Social Commerce: Why Can't We Ignore It
Once upon a time not too long ago, social media was all about socialising and perhaps some window shopping. Users were there to connect with people they knew and for brand discovery. If they saw something they liked, the purchase route was via a search engine to the brand’s website or shopping platform. Today, however, that MO has been turned on its head. Social media is now as much about hanging out as it is about shopping.
A recent study by Accenture found that the USD 492 billion global social commerce industry is expected to grow three times as fast as traditional e-commerce to USD 1.2 trillion by 2025. Growth is predicted to be driven primarily by Gen Z and Millennial social media users, accounting for 62 per cent of global social commerce spending by 2025, the report states. The 2022 Shopper Experience Index also found that in 2021, one out of two shoppers bought via social media.
Rise of social commerce
In India too, the social commerce landscape has been witnessing a steady inflow of investment from various VC and PE funds, as well as individual investors. According to the latest Research and Markets Report, the social commerce industry is expected to grow steadily over the forecast period, recording a CAGR of 62.4 per cent during 2022-2028. Already, established retailers and even e-commerce companies are leaning into the potential of social commerce through acquisitions or creating a different vertical.
For example, Myntra, an online fashion retailer owned by Walmart, made its foray into social commerce at scale in November 2021 by introducing M-Live, a first-of-its-kind interactive and real-time shopping experience for its customers. Google owned video sharing and social media platform YouTube acquired SimSim in July 2021. SimSim is a social commerce startup that helps small businesses to move to ecommerce via videos and creators. Social commerce has also seen an upsurge on Instagram, Etsy, Pinterest, and many others.
A key factor in the success of social commerce is the trust that digital natives place in their favourite social media platforms and circle of influencers including family, friends and domain experts. Social commerce simply leverages that trust and offers the shoppers what they want, when they want it – the lynchpin of a product to consumer (P2C) approach.
Apart from trust, basic commerce capabilities are essential for a seat at the social commerce table. Providing consumers a high-quality, enriched technical conduit for trust both through content journeys and seamless checkout funnel experiences is fundamental. For brands, this means working closely with platforms as well as others in the supply chain, for example, fulfillment providers to ensure that customer satisfaction and delight remain a priority. It's only after trust has been built, and hesitant users have become return customers that the real power of social commerce comes alive.
Engagement channels
Experiences like livestreaming, curated content feeds, seller consultations, and influencer recommendations are some of the engagement models which brands are already leveraging competently to persuade consumers to spend more.
Towards this end, 5G rollout and AR and other developments in the metaverse will enable further platform innovations for social commerce opportunities to thrive. However, it is up to the brands and platforms to decide whose responsibility it should be to pay for and provide capabilities like these – from purchase to delivery.
Unless both entities work seamlessly together, it doesn’t matter what cool social commerce features are on offer – shoppers will remain wary of purchases through this channel – and brands will be unable to tap the potential of social commerce.
It is at this crossroads that brands and platforms find themselves today. For brands the decision to ramp up social commerce capabilities will depend on their media strategy and where they are in their brand journey.
For platforms, the investment can be the differentiator factor between the competition. It will also help reduce dependence on advertising revenue and bring deeper engagement between users and the platform. Unfortunately, there is no playbook to follow – the right brand-platform partnerships, as well as transparency and data-sharing are all factors that will eventually determine the way forward. While the potential for growth is immense, so are the complexities. The challenge for brands is knowing where to place its bets and then executing it well.
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