What is Social Commerce and How It’s Shaping Online Shopping

In social commerce, things are sold directly through social media platforms. As an ever-changing phenomenon, the whole purchasing experience, from product discovery to checkout, requires the consumer to never leave the Social Media platform. Features such as the “purchase now” button and autofill payments reduce friction from the customer experience, making the entire process quicker and more efficient. According to a survey published by Research and Markets, the worldwide Social Commerce Market is expected to reach $89.4 billion in 2020 and $604.5 billion by 2027, increasing at a CAGR of 31.4 percent from 2020 to 2027.

What is the reason for social commerce’s growth? Several factors might be attributed to this, including the increased number of social media and advertising platforms, along with the streamlining of shopping events, as well as the popularity of Gen Z and Millennials, as well as the growing time spent on social media platforms. Not only is social media used to share personal tales and experiences, but it is also used to follow and be inspired by your favorite celebrities and influencers. Although apparel and accessories are the two product categories that dominate Social Commerce, they may be used in other product categories as well.

There are many benefits to social commerce, such as lowering the risk of abandoned carts, which can occur often on eCommerce sites. The entire purchasing experience is individualized and personalized. Consider your Instagram store; every brand you follow appears there. Influencers who were previously solely compensated to post affiliate links using the “swipe up” function may now collaborate with businesses through a variety of methods, such as live streaming, “shoppable” stories, and “guides” on Instagram. Furthermore, the designs and layouts of Facebook Shops may be changed by selecting colors, and fonts, and adding, deleting, or rearranging collections and product grids.

There is a common misconception that Social Commerce and eCommerce are the same. eCommerce refers to the purchasing and selling of things using a website or a dedicated app. Social Commerce is the practice of selling items through Social Media without leaving the Social Media app. The checkout is within the app with Social Commerce, giving an all-in-one experience that some may even say is preferable to traditional in-person purchasing. Brands may benefit from Social Commerce by connecting with consumers, offering targeted deals, and obtaining vital feedback through Social Media.

What is Social Commerce?

Our Findings
Our agency, The CreatorDB, conducted an online survey focused on Gen Z and Millennial shoppers in the United States to better understand buyers’ tastes and behaviors. We learned a lot about social media, online and offline buying, and overall consumer behavior.

The results of our study revealed three main findings:

  • According to the survey, 40% of Gen Z and Millennials made a purchase while viewing a live feed on a social media app.
  • Only 12% of respondents claimed they buy anything immediately after seeing it on Social Media, while 53% said they extensively study the items online before purchasing (e.g. in an influencer post or live streaming).
  • In contrast, 39% prefer “Buy on a third-party website” (leaving the Social Media app), while 61% choose “Add to Cart” (without leaving the Social Media app).

The Changes in the Online Shopping Experience

The number of US Social Commerce purchasers increased by 25.2% to 80.1 million in 2020 according to a new eMarketer research report and will increase another 12.9% to 90.4 million in 2021. This year, retail Social Commerce sales in the United States will increase by 34.8 percent to $36.09 billion, accounting for 4.3 percent of total retail e-commerce sales.

Both businesses and customers are experiencing changes in the shopping experience. Companies and brands are looking for new strategies to gain and keep customers following Covid-19. Customers can now engage with companies, read comments, and share items with friends and family to gain rapid input on whether or not to purchase using Social Commerce.

Prior to the addition of the “buy button” option to Social Media applications, companies solely utilized Social Media as a shop window and a means to convey new collections or market new product lines. Instead, visitors can now visit a brand’s page and directly browse items, providing a fantastic chance for businesses to simply collect data and receive direct feedback on what customers want. By making the entire experience more entertaining and engaging, brands and customers can engage on a whole new level. Brands may, in fact, make use of the features that these Social Media applications currently provide, such as live sessions, direct messaging, augmented reality, interaction with influencers, and so on. Every day, users may discover new items and brands due to an algorithm that highlights products and brands depending on user behavior, boosting the chance of reaching new consumers and growing brand recognition. AR technology is being used by platforms such as Pinterest and Snapchat to win at Social Commerce by allowing consumers to try on things before purchasing them. Pinterest does this by allowing users to try on different makeup and lipstick hues, while Snapchat has teamed up with Gucci by allowing users to try on their footwear. The recent Snapchat acquisition of Fitanalytics underscores the company’s efforts to assist consumers in locating garments and shoes using augmented reality technologies.

China’s influence with Super-apps and Livestream

Known as super apps, all-in-one platforms are based on the social commerce market of China, which is among the most sophisticated in the world. When it comes to selling items online, China has surpassed all other countries since most customers utilize Social Commerce to purchase on their mobile devices. Furthermore, many of their online storefronts begin with mobile applications, as opposed to the United States, where retailers construct a site first and then migrate to mobile.

In WeChat and other apps such as Line, users can access mini-programs, also known as “apps inside apps,” that enable them to do virtually anything, from ordering meals to shopping online to playing games to purchasing movie tickets. Mini-programs are used by brands (particularly luxury brands) and KOLs (Key Opinion Leaders) to expand their companies and increase sales.

