Sep 20
For those who may not be familiar, social commerce represents the integration of e-commerce functionalities into popular social media platforms. This integration allows businesses to directly sell their products to users within the social media environment. What sets it apart from traditional e-commerce is its seamless incorporation of a "purchase" feature directly within social media posts by sellers, enabling buyers to click and buy items instantly. The entire transaction process, from payment to order fulfillment, is managed by the social media platforms themselves. Prominent social media platforms actively involved in this practice include Instagram, Meta (formerly Facebook), Pinterest, YouTube, Twitter, TikTok, and even WhatsApp.
While the concept of social commerce emerged in the mid-2000s, it didn't gain significant traction until recent years. The turning point came with the rise of a generation that grew up with the Internet and was comfortable making online purchases. Generation Z and subsequent generations are the driving forces behind the remarkable growth of social commerce. For example, in 2021, Instagram, whose user base predominantly comprises 18-34-year-olds (Millennials and Generation Z), witnessed over 70% of this demographic making purchases through Instagram Shopping, as reported by EarthWeb.
On a global scale, the impact of social commerce is staggering. In 2022, it generated a whopping $728 billion in revenue, according to Statista. Furthermore, it is projected to maintain a robust compound annual growth rate of 31.6% through 2030, reaching an impressive $6.2 trillion. With an already substantial user base of 4.8 billion individuals on social media (virtually encompassing anyone with internet access), and the likelihood of this figure continuing to expand, the potential for social commerce is nothing short of colossal. Thus, it comes as no surprise that this phenomenon is commanding the significant attention it rightly deserves.
However, the question here is whether social commerce represents the "revolutionary transformation" in online shopping that it is often touted to be. The answer is simply no, as this selling format does not fundamentally alter consumer behaviors, expectations, and needs when it comes to online shopping. Shoppers still require comprehensive information to make informed decisions, and social commerce platforms must still adhere to them (such as the use of user reviews to validate the seller's credibility and reliability; the need for a simple return policy should the product arrive defective; immediate online customer inquiry response; etc.).
Social commerce just does not replace traditional e-commerce platforms. Consumers still rely on these platforms for their regular shopping needs. Traditional e-commerce websites offer a wide range of products, extensive search and filtering options, and a seamless shopping experience, providing a level of convenience and diversity that social commerce, with its more fragmented and informal structure, cannot replicate.
However, what social commerce excels at, in contrast to traditional e-commerce, is its effectiveness in immediately capturing impulse purchase opportunities. When consumers see something they like in a social media post, they can buy it immediately without going through multiple cumbersome steps as they would have in the past, which often resulted in lost sales opportunities for businesses.
Social commerce is therefore a complementary component to the broader e-commerce landscape. It serves a specific need for consumers, especially when it comes to the discovery of niche new products that are not often easily visible. A key statistic reinforces this idea, showing that social commerce remains a small but significant part of the overall e-commerce world.
As a business, as a brand, Integrating social commerce seamlessly into your sales strategy is therefore a no brainer. But having said that, you will need to understand clearly what role it plays to fully take advantage of it.
For small businesses and startups, it's likely the single most effective strategy to scale your venture. If you've already built a small foundation of social media followers, harness social commerce functionalities to capture the impulse purchases sparked by your product posts. However, keep in mind that establishing credibility can be challenging, so encourage user reviews, provide swift customer support, offer transparent delivery and return policies, and consider hosting live shopping sessions to ignite excitement around your brand.
For larger and well-funded brands, social commerce offers a cost-effective way to showcase the more unique and exclusive products you have. Remember, consumers look at hundreds of posts a day, so you will need something unique (in a visually captivating manner) to stand out and catch their attention. So focus your social commerce efforts on new product and exclusive product launches. If you haven't done so, do start to initiate partnership negotiations with social media platforms to secure favorable terms for selling directly on their platforms. Given the scale of your business's size and reach, this should be a feasible endeavor.
Well, that’s all I have to share this week. I hope this helps you in some way. Again, make sure you give us a follow on our LinkedIn page, we do release postings like this regularly. And soon, we will have a podcast version of this, so stay tuned.
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