The Power of Social Commerce: Why Your Business Can't Afford to Ignore It

The concept of social commerce was brought forward by Yahoo! nearly 17 years ago. At the time, it indicated advertorial content targeting users on eCommerce sites. Some might say that Steve Rubel, a PR executive and blogger, did the term justice in 2015 by expanding it to consider social networks as an eCommerce tool that could offer customers shopping recommendations and facilitate transactional interactions.

Social commerce began in Meta (formerly Facebook) before the other platforms caught on. The evolution has been non-stop, from being used to promote visibility and brand popularity to running stores virtually without a customer ever having to go to the brand’s website. If you are a numbers person, here are some interesting stats.  In 2022, social commerce sales stood at $724 Billion. One year later, there has been a 24.9% increase in social sales, with the expectation that sales will exceed $2 Trillion in the next 3 years. 

We’re talking an estimated CAGR of 30.8% YoY till 2030, which is a consistently positive rise!

While this has been attributed largely to the buying behavior in South Asia, the trillion-dollar question here is,

Will a social commerce strategy catapult more eCommerce sellers of all business sizes to the promise land of maximized sales growth?

Keep reading to find out! 

What is social commerce?

Social commerce entails selling and buying products through social media. It takes your brand online and exposes you to a wider audience, thereby amplifying your storefront’s visibility and accessibility without someone having to set foot in an offline outlet to do business with you.  With social commerce, the shopportunity goes through social media, from discovery and price comparisons to checkout. The trending social networks through which social commerce happens are Facebook, TikTok, Instagram and Pinterest.

But before we dive any deeper, there are a few things to clear up. 

Social commerce is not the same as social selling or eCommerce. While eCommerce encompasses transactions across eCommerce marketplaces, online stores or apps, social commerce pertains to purchases made only through social media. Social selling, on the other hand, are relationships that you cultivate on social media to tap up relevant leads. Think of it as a building block (but not the complete picture) of social commerce where you spread word of your storefront and product through social networks. 

So why all the hullabaloo over social commerce?

For one, it’s the lead potential. The internet is a wide field and the odds that more people hear about your business is greater online than offline. Even the most introverted and/or socially awkward person has at least one profile on any one social media platform, meaning that even if they don’t frequent all social networks or buy regularly, their online behavior, search patterns and timings that see the highest and lowest traffic get captured by algorithms. Advertisements are accordingly repositioned and displayed as a means to draw the buyer further into the funnel. Two, geography isn’t a barrier, and as long as your store accepts payments in different currencies and ships internationally with a reasonable timeline, the world can literally be knocking on your door. 

Does this mean that social commerce is a futuristic substitution for a brand’s website? Not exactly. It will be more of an engagement enabler that lets you stay on-brand across different social networks. The next section will give you compelling reasons to consider the switch to( and subsequent adoption) of social commerce.

7 Reasons to use social commerce

Remember what we said earlier about social commerce being fueled by social selling?Social shopping has moved customers and sellers away from a traditional eCommerce model that is static and one-dimensional.

Here is how it works; social commerce is driven by different content formats which include but are not limited to- 1:1 chats, product demos, expert tutorial videos, advocate communities and forums and feed trends. It connects creators and businesses with customers to promote a particular brand’s product or service, which serves as user-generated social validation. It’s like a user review left on Google; only more interactive! This turns the experience into a bond-building effort between the primary players; shoppers and sellers.

A new channel for increased interactions 

In China, social media commerce apps took 10% of  the sales market share away from traditional eCommerce platforms, with the country poised to reach $1 Trillion by 2025. While there is a shift in social behavior overseas in the U.S, the adoption rate of social commerce is moving at a comparatively glacial pace, at just 5-6%. Skilled social shoppers are constantly seeking to recreate the social experience in their online interactions with a brand, and social commerce offers exactly that. The business invites a user base that keeps on growing without losing out on existing consumers who are already familiar with the brand. In fact they play a major role in expanding the user base by recommending you to their network, which is why it matters that relationships are nurtured carefully giving every user equal importance when they transact socially.  

Collecting customer feedback in real-time

Social commerce lets customers provide feedback on their interaction experience- both the good, and the bad. While it isn’t always possible for a merchant or brand to get it right everytime, what customers notice is your responsiveness to, and awareness of their feedback. It opens up a two-way communication where you can learn how smooth the purchase experience is, discover roadblocks or glitches and the measures to take to make sure an unfortunate experience does not repeat.

