Social commerce has become more than just a trend in the social media and online commerce world. With the world continuing toward more digitalization, and social media platforms becoming a place not just for entertainment, shopping on these platforms has skyrocketed. But what is social commerce?
The term social commerce was derived from e-commerce and social networking and is considered a subset of e-commerce. Social commerce is a newer approach to e-commerce which involves social platforms like Instagram and Facebook to publicize and sell products. In other words, social commerce is selling products directly on social media which means that the whole shopping experience, from discovery to purchase, occurs on social networks. When this simple concept is combined with the substantial growth of mobile device usage for social media, the value in this type of commerce greatly increases. The benefit of social commerce is to shorten the customer journey by making the sales process faster and easier. So, instead of discovering the product on a social network then going to a website to complete a long transaction, the customer can discover and complete the transaction on one platform. Social commerce used to only be present on a few social media platforms but this has rapidly changed. The pioneers of social commerce are Facebook, Instagram and Pinterest.
Facebook is considered the leader in social commerce. Facebook is the most popular social media platform with roughly 2.8 billion monthly active users, which constitutes a huge market to sell products. Furthermore, Facebook has always been at the forefront of social commerce with new features. Users can create “Shop Now” stores, which are online stores on Facebook that enable merchants to feature their items and connect with customers through WhatsApp, Messenger or Instagram. This tool helps merchants manage orders, add items and test out the customer experience.
Although Instagram came to the social commerce game a bit later than others, they have the opportunity to own this space due to certain advantages of the platform. The majority of Instagram users are young adults, which is where social commerce is seeing its largest demand. Also, Instagram is an inherently visual platform which gives it an edge over competitors when it comes to displaying and discovering products. Instagram has more than 130 million users click on Instagram shopping posts each month. It’s easier to convert engagement to sales on this platform because 70% of shopping enthusiasts turn to Instagram for product discovery. Instagram has upgraded the capability of shoppable posts by adding an in-app checkout feature which eliminates the customer’s need to purchase through a merchant website. Instagram is always working on more shopping features which means the platform will become more commerce-centric than ever before.
Due to its highly visual nature, similar to Instagram, Pinterest is deemed ideal for social commerce, especially since half of U.S. users are already using it to shop. It was among the first platforms to release native shopping features. Pinterest introduced Buyable Pins in 2015 which was an instant success. Since 2019, Pinterest has started promoting itself as more of a “commerce social company” than a “social media platform”.
Social commerce is directly tied to the increase in mobile shoppers. Mobile traffic is now just as widespread as desktop traffic. 92% of internet users use mobile devices to go online at some point. As of January 2019, North America had a mobile social media penetration rate of 61%. This huge potential consumer base now has the ability to make purchases easily through their phones by just tapping the “buy button” on the social media platforms. This explains why mobile social media platforms like Instagram have a higher Average Order Value than Facebook. Shopping from a mobile device on social platforms also helps in authentic engagement. When a merchant makes a sale through a social media platform algorithms categorize this action as engagement.
During the Covid-19 pandemic, as reliance on e-commerce and social media sored, social commerce has achieved a large increase. This increase is not accidental, and it will continue. Estimates indicate that it will increase at a rate greater than 30%. In the US, the number of social commerce purchasers surged by 25.2% to 80.1 million in 2020 and will grow to greater than 90 million in 2021. Retail social commerce sales in the US reached $19.42 Billion in 2019 and it grew by 37.9% in 2020. It is expected to hit $36 billion this year.
To reap the benefits of social commerce requires implementing a robust social media strategy that engages users, builds strong relationships and provides unique content. Social commerce is booming across the globe for many reasons. The main reason is simply because of the astronomical growth of social platforms. This gives merchants the opportunity to directly advertise and sell their products to consumers all on one platform. Social commerce allows merchants to deepen the connection with their customers which helps build trust and creates a sense of loyalty. People tend to trust others' opinions. When you have a satisfied customer they are more likely to leave positive reviews and comments about your brand or even share and recommend you. This helps gain more brand loyalty and win new customers.