcompete their rivals.

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