Acting on feedback conveys to customers the message that you are not passive in the experience you wish them to have with you. It positions you to promote your products in a way that lets the audience resonate with your brand. This way, even if a person’s experience hasn’t been positive, they won’t rule out future interactions based on a one-off incident.  Other users are very likely to look up reviews and verify experiences of those who made purchases before them, which establishes your credibility and enables them to decide to proceed. You can even use feedback for product innovation and come up with a product range and line that people would be interested in buying, rather than drain your best efforts and time on things nobody would buy.  Creating and sharing polls lets people vote based on brand familiarity and preferences. This feedback can be aggregated to revamp your existing catalog. Consequently, your inventory is stocked with the right items across seasons, thereby even beating inventory seasonality!

Be where your customers are

Did you know that TikTok and Instagram are giving Google Maps and Searches stiff competition, with 40% of Gen-Z shoppers preferring to do their research through these platforms? In countries like India where ½ the population is under the age of 29, this percentage represents a sizable chunk of the user group you intend to engage with. Considering the estimation that India’s social media users will grow to 448 million in 2023, social commerce is the means to get you to where your customers spend an average of 3-5 hours of their time. 

There is another encouraging example to indicate the potential of social commerce for fueling engagement. On TikTok, the hashtag #TikTokMadeMeBuyIt blew up, garnering 28 billion views across ads, influencer content and reviews.When it first launched in the market in 2016, only a handful of people knew what TikTok was. But beauty, fashion and apparel content creators turned the pandemic-led lockdown in 2020  into an opportunity to share videos online and engage users through dance challenges, product endorsements and quick hacks, all of which proved to be a hit with the masses! And this trend continues today, with content creators monetizing off of video sharing apps as more users spend time consuming content!

Frictionless, Faster shopping

Social media reduces the steps in the buyer journey and makes it frictionless by offering viewers options to see something at a glance, click on it to expand, verify affordability and checkout. In other words, the process from discovery to final purchase is smooth, with the onus on the seller to ensure such orders are fulfilled against the time and delivery expectations. 

Every mouse click or finger tap matters. If it can be shortened, the shopper’s attention is less likely to waver,  leading to them finishing the transaction. Lifting the registration formalities to first-timers while recording payment information can also reduce the friction and quicken the process. This gives control back to the consumer and promotes autonomy, from how they find their way to you, to re-engaging with you after multiple purchases.

Improved ranking on search engines

If your on-page website content is relevant and promoted across social media accounts, it can crank up traffic. Content that plays into a user’s interest will push them to you, motivating them to explore your business. At the very least, your site gets bookmarked for a later time. With gated content, you can collect visitor information to start building up rapport even before they become buyers. You can subsequently link your social accounts to link-building and email marketing strategies, ensuring your audience has a clear path to you. Such organic actions are rewarded by search engines by pushing your website higher up in rankings, ensuring more eyeballs on your business or brand. 

Understand  Consumer Psychology 

Social commerce capitalizes on people’s natural inclination to go by intuition, look up to a leader or follow the herd, particularly if there’s a shared interest. There’s an interesting concept in social psychology known as thin-slicing, which relies on the social cues consumers respond with to context clues. A few mental tricks that social commerce uses to know what influences and inspires a customer’s buying choices are

Following the herd

The herd mentality is followed by risk-averse social shoppers who observe what others are buying, or bought previously to confirm they’re making the right purchase choice for themselves. And it’s not limited to the product but also to the post-delivery experience. The right product but a poor delivery experience can discourage them from interacting with a particular social commerce brand. If all the boxes check, following the herd is a classic case of peer-to-peer social validation.  

Following the Leader

If you bought a Lakme eye-conic pencil after seeing a content creator’s how-to tutorial, you just followed a leader! People tend to trust an expert authority, especially if the results are visible and visual. This saves them decision-making effort and time. If the content is plugged with testimonial sharing, expert sharing and referral programs where the original buyer is rewarded for sharing their experience, social commerce gives you the advantage of having both existing and new accounts that are actively engaged!

Follow who you admire

Recall the efforts you take to impress your crush and find out what he/she/they like? Social commerce exploits this tendency as a part of impression management. If someone you look up to buys a product, the automatic assumption is that that product is worth buying, whether it’s for yourself, or for someone else. Examples of this include influencer’s picks, exclusive invite-only referral programs and group or co-shopping.

Measurable customer insights 

Social media analytics differ by platform, and metrics vary by content. The most common metrics, though, include views, impressions and social shares. Social media analytics offer companies better and accurate customer insights which help you measure the effectiveness of your social commerce strategy. 

It holds companies accountable for the experiences customers get and the insights can be used to 

• Keep up with trends pertinent to your brand’s offerings.
• Stay in the right conversation circles and know what is being said.
• Understand customer sentiment and gauge reactions.
• Identify products and update catalogs by price, season and demand. 
• Map 3PL and channels to fulfillment and delivery performance,i.e. Did the product meet expectations in terms of order and store-to-door timelines?

