Social Commerce – The most important in a nutshell
Social commerce plays an important role in retail today. To discover and buy new products, consumers are currently using more channels than ever before. 90 percent of all online shoppers use social media for this purpose. Of these users, around 38 percent become aware of new products via Instagram and the like, which represents huge sales potential. This is because purchases can now be made directly via all major social networks. Prospective customers can easily complete their order directly where they come across the items. Social commerce has triggered incredible hype among e-commerce trends, with many benefits for businesses. In this article, you will learn what social commerce actually is, how exactly it works, and how you can use social commerce optimally for your company.
Social commerce (abbreviation: S-commerce) is the direct sale of products and services via social media. This is where social platforms such as Facebook, Instagram, Pinterest and TikTok are linked with e-commerce.
With social commerce, users are not only inspired on social media to subsequently make purchases on the brand’s website. Here, the entire shopping experience, i.e., from product discovery to final checkout, takes place entirely on the social media platform: The initial attention on the product or service, followed by serious interest, the gathering of information, the setting of purchase incentives, up to the actual conclusion of the purchase. In addition, customers receive support directly via the social networks, can provide feedback and share experiences with other community members.
The term “social commerce” was first used by Yahoo in 2005. On the start page of the then popular search engine, links were provided to products from external online stores that were currently in vogue. Yahoo thus functioned in a similar way to a social media site that specifically tried to generate attention among users for certain products – this is how social commerce came into being.
About five years later, as social media became more popular, social commerce took on increasing importance due to sales promotion through recommendations. Social networks were no longer just for promoting a company’s image, showcasing their products, and increasing their reach. They also had a significant impact on increasing e-commerce sales worldwide.
When Facebook introduced its shopping function in May 2020, however, social commerce once again took on a whole new dimension. Accordingly, social media no longer served merely to promote sales, but made it possible to map large parts of the sales process directly within the platform. Such a shopping function can now be found on all major social networks.
Social commerce is not only relevant for large companies. Smaller, local brands and individual companies can also reach customers and make sales much more easily and specifically via social media without expensive marketing campaigns. That’s because, according to the Accenture study “Why Shopping’s Set for a Social Revolution?”, 59 percent of respondents are more likely to buy from small companies on social media than from online retailers, and 44 percent are even more likely to give unknown brands a chance.
Leading the way in the overall e-commerce market, and therefore in social commerce, is China. The number of sales made there can undoubtedly not be compared with Germany. The sales generated on Single’s Day, the most important shopping holiday in China, far exceed those of Black Friday. And we’re not talking about normal e-commerce here, but purchases via social networks, such as WeChat, QQ and Co.
But even if Germany has not yet reached the same level as China, a very clear trend can be identified. Social commerce is seen as the “future of commerce,” and it is to be expected that all major players will offer such a social commerce experience in the next few years.
E-commerce (electronic commerce) involves buying and selling transactions through a website, apps, online retailers and marketplaces. Social commerce, on the other hand, involves customers making purchases via social media. Social commerce cannot therefore be equated with e-commerce. At the same time, social commerce has significant advantages over e-commerce.
All of these benefits lead to the four goals businesses want:
What the customer journey looks like for customers who store via social media depends entirely on the network they use. Currently, the most important social commerce platforms are Facebook, Instagram, Pinterest and Twitter.
Facebook is still the most used social media platform. Countless millions of people are active here every day. The Facebook Marketplace was launched in 2007 and has been an integral part of the platform ever since. Here, both members and companies have the opportunity to buy and sell products via Facebook. The Buy button, which has been available since 2014, took the shopping experience to another level. Customers could now buy products featured in posts directly through the platform.
Along with Facebook, Instagram is one of the most popular social media networks that specializes in images and short videos. Companies can present their products excellently with an appealingly designed photo. Stories, however, are especially hyped by users. After all, instead of a boring product photo, you can tell a story with and around the item here. To enable customers to store directly on the platform, the Shop Now button was introduced in 2015. Just like on Facebook, users can make purchases here in a matter of seconds. However, Instagram also provides another highlight with its new “Shops” feature. This allows companies to set up a complete store on the platform. This allows users to buy products directly on the company’s Instagram page.
On Pinterest, too, the focus is on visual content. Users can design a pinboard with photos and small animations on the platform and publish them. The presentation is much more playful than on Instagram. Products can also be purchased directly on Pinterest. Items such as fashion and art are put in the right light with Pinterest Shopping, for example, using product pins. However, this feature is only available to select sellers so far.
TikTok likewise offers users the opportunity to store via the platform with its Shopping function. Businesses can add custom cards to products in their in-feed video ads that users can swipe through. Clicking on the Card takes them to an in-app catalog. The actual purchase is then made on the company’s website. Additionally, TikTok offers Dynamic Showcase Ads, which allows businesses to serve automatic, targeted ads for various items based on users’ interests and activities.
Even though social commerce has not yet been developed as far in Germany as in other countries, companies can achieve success on social networks such as Instagram, TikTok, Pinterest and Co. by selling products directly on the platform. The following three examples show how it can work:
PURELEI is a jewelry brand that additionally gives its customers a little Hawaii feeling with fashion and accessories. On Pinterest, the Mannheim-based company lets users forget the gray everyday life and feel the summer through their tropically designed pinboards. With the help of product pins, users interested in buying get all the necessary information, such as the description and price of the items displayed. Since it is not yet possible in Germany to make purchases directly via Pinterest, users are redirected directly to the PURELEI online store.
