The internet has not only revolutionized the way we consume information or how we interact with the people around us, it has also paved the way for an interactive and personalized shopping experience with the convenience of doing it all online. What was once an exclusive domain among malls and physical stores, online shopping and e-commerce has become the norm for consumerism.
With the launch of Amazon, major department store chains such as Macy’s, Walmart, Sears and Kohls, have struggled to breakeven and have consequently closed several stores in unprofitable locations to reduce their losses.
Most retailers have ditched their brick-and-mortar businesses for an online platform to stay relevant and compete against online shops. E-commerce, because of its vast network of online tools and users, has also given small entrepreneurs the opportunity to sell their products and market them without heavy costs. The massive success of online shopping has also given birth to peer-to-peer e-commerce stores such as Etsy, Shopbop and Asos and has also made its way towards social media with the rise of influencer marketing and Instagram’s new shopping feature that allows users to make a purchase and checkout on the app itself. Pinterest has also hopped on the trend by adding a ‘Buy It’ button right next to the ‘Pin It’ button for buyable pins, allowing customers to pin a post and make a purchase at the same time.
It’s no surprise that this phenomena of bridging the gap between social media and e-commerce for a streamlined buying experience is called social commerce. Its purpose is to fuse together the potential of social media ads and the ease of shopping in one app. According to a research by Gartner, about 66 percent of 424 brands have adopted social commerce features within the last year to create awareness, drive transactions and provide customer service. The same research also reports 41 percent of brands have made use of shoppable content options from Instagram while 17 percent engage in Facebook’s shoppable brand pages.
While this sounds like a promising opportunity for retailers and entrepreneurs, not a substantial amount of income has been reported from this kind of selling platform. In 2016, only 2 percent of revenue was taken from social commerce and 34 percent of shoppers had never bought anything on social media during that period. This might be because social commerce is relatively new in the scene. However, some brands have been known to have success in the platform such as Nike’s Air Jordan pre-release of its limited-edition Air Jordan III “Tinker” in Snapchat. The product was sold out in 23 minutes and was given a same-day delivery to select addresses care of Darkstore’s local fulfillment centers.
Another example is Lolly Woolly Doodle, a startup clothing brand that caters to women and little girls. Lolly Woolly Doodle tapped social media to connect with its customers and provide personalized products by offering their customers a chance to design their own clothing and deliver it to their doorstep via the brand’s Facebook page. The brand has since evolved into a million-dollar business with $11 million in sales in 2013 and an investment from AOL founder Steve Case worth $20 million in the same year.
Social media already plays a crucial role in influencing consumer purchase decisions especially among millennials and Gen Zers. Gen Zers are also known to value social media hype over discounts or sales when making purchase decisions, with 80 percent of the group turning to social media for purchase references. This generation group also prefer brands that interact with them individually and promote social responsibility. Because they lean more towards social media for trends, they have the tendency to make impulse buys more often than their older counterparts. Of all the social media apps, Instagram is king when it comes to driving the force of social commerce. 72 percent of users have claimed to make purchases on clothing, shoes, makeup and jewelry based on what they see on Instagram. The rise of influencers have also prompted brands to collaborate with them to bring their brands closer to the customers and to increase engagement. 91 percent of brands use Instagram influencers or brand ambassadors, a smart move for engaging the Gen Z and millennial consumers.
Facebook boasts a massive number of users with 1.47 billion users daily on its site. The company has rolled out Facebook Marketplace, a platform where users can buy and sell items and is a potential competitor against Amazon, Etsy and Google Shopping.
So far, these have been the major developments in the field of social commerce. It’s currently a fresh concept and is in its early stages, but it brings promising results to the table and ushers a new kind of e-commerce strategy that will make shopping more interactive and personalized while making it convenient. So that the next time you go looking for that attractive pearl ring your favorite influencer is wearing on her Instagram post, you only have to tap the post itself to buy it rather than go searching for it in the whole web.