The Tupperware party is back. Although you may not have heard the term “social commerce,” it’s not something entirely new under the sun. Like the Tupperware parties of yore, it’s essentially world-of-mouth marketing or direct-to-consumer selling – but in a nifty new package. Instead of in someone’s living room, the action happens online.
So, it’s word-of-mouth, direct-to-consumer… but what is it? Social commerce is a combination of social media and eCommerce, where products are (mostly) sold directly on a social media platform. It can manifest in various ways. At its most basic, social commerce is experienced as a personalized or curated list of products in a feed that consumers can scroll and “discover” and buy. There’s also social shopping, in which consumers use social media to find reviews and recommendations to guide their purchase decisions.
Social commerce also can be an actual Tupperware party – a livestream shopping event with an influencer talking about, showing, and using a product with a group of interested consumers watching and participating through chat.
Get in on the social commerce action
Why should you care about social commerce? Five key reasons:
1. Apple’s iOS 14.5 update
With only about 20% of iOS users opting in to allow in-app tracking, many eCommerce brands are feeling the hit to their Facebook marketing. Costs are up and effectiveness is down due to less data being fed into Facebook’s algorithms. Privacy restrictions like this aren’t going away. As another example, by the end of this year, Google Chrome will no longer allow use of third-party cookies that companies use to track users and feed them targeted ads. In the face of these trends, you may be on the lookout for other ways to acquire new customers, and social commerce might be an avenue to explore.
2. Word-of-mouth and direct-to-consumer are powerful tactics
It’s all about trust – and nearly all consumers say they trust recommendations from friends or family over any other type of marketing or advertising. Most consumers also trust recommendations from people they don’t know to help them make decisions – which is why recommendations are so integral to marketplaces like Amazon. Specific to livestream shopping, McKinsey reports that brands see 30% conversion rates (wow!) – 10 times higher than for traditional eCommerce.
3. It’s where the consumers are
Instagram has more than 800 million monthly users, projected to reach almost 1.2 billion monthly users by 2023. Facebook still remains the number one social media platform in the world with approximately 2.89 billion monthly users around the globe. In the US, total Facebook users are projected to hit more than 324.million by 2026. TikTok and SnapChat are projected to grow an astonishing 22% year-over-year, coming in at about 73 million and 265 million daily users, respectively. Don’t forget YouTube, almost as huge as Facebook, with 2 billion users worldwide. And Pinterest continues to trend upwards, with 454 million users in Q2 2021.
Looking internationally, although livestream shopping hasn’t really caught on here in the US yet, in China, livestream shopping is big business. Estimated to have driven $66 billion in sales, in 2020 there were more than 10 million livestream shopping events. And it’s only growing. Livestream shopping is projected to generate $281 billion, or an incredible 60% of social commerce in China by 2023.
4. Consumers are spending on social
Research shows that consumers are shopping and spending on social media platforms, a logical extension of the increasing popularity of mobile shopping. From 2019 to 2020, there was a 30% increase, or 80 million US consumers purchasing via social media! Experts expect this trend to continue post-pandemic, projecting another 30%+ increase in US social shoppers by 2025. In fact, about half of Millennials and Gen Z consumers report they actually prefer social shopping over traditional online browsing. And turning to look at trend-setting China again, consumers there are even more willing than US consumers to buy through social media platforms, with 46% of internet users expected to purchase via social networks by the end of this year.
5. Your competitors are doing it
If you want to stay relevant and grow market share into the future, it’s likely you’re going to have to get in there and participate in social commerce. A 2021 survey found that almost 80% of US businesses said they planned to sell on social media in the next three years.
Use social media for more
Hopefully by now you’re getting the idea that social media platforms are for more than brand- and awareness-building. Social media platforms think so too. Platforms have upped their game with various options to help merchants increase conversions – directly on the platforms themselves. For example:
- Facebook Shop enables brands to post a variety of content, including products, curated collections and branded posts. These products and product recommendations show up in users’ feeds based on their behavior. Facebook also piloted Facebook Live Shopping Fridays (livestream shopping) in 2021 with a handful of apparel, cosmetic and skincare brands.
- Instagram Shop is similar to Facebook Shop and allows brands to serve up personalized recommendations based on the brands users follow.
- Even Twitter, which crashed and burned with social shopping in 2017, is back trying it again, piloting a Shop Module with 12 brands.
- Pinterest added a new Shopping List feature for users to easily come back and shop after browsing and lets brands add shopping links (to eCommerce sites) within idea pins, which are Stories-style pin posts. Pinterest is also testing an affiliate program, enabling brands to select and repost users’ idea pins/recommendations as ads. As of now, there’s no direct checkout option on Pinterest.
- SnapChat is getting into the game leveraging its filters for social commerce with an augmented reality (AR) bent. It also has added other commerce features, including in-app shopping.
How Shopify supports social commerce
Shopify also knows social commerce is big and supports it through the platform and its app ecosystem. These integrations with Facebook, Instagram, TikTok and Pinterest help streamline brands’ efforts for content creation, merchandising and sales tracking on the platforms. For example, for Facebook Shops (set up one store for customers to access on both Facebook and Instagram), brands can use Shopify to centralize inventory, ad campaigns and orders. With the TikTok partnership, Shopify merchants can create and run marketing campaigns from the Shopify dashboard. And with Pinterest’s Shopify app, brands can upload shoppable product catalogs with products consumers can click and save and ultimately purchase on a brand’s eCommerce site.
Explore social commerce, but be strategic
Because social media can be a source of vital information and validation from other consumers, we do recommend brands consider selling more on social platforms where reviews can be promoted and user feedback is generally good. However, while it may seem like a no-brainer to sell on social media platforms, it pays to be strategic. The platform may make it easy for you, streamlining the sales funnel and increasing conversions, but ease comes at a price: customer data. In other words, you won’t have access to customer data if customers don’t purchase through your eCommerce site.
Therefore, just like social media advertising, social commerce should be just one facet of your marketing strategy, complemented by other tactics like email marketing and loyalty programs that encourage customers to return to purchase on your site and increase customer long-term value (LTV).