EcoYou is a Berlin-based label that specializes in selling sustainable, plastic-free bathroom and household products in its own online store. On Instagram, the brand brings users closer to the topic of environmental awareness in high-quality designed content. Below that, they also share tips on how each individual can make a change in that regard. In doing so, they link to their respective appropriate product especially in their Stories. Through the store function on Instagram, users receive all relevant information of the item directly on the platform. However, the conclusion of the sale has so far taken place via EcoYou’s website, as the checkout function on Instagram is not yet available in Germany.
Known through magazines such as Gala, Instyle or Cosmopolitan, founder Jennifer Lapidakis’ makeup collection gained its breakthrough in 2019 through an appearance on the show “Die Höhle der Löwen” on VOX. STRONG fitness cosmetics offers decorative cosmetic products that are water- and sweat-resistant, making them ideal for any workout. The products are distributed with the help of social commerce. Not only is a seamless integration of the Facebook Marketplace in use for this, but posts with a special focus on the interests of users as well as user reviews also have their place there. There is information about make-up tips for beginners and professionals, but also current promotions in the store.
One question that could be asked in this regard is whether social media users really have an intention to buy when they are active on the platforms. When customers are directly in a company’s actual online store, it is to be expected that they actually want to purchase a certain product. On social media, people basically focus on contact with friends and family. They also want to find out about the latest news, be inspired, or watch funny videos. The shopping experience on the platforms is not yet the focus for users.
An additional disadvantage is the dwindling control companies have over their customers and their data. The fact that the purchasing process takes place entirely on the social media platform means that customer data is stored by the respective platform itself and no longer by the retailer. This makes it harder for companies to get to know their customers better and provide them with a personalized shopping experience. In addition, social networks can sell customer data to others or pass it on to competitors. This damages customer trust in the brand and can result in lost sales.
Even more critical, however, should be the danger of social networks taking control of pricing. It could come to product prices being changed without the retailers’ consent.
Social commerce offers the opportunity to achieve a large reach with little effort and without a high budget. Companies can create their own store and sell their own products directly via social networks without any detours. With these tips, companies succeed in implementing social commerce the right way:
To reach people emotionally and arouse interest in your own company, you should make sure that you don’t just present products, but tell a story about them. It doesn’t matter whether it’s a photo story, a blog post or a video in which the product itself is tested – the main thing is to generate emotions in potential customers that they associate with your product or brand. With the help of stories, companies show their authenticity and character. However, care should be taken to be honest and open, as this is the only way to develop deep trust among customers.
Social commerce should be used thoughtfully. It’s important to choose the right platforms to distribute your products. Not every social network is relevant to your target audience. For the time being, you should draw attention to yourself and your store on channels where you are already represented. There you are already known and appreciated by users and in most cases get more support by liking and sharing posts.
In order to become successful with social commerce, it is important to not only rely on community participation here, but to still focus on your own efforts. High quality content should be shared regularly, you should be active and up-to-date. For this, it is necessary to create a long-term content plan so that you always have enough material to post and it does not come to a standstill on the page.
Just as you link to your web store on social media platforms, be sure to link to your social media accounts on your website. Higher click-through rates can only be achieved with two-way links.
In any marketing strategy, as in the case of social commerce, you should find out which social media channels are used by your target group. This is the only way to advertise and sell targeted products. Here, it is also important to understand how your target group consumes content. Instagram users may have a lower purchase intention than Pinterest users.
Tailor your content to the appropriate platform and your potential buyers. On Instagram, for example, image series with several of your products can be presented aesthetically, while on TikTok a presentation in video format is required. A high level of creativity will help you stand out from competitors and fully attract attention. With high-quality and inspiring content, you will convince users about you. Remember that dynamic content usually resonates better with people than simple images.
Different product data requirements can be found on every social commerce platform. In order for you to operate successfully across platforms, it is necessary that you provide the channels with the right information in each case. Again, make sure it is up-to-date and accurate.
When it comes to product selection, be strategic. Too much choice can often overwhelm customers. With an ROI analysis, you can find out which of their products perform best. These are exactly the ones you should limit yourself to, as these are the items that will generate the most conversions.
Influencers aren’t called that for nothing: They have the power to influence people, which can be crucial, especially when it comes to product purchases. On Instagram, for example, a shopping feature can be integrated into certain profiles to close the gap between product discovery and purchase. With a combination of social commerce and influencer marketing, users are offered more creative and organic brand exposure.
Compared to China or the USA, social commerce in Germany is still relatively in its infancy. Nevertheless, a clear trend is discernible: customers want to be accompanied via social media in all phases of their customer journey and enjoy a unique shopping experience. Big data, artificial intelligence and the growing influence of influencers are making social commerce a potentially profitable alternative to the classic online store. But the ongoing development of new social media channels and the user-friendly features of the platforms are also helping to raise social commerce to a high level.
But it is not only customers who benefit from the new way of online shopping, companies are also offered great advantages. They get the opportunity to strengthen the relationship with their customers and close more sales. Due to the presence of the brand in the place where potential buyers are anyway, as well as the fast handling of the purchase process, a feeling of trust is created with the customer and thus the chance of achieving a purchase is increased.