Users of apps such as Pinduoduo can shop together and receive discounts. Users of the Chinese TikTok (Douyin) app may shop inside the app by clicking on product links. There is also live streaming and mini-programs. Douyin, for example, just released the “Douyin Pay” e-wallet. Customer evaluations are one of the most significant components of purchasing online in China since people rely heavily on them, which is why they are frequently long-form and comprehensive with images.

A key aspect of Social Commerce is KOLs since customers regard them as friends who share personal recommendations and advice. KOLs are essential for firms that wish to successfully advertise their products: some of the most well-known KOLs, such as Becky Li, Austin Li, and Viya, have sold millions of dollars of merchandise… not only clothes and cosmetics, but also automobiles and, on one occasion, a rocket!

What is Live Stream shopping?

China and the United States are becoming more and more popular with live streaming. Amazon Live, Instagram, and Facebook, for example, are already allowing retailers to test this functionality. The goods are linked next to (or below) the video during the live stream so that consumers may simply add them to their basket. Similar to QVC, but entirely digital and mobile-first.

AR technology is being used by platforms such as Pinterest and Viewers of the live broadcast can join from anywhere on the globe using a phone or tablet and engage with the merchant in real-time. Through features like “live chat,” the seller may have a real-time interaction with the buyer as if they were in a shop, allowing the customer to ask questions and the brand to deliver personalized customer care. Interaction is essential!

You can purchase everything in China, from farmers’ wares to expensive items. It’s also a terrific source of fun; for example, on the app NTWRK, you can browse unique drops for shoes, home goods, fashion, art, and other items. Special visitors also display products. Stocks are scarce, and they may be found online for a significant markup days after the dip. This app also includes live festivals, which combine shopping and entertainment. 

This program works with prominent artists like Billie Eilish, who collaborated on an exclusive drop of three unique prints inspired by her Apple TV+ documentary “Billie Eilish: The World’s a “Little Blurry.” Shop Shops is another growing app that is a perfect example for small businesses: many shops prefer to live stream their items directly from their establishments.

Overall, businesses are beginning to invest more in live stream shopping, particularly following Covid-19. Walmart, for example, collaborated with TikTok to create a shoppable experience presented by some of the finest social media app producers. The popular hashtag #Tiktokmademebuyit has received over 1.5 billion views, while the hashtag #amazonfinds has had over 6.7 billion views. Every week, there are a slew of things that go viral that you didn’t realize you needed until they appeared on your For You Page: from beauty products to home décor, the number of unique and helpful products is infinite.

Shopify and TikTok have also joined forces: retailers can now directly target and generate ads from the Shopify app. This opens up new opportunities for companies to reach out to prospective new customers. Live stream buying is frequently based on FOMO: if you don’t buy it right immediately, you’ll lose out.

Social Commerce and Influencer Marketing

According to our poll, 46 percent of respondents buy something at least once a month as a result of social media company posts and/or influencer material. This demonstrates the evident need for influencer marketing since influencers can assist organizations in achieving various marketing goals such as brand exposure, sales, engagement, and high-quality content. When influencers become businesses, their fans, who are always seeking inspiration and the latest trends, have even greater faith in them.

Stories with shoppable items are an excellent example; readers receive daily information about trends and items through tales. Influencers may include the brand’s items in their tales while showing off their best outfit of the day or their new favorite beauty products. The same is true for food and beverage goods, as well as new applications, devices, and accessories, among other things. Followers may purchase things without leaving the app with just a few taps, from product discovery through in-app purchase payment, for example, using ApplePay or a credit card linked to their Facebook and Instagram accounts.

Influencer marketing works well with social commerce because influencers are highly trusted by their followers and can authentically integrate the product into their content, making the transaction flow simple and seamless. We’re not only talking about Macro-influencers here but also Micro and Medium-influencers, who frequently have above-average engagement rates and have earned even more trust from their followers.

Buy Now Pay Later

Affirm, Afterpay, and Klarna are all BNPL “Buy Now Pay Later” services that allow users to split payments without incurring interest fees. It’s an ideal business strategy for the Gen Z demographic, who frequently has less buying capacity for high-end items. Because of the epidemic, customers are looking for other methods to fund their purchasing, which is why BNPL services are growing increasingly popular, and Social Commerce can only gain from it.

Wrapping Up

With emerging technologies such as Virtual Reality, Artificial Intelligence, and Augmented Reality integrating into Social Media platforms, Social Commerce will continue to evolve. Brands and businesses alike can increase their digital presence by tracking metrics such as CAC, CPA, CPC, and CTR, analyzing the true ROI of their online activities, and reconnecting with users who left items in their cart (as opposed to browsing an eCommerce as a guest, which does not provide that opportunity to brand owners). Brands and enterprises may reach new audiences and make the customer purchase process as frictionless and fast as possible by combining influencer marketing and social commerce.

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