What is social commerce?
Social commerce is the process of selling products directly on social media.
With social commerce, the entire shopping experience — from product discovery and research to the check out process — takes place right on a social media platform.
With social commerce, you might see a pair of sweet strawberry-print clogs on your Instagram feed, hit “shop now” and complete the purchase right there in the app.
Or, you could spot a well priced umbrella as you’re scrolling through your Facebook feed, click “Buy.” Once your purchase is complete, you can continue to enjoy your usual Facebook experience by creeping pics of your friend’s sister’s ex-boyfriend’s new baby, without missing a beat.
These are shopping opportunities (shopportunities!) right on the digital platforms that your audience uses most. And you should be taking advantage of them.
Social commerce is a form of e-commerce with a focus on the active involvement of customers and interaction among fans. The focus is on the exchange about brands or products in social networks, which is intended to promote sales through recommendations and positive comments.
Online shopping in social networks
In 2005, Yahoo used the term “social commerce” for the first time. The breakthrough came almost synchronously with the increasing popularity of social networks in the course of the 2010s.
While social media was initially used by companies primarily to promote their image, present products and brands on the web and expand their existing fan base, social networks are now also becoming increasingly important in view of the worldwide increase in e-commerce sales.
Focus on active participation of clients
While communication with the target group in traditional marketing is comparable to a one-way street – from the company to the consumer – online marketing in general (and social media marketing in particular) thrives on interaction. Accordingly, the active participation of customers is also in the foreground in social commerce.
What the traditional web shop lacks is part of the programme in social networks: the development of personal relationships and interpersonal exchange. The content presented should inspire the community, encourage them to interact – for example by commenting or sharing – and thus ultimately push the company, product or brand.
In order to build appropriate relationships and actively involve the community, simple product placement is not enough. Relevant content that offers the user a certain added value also plays a decisive role in social commerce – as is so often the case in online marketing. Once again, the challenge lies in winning the trust of the target group through authentic posts and arousing emotions with stories.
Social Commerce will become a platform feature. Platforms such as Tmall and JD.com are more than just e-commerce platforms. They are digital ecosystems straddling chat, social media, payments, search and e-marketplaces.
An integrated checkout for Instagram
Instagram in-app checkout is coming. After a test phase with selected companies in the USA, the direct shopping function will also be rolled out in other countries. However, an exact date has not yet been communicated by the Facebook group. The new function enables the sale of products directly via Instagram without a separate online shop.
This significantly improves the user experience and the number of clicks until the purchase is completed can be reduced to two. This in turn should lead to high conversion rates. The disadvantage for companies: in addition to a transaction fee of 5 %, Facebook also retains the payment data of the buyers. So far, the use or interest in using social shopping is still ~ 25 % each (Figure 1), but these shares are likely to increase in the future.
A funny fact is that China adopted, due to COVID-19, the American QVC-Syle shoppertainment livestreaming events and it became swiftly very popular. After that, China started to be transparent to the U.S.
The future will be exciting
Asia—not just China—will have an increasingly significant role to play in this incubator, thanks to its mobile-first population. Southeast Asia is also a fertile ground for social commerce development worth watching. For example, two new superapps—Indonesia’s gojek and Malaysia’s Grab—are already well established across the region.
Both started as ride-hailing services, but by virtue of creating a third-party platform for developers (like WeChat did) now offer seamless access to chat and on-demand services across transport, payments, financial services, groceries, dining, logistics, healthcare services and lifestyle.
China, the birthplace of WeChat, continues to innovate, and new social commerce platforms are achieving stratospheric size. One such example is Pinduoduo which in just five years of existence has achieved the same Gross Merchandise Volume (GMV) that Alibaba took 10 years to achieve. In the 12 months up to September 2020, Pinduouo’s GMV stood at US$214 billion. It achieved this by combining the interactivity of social media platforms with team buying, fun shopping games and value for money purchasing.
Each new platform has its unique characteristics, but they all follow the same genetic makeup of their predecessors and peers. We need to learn how to fully leverage brands across platforms such as these and many more which are yet to emerge. This will be a constantly evolving process, but 2021 will become the year when social commerce becomes an established discipline, just as media relations did decades before.
And what about Europe?!?!?!
Unfortunately, Europe is not themost advanced continent on earth. Due to the hilarious data protection laws (GDPR), a lot of opportunities are blocked. It is quite difficult, to be conform, because there is little transparency and a lot of insecurity, due to lacking information.
It took six weeks of my precious time, to get this website GDPR Comform, and I am still not 100% sure, that I am completely safe. Especially Germans are hysterical about the national holy grail Data. efore Corona, a rweal large amount of Germans refused to pay cashless, because they have this odd believe that some creepy people will scan their payments, or something like that.
For me as a Dutch man, with a culture of openess and curiousity, this mindset is strange and sometimes I have to grin when somebody tells me, that I am brainwashed because I prefer to pay cahs-/contactless 🙂 This really happened, when I was asking my butcher, when she will start to accept debit cards. A man, who I had nerver seen before, started to speakto me lodly that I allow whoever, to control my life 🙂 :).
In the Netherlands, physical money is hardly used anymore. When I buy some food on the market, I pay with my debit card and more and more infrastructural feateures like public transport and parking (cahs- and ticketless) are digitalized and cloud based. It’sfunny, that two neigbours are so very different 🙂
But the European Union and especially Germany must learn, that the world, and therfore also Commerce (on and offline) and marketing are changing, to be capable to become an equal player. I often wonder, why Europe, as a huge community with capable people, is not able to design and develop. This is still an issue https://sifted.eu/articles/problem-european-innovation/.
“In an age in which “software is eating the world”, European firms need to adjust their management styles and organisational models towards the US-American style while keeping their distinctive, valuable European features that make European brands loved for quality around the world.”
It seems, that companies also ignore changes: https://www.linkedin.com/pulse/oh-why-do-german-companies-have-problem-job-hoppers-marian-jarzak. I have worked in different doamins and I have lived in many countries (Dutch people are globetrotters) and this fact makes comanies feel lost. They often can’t cope with a life journey wchich are not German normed 🙂 Reading between the lines about work- and life experience, the felxibility (agility) one gaines, when living a varied life,is lacking.
Agilism is still failing https://luis-goncalves.com/why-agile-does-not-work/.
One day in the future Germany AND the European Union will become aware of the fact, thatignoring innovation will have a huge impact on economics and therefore on the prople living in Europe. Especially in our current crisis, it becomes crystal clear, that Europe is not up to date!
Let’s see, what the future will bring…