Social Commerce Part 1: What is It & Why Should You Invest in It?

What is Social Commerce?

The strong majority of today’s eCommerce sales come from 1) a company’s website, 2) 3rd Party Marketplaces such as Amazon, and 3) Social commerce.  Social commerce refers to the use of social media platforms as a sales channel to facilitate eCommerce transactions. It allows companies to engage with customers, build brand awareness, and ultimately drive sales directly through social media platforms by integrating commerce and media.  Some examples of social commerce are shoppable posts on Instagram, the ability to purchase products directly through Facebook Marketplace, and "swipe up" links in TikTok videos that take users to product pages.  

Social commerce allows consumers to purchase directly on a social media site, without being redirected.  While social commerce utilizes social media platforms to facilitate the buying process, it is important to note that it is not the same as social media advertising.  This channel offers benefits to both consumers and businesses, as it provides a convenient and seamless shopping experience for customers, while allowing companies to reach new audiences and leverage the power of social proof and influencer marketing.

Social Commerce v. Social Media Advertising: What's the Difference?

Social commerce and social media ads are both related to using social media for marketing, but they differ in a various ways, including:

1. Purpose: Social commerce is used to facilitate the buying and selling of products or services directly on social media, while social media ads are used to promote products or services and drive traffic directly to the point of purchase.
2. Placement: General social media ads redirect consumers to the point of purchase and social commerce provides the convenience of making the purchase directly from the social media site.
3. Approach: Social commerce relies on building relationship and trust with customers through social media, while social media ads often rely on targeting specific demographics or interests.
4. Timing: Social commerce transactions can happen in real-time on social media, while social media ads typically take longer to convert into sales.

Overall, social commerce is more focused on direct sales through social media, while social media ads are more focused on building brand awareness and driving traffic to external sites.

Types of Social Commerce

There are many different types of social commerce that brands can use to market their products, however, some of the most popular types are: 

1. Shoppable posts: A brand can share products in their posts or stories that have a "buy now" button, swipe up feature, or checkout feature.  Shoppable posts give consumers the opportunity to make a purchase without ever leaving the social site they are on.  Below are two examples of how shoppable posts work on Instagram, allowing viewers to click through to a brand's storefront, add to cart, or purchase immediately.  The entire process is facilitated by Instagram, creating a more streamlined and convenient checkout experience for users.

1. Influencer marketing: Brands have the ability to partner with influencers, who will share a product or service on their own social media profiles.  This allows brands to leverage the credibility and trust between the influencer and their followers to promote the brand's products.
2. User-generated content: Brands can encourage users to produce their own content related to their products or services.  When existing customers promote the brand and its products, brand awareness increases on the platform.  This is typically accomplished with user-generated content (UGC) challenges, utilizing hashtags, giveaways, or polls, incentivizing customers to post by rewarding them with discounts or exclusive sales.

What are the Benefits of Social Commerce?

1. Increased Reach & Visibility
   1. Social media platforms provide businesses with a large user base to market to, increasing the chances of expanding their customer base. Brands can develop UGC challenges as a way to incentivize customers to post images, videos, reels, and more related to the brand's products or services and generate increased brand awareness on the platform.
2. Personalized Customer Engagement
   1. Social commerce allows businesses to engage with customers on a more personal level, allowing the to develop stronger relationships with consumers and build brand loyalty.  Social media platforms also use data and algorithms to grasp the interests and preferences of different customers, allowing them to personalize product recommendations and show the best potential shoppable posts based on a given customer's interests and what they are most likely to need or want to purchase.
3. Enhanced Customer Experience
   
   1. Platforms like Instagram and Facebook allow businesses to showcase their products directly in a user's feed.  Customers are able to see the products they are considering in a real-life setting.  In some cases, customers can conduct virtual try-ons of products or virtual reality demonstrations, providing a more immersive and interactive experience for the customer.  Additionally, customers are able to complete their purchase directly on the social media platform they are using, streamlining the checkout experience.
4. Increased Sales
   
   1. There are a few different ways that social commerce helps drive increased sales.  By reaching new audiences and targeting specific markets, businesses increase the chance of reaching an interested consumer and getting them to make a purchase.  Additionally, personalizing the experience for customers allows them to develop more trust in the brand and therefore be more likely to make a purchase.  Integrating the social media channels with eCommerce functionalities allows businesses to increase conversion rates by driving sales directly through the social media platform.

Why Should You Invest in Social Commerce?

Social commerce sales have particularly taken off in the last several years, and are expected to reach $1.3 trillion this year.  The increased use of social media, particularly by younger generations, and the convenience that online shopping provides has helped drive the growth seen in the market over the last few years.   Additionally, as can be seen in the graph to the right, the market is expected to continue to grow over the next several years, forecasted to reach almost $3 trillion by 2026.  As this market is growing, it is vital to take advantage of the benefits that this channel can provide you and your brand.  

More About aiCommerce

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