Is Social Commerce the Future of Internet Retailing?
For any U.S.-based social media users, connecting with friends and family is easy. Most platforms are designed with this experience in mind. Users can chat, post pictures and share their thoughts with the tap of a finger. While this social connection is important, it's becoming increasingly common for users to crave more from their favorite platforms, particularly as it pertains to shopping. Many social sites have implemented options where consumers can buy within the app, such as clicking on an Instagram photo that leads to a direct link to buy.
While this is a step in the right direction, current platforms lack a comprehensive social commerce model that benefits the consumer. Social commerce allows the user to shop while earning rewards for their engagement. The more they shop, share and gift to others, the more they receive, which they can in turn use to continue to engage with brands. Ignoring this opportunity for e-commerce within a captive social audience is a costly mistake. Consider that 69 percent of U.S. adults currently use at least one social media site.
Embracing a New Social Model
In a Pew Research study from last year, roughly half of Americans surveyed said they've made a purchase using their mobile device. However, a much smaller percentage sought a new product via a link on social media. In fact, for those between the ages of 18 and 29, only 24 percent made their purchases via social media, the largest percentage of any age group.
Why is there such a disconnect between time spent online and the purchases we make via social? While there are several key issues with current offerings, one of the glaring problems is a lack of user friendliness. Poorly organized landing pages that aren't properly designed for mobile and complicated checkout processes can lead to shopping cart abandonment. It's important that both retailers and their social commerce partners design platforms that meet shoppers’ needs and streamline the buying process.
In addition to providing an easy to navigate experience, in order to truly capitalize on the social commerce model, both platforms and retailers need to strategize on specific offers and promotions that will entice users.
The social commerce process is simple: a retailer partners with a platform with a significant and engaged user base. In a study conducted last year, 56 percent of consumers who actively follow brands on social media reported doing so to view product information. The users are activated with deals specific to the platform, which encourages shoppers to stay loyal and inform others of their positive experiences.
What makes social commerce uniquely appealing is that it benefits all parties involved, effectively boosting sales for partners and maintaining revenue for the social platform, all while keeping the customer happy. This instant gratification and acknowledgment ensures customers are valued and not just a means to an end. Creating a positive customer experience is invaluable in a world where an unhappy user can quickly take to the internet and inform the masses of any issues with your brand. Fifty-five percent of 18 to 29 year olds have shared their experience with a retail transaction, whether good or bad, via social media.
South and Southeast Asia is home to some of the most populated countries in the world, and yet these markets seem decidedly uninterested in current social media offerings. Only 37 percent of the population actively use social media.
While not enamored by traditional social networking, this population shows increased interest in social commerce. In India alone, 66 percent of people refer to social media before making a purchase, and social commerce ranks more important than any form of social networking.
For e-tailers with a global focus, there's significant untapped potential to fill both here and abroad. It's estimated that the digital gift card market alone is worth around $149 billion.
As social commerce platforms continue to evolve and improve, internet retailers should look to capitalize on this growing opportunity before it’s too late.
Govinda Giri is the architect of Sagoon, a social commerce platform enabling its users to connect, share and earn.
Related story: The Rise of Social Commerce