Social Commerce is Having More Than a Moment
Social commerce, the latest darling of digital marketers, continues its meteoric rise with the latest predictions putting the industry at $1.2 trillion in purchases by 2025.
With more than $958 billion spent in 2021, it’s clear that social commerce represents a very real, profitable tactic for brands. No wonder there’s hunger to invest. But at this pace, strategic marketers must ask themselves a few questions.
Social Commerce: A Moment or a Permanent Shift?
Three major drivers are affecting the moment we’re living in:
- Time spent: Today, there are 4.5 billion people using social media — that’s more than half the world’s population.
- Content: With so much to see, do and learn, average daily time spent on social media is now 2.5 hours.
- Payments: Driven mostly by millennials and Gen Z, 2 billion people now use mobile wallets.
As these behaviors shift, so do expectations with more shoppers seeking:
- Convenience: Research shows that 82 perfect of shoppers like how quick and easy it is to shop on social media, while 71 percent say they prefer to buy immediately after viewing content rather than switching to a retail site.
- Inspiration: 60 percent of users say they’ve discovered a product via social feeds, and 55 percent were moved to buy.
- Validation: Heavily influenced by community, 70 percent of people who watched livestreams hosted by an influencer say they were “highly likely” to buy the products recommended.
While traditional e-commerce is calculated, self-prompted, and often cumbersome, social commerce is spontaneous. It allows you to be inspired in the moment and to buy without leaving the experience you’re in.
What Are Social Platforms Getting Right?
Social platforms have adapted to these shifts in behavior by (smartly) building commerce features into the core experience.
Facebook and Instagram storefronts invite you to shop for products inside a brand’s profile and offer half a dozen shoppable formats that allow you to instantly view featured products, prices and details. TikTok, Pinterest, Snap, and Twitter have launched similar social commerce experiences and shops, each designed around how people specifically engage on those platforms.
As storefronts go mainstream, Razorfish is seeing brands highlight new products and persuade you to buy with:
- Live shopping: Live video is expected to grow 15-fold by 2022 and reach 17 percent of all internet traffic. Being able to buy what’s in a video you’re watching will surely propel social commerce to new heights.
- AR/VR shopping: With a camera phone, we can “try” products on ourselves and in our spaces, then purchase from within that experience (a natural stepping stone to Web3). It’s not clear why just 3 percent of brands use these formats — but they should.
- Shopping from creators: Instagram has an affiliate program (in beta) that allows creators to earn commissions based on sales they drive for a brand. YouTube’s BrandCommerce product (also in beta) allows brands to partner with creators and insert shoppable experiences within video.
- In-app checkout: All platforms are driving toward in-app checkout using any payment method loaded into a digital wallet. On Facebook and Instagram, Checkout allows customers to buy items directly from a shop.
Why Are Brands Hesitant to Jump in?
Despite the momentum, many brands are still hesitant to adopt social commerce, likely because of pain points associated with executing across platforms as well as issues concerning the following:
- Discoverability: Most social platforms allow you to search for videos, photos and profiles, but aren’t designed for finding specific products. It’s up to brands to use paid media and target people with shoppable ad content if they want to be found.
- Data ownership: Traditional e-commerce websites allow you to see what consumers are doing, and that data is owned by you. Social media data, conversely, is owned by the platform. Plus, most management platforms behind social commerce — like Instagram’s Commerce Manager — still limit what you can see.
- Inventory management: Managing multiple stores across multiple countries in multiple languages is … a lot. Having a single interface to orchestrate your entire social shopping landscape will become essential.
- Customer service: As easy as social commerce is, shoppers will have questions about products before purchasing. Third parties are filling the need with AI-powered bots, which leverage the platform's DMs.
- Benchmarks: While platforms often showcase studies from other brands, we lack solid data on just how powerful storefronts are. Hopefully advanced analytic tools will enable a more holistic view of performance across storefronts, regions and more.
- Selling fees: Across major players like Facebook and Instagram, fees occur when you use their platform to sell products and let customers check out. Fees can be as high as 5 percent per shipment and, while lower than Amazon, there’s nothing to stop fees from rising in the future.
Despite these growing pains, the future of social commerce is bright. Platforms will provide more of what consumers want and brands will demand standardization. Digital wallets will evolve to support alternatives like crypto and Facebook Pay. And with Web3, social commerce will be foundational to any metaverse experience and could be the tipping point for decentralized commerce — where you really can buy anything from anywhere.
Brands not embracing this trend, or at least testing the water, will be left behind.
Stevie Morris is vice president, content and social marketing strategy at digital agency Razorfish.
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Stevie Morris is the VP, Content & Social Marketing Strategy at digital agency, Razorfish.