Social commerce made a big splash during the pandemic, and market watchers expect it to grow exponentially over the next few years. As businesses prepare their strategies to move forward in 2022, they should consider the impact of key social commerce trends.
The traditional commerce model involves finding details about a product online or through advertising outlets. Once shoppers discover a product this way, they go elsewhere to purchase it. The model since the pandemic has expanded somewhat by moving product conversations to social media to influence shopping preferences.
The social commerce model is now becoming all about buying and selling goods or services directly within a social media platform. This approach moves social media beyond its traditional role in the discovery process.
Pivotal Development for E-Commerce
Before social commerce, brands generated awareness and community-building on social media. The goal was to drive traffic to a third-party web property, such as a Shopify site or an Amazon store. With social commerce, brands can now grow their audience and sell to them on one platform, according to Thibaud Clement, CEO and co-founder of Loomly.
“Social commerce encourages users to complete their entire purchase process without leaving their preferred social media apps. Social commerce is a pivotal development for e-commerce,” Clement told the E-Commerce Times. “Social commerce is turning e-commerce into in-app purchases.”
Now each step in a funnel matters, and each click counts. It is very easy to see how selling where you advertise is a game-changer, he observed.
Consumers and businesses are adopting social commerce very rapidly. That marketplace will reach $3 billion by the end of 2028, with a steady increase of social buyers in the U.S. from 32.5 percent in 2021 to 37.9 percent in 2025, Clement noted.
Smart retailers must quickly recognize the following five key trends to build a social commerce presence.
1. Commerce Platforms Are Converging
Social commerce, e-commerce, and social media are not all the same. But they do have a convergence point on the internet.
Traditionally, social media sites were window shopping platforms where users hung out with their connections but with no shopping intent. Search engines were the actual shopping platforms where users actively looked for a solution to their need, offered Clement.
“In that sense, social commerce is really evolving social media into the mall of the 21st century, where users come to both hangout and shop,” he said.
Its main benefit removes a step in the sales funnel by allowing users to discover a product and buy it within one app. The transaction is most likely done with an on-file payment method such as a saved credit card.
The biggest difference between social commerce and e-commerce is how buyers and sellers interact with one another and the level of influence involved, offered Jennifer Krizanek, CMO of Contentserv.
“Considered a subset of e-commerce, social commerce involves social media and online media that supports social interaction. E-commerce is the act of buying and selling goods, products, or services over the internet,” she told the E-Commerce Times.
2. Consumers Are Driving Point of Sales
Social platforms will continue to be the primary place for consumers to follow and engage with brands. Today even B2B manufacturers are taking notice, noted Krizanek.
Social media will be the advertising and buying platform. Both social commerce and social media are enjoying explosive growth with e-commerce sales expected to increase at a healthy clip, she asserted. Research shows them reaching 23.6 percent of total retail sales by 2025 versus 11.0 percent in 2019. Behaviors like click-and-collect usage will reach $140 billion in sales by 2024.
Differences between social and e-commerce exist. But the two channels have similarities as well, Krizanek continued.
For instance, each strives to create a seamless experience. Neither should be viewed as separate exploratory channels.
Rather, they both are complementary to executing, fulfilling, and achieving omnichannel commerce strategies and increasing revenue. They both also increase customer trust and loyalty, she explained.
3. Social Commerce Is Realigning Buyer Behavior
Brands must figure out how social commerce aligns with the behavior of their audience, noted Clement. As social commerce and social media converge, brands may not thrive using one channel without the other.
For instance, if a brand has an established presence on social media, but maybe no online store set up, then the main question is: will this audience actually buy from them through social media?
If a brand has an established e-commerce website, but no social media presence, then the main question is: can they unlock a growth reservoir by generating awareness and traffic from social media?
4. Digital Assets Are Taking Over
Worldwide interest in virtual goods is developing. Retailers must watch for it and act on it, Clement predicted.
Cryptocurrencies and non fungible tokens (NFT) are digital assets recorded on the blockchain. Unlike traditional forms of currency, NFTs are interchangeable because each token has a unique value. Clement expects such transactions to go mainstream.
The metaverse is taking center stage. Consumers have never been keener on acquiring digital assets. Meanwhile, supply chain challenges and inflation are impacting businesses that market physical goods, Clement added.
“There is an opportunity for most types of businesses. Fashion brands can market digital clothing items, lifestyle companies can venture into selling artworks, and content producers can monetize premium content,” he said.
5. Influencers, Content Are Driving Factors
Influencer marketing is the new “It” thing, according to Vinod Varma, co-founder and CEO of Creator.co. As social network usage grows across various industries, brands spend more on social media and leverage key influencers to connect with audiences and share their messaging.
“Brands are no longer just throwing money around and seeing if it works. They are demanding results and ROI from the influencers they select,” he told the E-Commerce Times.
Content will remain king, whether brands create content, work with influencers, or leverage an agency. The content will always be what gets shoppers’ attention.
Brands must explore the different social platforms to understand the best way to connect with users. For instance, TikTok is all about video. LinkedIn is great for sharing information across B2B channels. Facebook is about community and connection. Twitter is the on-demand news channel.
“Your content should always have a purpose, and you should keep that goal in mind when generating and posting it,” said Varma.
Latest Social Commerce Research
Consumers still have social commerce activity sitting exclusively within an e-commerce center of excellence, according to the latest research released in November. The findings confirmed that internal organizational silos still prevail, even 18 months into the pandemic, according to 3Q Digital VP of E-Commerce and Marketplace Strategy, Diana Gordon.
3Q Digital’s 2022 Social Commerce Report outlines the survey results of 400 marketing leaders across four industries — consumer packaged goods (CPG), retail, technology, and financial services.
The report reveals some surprises:
- Most brands were investing in social commerce through Facebook-owned properties. Other platforms like Snapchat seemed to have better success at achieving overarching marketing objectives.
- All respondents regardless of industry agreed that social commerce would continue to grow in importance, along with investment in subsequent quarters.
- Social commerce in the U.S. is still in its early stages, and each industry has unique reasons for investing in it.
More research tracking the evolutions within this space over the next several years will show how brands can best use social commerce to complement their broader media strategy, the report concluded.