Social commerce — selling products or services on social media platforms — is a marketing tactic that can boost retail revenue with relatively little effort without overly adding to the advertising spend.
This new retail strategy is attracting the attention of marketers. Social shopping grew 35 percent last year, with U.S. sales reaching about $38 billion. Market watchers expect that number to reach or exceed $50 billion by 2023.
Tapping into social commerce gives brands the ability to reach new audiences on platforms consumers already use and trust. Retailers find the social media outlets a no-brainer for direct selling because it streamlines the sales process and exposes brands to new purchases without having potential buyers leave the platform.
The trend of selling products directly from social platforms is being driven in part by shifts in users buying habits. Consumers for years used social media as an easy way to window shop. Similarly, retailers relied on social platforms to build awareness, community, trust, and influence.
Ultimately, retailers used e-commerce sites such as Amazon, Walmart, or Shopify to sell their wares; because shoppers jumped from window shopping as a social platform sideline over to those e-commerce sites to fill their digital shopping carts.
Our ‘Effortless Economy’
Now, consumers and marketers alike see social media outlets as a middle ground between selling and buying. Consumers have grown used to seeing product placements and promotions on social media. So it is a natural next step for them to want to shop without going to another platform or branded website, suggested Callum Campbell, CEO of enterprise commerce automation company Linnworks.
“The primary force driving commerce’s whole move to social media commerce is what we call the rise of the effortless economy. Essentially, what we are seeing is that commerce is moving closer and closer to consumers.
“It is becoming increasingly easy for consumers to purchase. That is happening because it is moving where their purchasing is happening. That is where we’re spending our time,” he told the E-Commerce Times.
The history of commerce shows a time when people had to leave their homes to buy a product. That changed when Internet technology advanced. Now people no longer leave their homes to shop.
Of course, the pandemic pushed in that direction. But it did not create the need. It merely facilitated the necessity.
Shopping online was a high convenience experience that took another step forward to the idea of the social marketplace. Now the reality is you do not even need to go to lots of different websites anymore. You can shop for everything in one environment with increasing effortlessness, he explained.
“I believe the next iteration of that trajectory is towards commerce happening wherever consumers are spending their time. It is like effortless consumption. It is commerce as you go. You’re on Facebook, products are made available to you for purchase. Or you’re on Google, or YouTube, all of these different environments that we are spending time on are becoming commerce-enabled,” he said.
So platforms like Pinterest, BuzzFeed, they are all becoming commerce-enabled. But this is fundamentally driven by the principle that commerce is becoming increasingly effortless for the consumer. So this is just the next iteration of that trajectory, Campbell offered.
Diving Deeper Into Social Media as a Selling Place
The E-Commerce Times asked Campbell to elaborate on his views of this new commerce spectrum. His notion of an effortless economy has an intriguing ring to it.
E-Commerce Times: Are you saying that social media is replacing dedicated digital shopping malls?
Callum Campbell: Consumers now can consume wherever they want. Your choices now might mean that on a given occasion, the most convenient thing for you is going to the store near your home.
But equally, it might mean going to Amazon, or it might mean shopping while you are on a social media platform. That experience works because through data, marketers on that platform understand your buying intent. So commerce happens there.
I think the way that brands and retailers need to think about the consumer is that they exist across the spectrum always like a continuum. Commerce is not discrete anymore. It becomes continuous. We are moving towards a world where any digital platform that you spend time on will eventually become commerce-enabled because it understands your buying intent at a given moment.
Is that more a theory or is it already at play?
Campbell: Let’s expand on this idea. This is way more down the road. But I think we will move towards a world where the Uber taxi you enter is a digital platform, effectively. In that Uber, you are essentially a captive audience. So Uber understands that you are going to a friend’s house and recommends a bottle of wine that you want to buy for the evening. The Uber platform is collecting your data on the journey.
I think even digital platforms, like an Uber platform, will figure out how to monetize our captive audience. Social commerce is the kind of, you know, an obvious iteration of this. I think it goes further into transportation commerce. All different forms of commerce. So that is why it becomes a continuous spectrum. Commerce is not just this discrete thing happening in a store or on a website. It will eventually happen everywhere; and that is already beginning to happen.
How do you get to be in the middle ground, and is that a bad thing?
Campbell: I think social commerce is an interesting middle ground because it is not one end or the other. In the world of commerce as we know it, folks typically think of either shopping on a Web store, on a website, or shopping on a marketplace. I think they both have the kind of pros and cons. But typically, when you shop on a marketplace, you get less experience of the brand. It is more of a solution-type purchase. I think social commerce is a really interesting intersection between solution-based buying and brand-based buying. I think that makes it a very powerful forum.
Another draw for that middle ground status is that some platforms are actually bringing marketers to social media to draw in more users. Social commerce is beginning to bring the two parts together — commerce and e-commerce. It is making brands more important. Shoppers can easily buy without regard to brand loyalty when shopping online, especially if the goal is to get a bargain price.
Can you explain how that is happening?
Campbell: For example, Amazon is bringing sports to its platform. In Europe, you can watch soccer on Amazon, and soon other sports will be available for viewing in North America. Amazon is doing this to get consumers to spend time on Amazon. When Amazon visitors see their favorite basketball player gets that slam dunk, and then the Nike shoes show up available for purchase, the platform has this top-to-bottom experience of the funnel.
Amazon and other platforms respond to what they are seeing with brands by creating entertainment environments to engage the consumer and then make product available. Social commerce is definitely that middle ground. I think platforms like Amazon are trying to figure out how to create opportunities for entertainment for their consumers. The new marketing focus recognizes the need to raise the bar to compete in a world where brand and entertainment become so important.
I think it’s going to draw in a new type of audience. It grows the market for the brand or the retailer to the brand. The retailer needs to think of the situation as an opportunity to drive more revenue out of these channels.
Given what you just explained, will this middle spectrum concept eliminate the need for consumers to go to places like Amazon and eBay to buy or just click the checkout button on my social media platform of choice?
Campbell: Potentially. That is why I think the big battle and commerce in the future is going to be between platforms like Amazon, Google, and Facebook. I think they will ultimately compete with each other.
So what you see is, at the moment, Facebook has been an entertainment environment. What Facebook is introducing to an audience that has been entertained is making products available to them.
Amazon has historically been a commerce environment with products available but no entertainment. Whereas Facebook is going the other way. Both platforms are trying to own the buying experience, top to bottom, the top of the funnel right through to transaction. So I think they compete with each other.
Is it the intent for social media to remain that middle point? Or is it going to take over one or the other?
Campbell: I think it will be the middle point. But I think a lot more platforms will start looking more like social media platforms. They are going to create much more content; and they are always going to become more like social networks themselves. So I think a lot of the platforms will start to look similar. They’ll have entertainment experiences, and then shopping experiences, all integrated to one another.
But the brand at the middle of it that is selling through these channels has to have that continuous total commerce offering. If it is going to stay relevant, it is going to have to stay connected with its customers.