What is Social Commerce?

Digital Marketing - Study Notes:

What is social commerce?

Social commerce is the combination of ecommerce and social media. It is the process of selling products and services directly through social media. In a social commerce environment, the entire shopping experience, from product discovery to checkout, takes place within social media platforms.

Social commerce offers customers the ability to research, browse, bookmark, and checkout directly within social media, rather than going to an external website. For this reason, it is reshaping how people buy and sell. This in turn provides platforms and brands with new opportunities for user experiences and revenue streams.

The growth of social commerce

Global social commerce sales are expected to reach $3 trillion by 2026. When internet users aged 16 to 64 were asked what their main reasons for using social media were, nearly 28% indicated that it was to find inspiration for things to do or buy. Just over 26% revealed that it was to find products to buy.

China is at the forefront of social commerce (and by a long shot). By 2022, 84% of Chinese consumers had done shopping on social media channels. US, UK, Indonesia, and South Korea are also strong markets.

In the United States, the average retail social commerce sale per shopper is expected to soon be over $640. What’s even more impressive is that online data suggests that it will nearly double in just two years to about $937.

Social commerce is most popular amongst Gen Z consumers. In 2022, more than 25% of online consumers aged 18 to 34 did their shopping on Facebook and Instagram. These are America’s top social commerce players based on eMarketer data.

Example: TikTok

Live selling on TikTok has exploded. In fact, 40% of Gen Z TikTokers have purchased while watching a live stream. Using live streams for shopping enables people to make real-time purchases without leaving the TikTok app.

This is a great way to encourage conversions among an already-engaged audience. It is similar to how people used to buy items while watching shopping channels on television, but now draws on the huge TikTok audience and the huge shopping functionality within the app. Also, given the popularity of TikTok among younger people, this is a perfect chance to start nurturing a new generation of consumers. 

Benefits of social commerce

Social commerce brings benefits to both consumers and brands.

Benefits for consumers

These are the benefits of social commerce to consumers:

• Frictionless buying: Social commerce enables consumers to quickly buy products without leaving the social platform.
• Improved customer experience: The smoother buying process leads to an improved customer experience overall. Also, social commerce enables brands to provide efficient customer service, which also enhances the customer experience. And finally…
• Social proof: Consumers can find more social proof around a brand, product, or experience before committing to a purchase.

Benefits for brands

Social commerce also brings several benefits to brands:

Two of the key ones are:

• Access to focus groups, and…  
• Access to market research

Access to focus groups

Social commerce offers an instant focus group around your products. This gives you an opportunity to develop new ideas and gain live market research. You can gather clear data about exactly who your customers are, what they like, and what makes them purchase.

There is opportunity to chat with them live in a stream, or via comments or direct message. This all enables you to provide personalized customer service. You could ask your customers what they would like to see next or what they prefer. You could even get their feedback on your product names, ingredients, features, and promotions.

Access to market research

You can also conduct social listening to see what others are saying about your products. You can conduct research on creator and influencer content, as well as user-generated content (or UGC).

Social commerce also brings several other benefits to brands:

• Customer relationships: Social commerce enables brands to create a strong relationship with customers.
• Content growth: Brands can use social commerce to help create authentic content about the brand. This could include UGC and influencer reviews.
• Audience targeting: Brands can target their audience within the platform that potential customers prefer and engage with the most.
• Personalized advertising: With social commerce, brands can be specific about which customers they want to get certain products in front of.
• Brand visibility: Because social media continues to be a growth area across several platforms, it’s a great way for brands to become more visible and increase their reach.
• Consumer data: Social commerce can prove to be a rich source of data that can help inform how brands develop their buyer personas. Gaining insight from social media can help a brand to understand more about its customer’s needs, align with their values, and build a closer relationship overall.