The analytics accompanying social commerce lets you measure efforts and reevaluate your audience. The data derived is useful in revising the strategy and lets you drop those content formats that see engagement dipping and trailing off after a point. Routine A/B testing your initiatives can ensure you’re delivering the right content to the right people, thereby enabling you to be relevant as competition grows.

How to make the most of a social commerce strategy

It’s an open secret that data and relevant content quality are essential to execute a successful social commerce strategy. Given how social commerce is an update-sharing, networking tool and storefront combined, a strong social commerce strategy can improve a brand's reputation and customer engagement.

The 6 Cs’ of a social commerce strategy are;

1. Context

Contextual commerce is all about providing a seamless shopping experience by integrating commerce into everyday activities. By understanding the consumer's context, brands can offer personalized and relevant recommendations to consumers. For example, Snapchat has integrated Shoppable AR lenses, where users can try on and buy products directly from the app, thus making it easy for them to shop on the go.

2. Convenience

Convenience is key in the world of social commerce. Consumers want to be able to make a purchase with just a few clicks, without having to navigate through multiple pages. A great example of this is Instagram's Checkout feature, which allows users to buy products without leaving the app. It streamlines and hastens the purchase process for consumers.

3. Curation

With the vast amount of options available to consumers, curation becomes essential. By curating and showcasing the best products, brands can help consumers make informed decisions. For example, Amazon's Explore feature offers a curated selection of products from around the world, making it easy for consumers to discover unique products. There was even a bump in curated collections from bloggers who were inspired by TikTok’s hashtag “TikTokMadeMeBuyIt”  which underlines how connected, interdependent and symbiotic social commerce can be for sellers!

4. Community

Building a community around a brand is vital for social commerce success. By creating a community of like-minded individuals, brands can foster engagement and build loyalty. For example, Glossier has built a community of loyal customers through its social media channels, where customers can interact with the brand and each other.

5. Content

Repetitive as it may sound, content is the ringleader in social commerce. The more compelling your content is, the better able your brand is to cater to and meet the demand. The content should persuade prospects to remain invested in the buying journey. And content formats work and perform differently depending on where it is being used and how it is being consumed. For example, Instagram, TikTok and Snapchat are driven by video and visual content, while imagery works better on Pinterest. Marketers drafting this strategy should come up with content after aligning their understanding of the business with the knowledge of which platform is best suited to helping them reach this objective.

6.Channel

Choosing the right channels to reach the target audience is crucial for social commerce success. Brands need to understand where their customers are spending their time and how they are interacting with social media platforms. For example, TikTok has become a popular platform for brands to reach younger audiences, with viral challenges and sponsored content.

The Learning

Having been previously leveraged as a means to keep in touch with family, friends and gradually grow one’s social network, social commerce should not be underestimated. It is the key to increasing eCommerce sales through the same core pillars of trust, credibility and engagement. The best part is the size of your business is irrelevant. If you’re relatively unknown, not all is lost- social commerce lets you set up shop online without inviting all the costs associated with storefront real-estate. True, companies with deeper pockets can run costlier campaigns, but your secret weapons are timing and content. Once you zero in on a social media platform, you can observe trends, use analytics and deliver content through your posts and replies. 

Ultimately, social commerce is a touchpoint in the omnichannel eCommerce strategy that offers a psychological perspective to shopping. This knowledge can maximize your sales and touch lives even when the seller and buyer are distanced! 

FAQS

What are the types of social commerce?

1. Digital storefronts like TikTok Shop and Instagram Shops.
2. Marketplace or P2P sales like Facebook Marketplace and eBay.
3. Pinboards or shopping lists.
4. Livestreaming shopping events 
5. Snapchat’s shoppable lenses.

What is the rise of social commerce in India?

With 448 million users this year, the projection is that by 2030, India’s revenue generated through social commerce will grow to $60-70 Billion.‍

Will social commerce pay off in India?

Thanks to the rise in internet penetration and mobile engagement, there has been a  rise in both mCommerce and social commerce. There is even a mesh of the two tools where an online storefront can be created on Instagram and Facebook. Anyone can be a seller on Facebook’s Marketplace, without going through the business registration formalities. Social shares and commenting for reach can offer better visibility and increase sales. The social commerce opportunity will reportedly grow at a CAGR of 60% by 2028.

What are the benefits & limitations of social commerce?

While the obvious benefits of social commerce include increased sales opportunities through visibility and popularity, social commerce tends to be limited by

• Mistrust, especially if the shopping experience is complicated or faces frequent technical disruptions.
• Disinterest, especially when social media is viewed as a communication medium rather than a shopping mall.
• Serviceability restrictions: certain products are not deliverable to certain locations which makes a potential buyer lose interest and abandon the journey
• Privacy issues: with digital frauds and money scams, people are wary of entering personal information that can spread or leak.