Social Commerce: What You Need to Know

6weeks

Today, it’s hard to believe that just a few years ago, the idea of social commerce was almost rejected as unviable. Researchers thought that users of social networks and platforms would quickly get tired of trying to sell or buy something during virtual interactions. However, life proved all their assumptions wrong. As the social networks that were the first to introduce social commerce features now generate real profits from it, which are expected to only increase over time according to all indicators. Initially, it all seemed like just another digital novelty. But the past two years have proven that social commerce is capable of taking a significant place in the e-commerce sphere. Statistics convincingly demonstrate that this direction is a new step in its development, opening up broad business sales prospects.

What Is Social Commerce And How Did It Come About

Social commerce is the process of selling goods or services using social media platforms, during which users do not need to navigate to the websites of online stores or companies. In practice, it looks something like this: during their free time, whether it’s commuting, waiting for a meeting at a cafe, or any other activity, users have the opportunity to browse stylishly presented posts on Facebook or Instagram and simultaneously choose, for example, clothing or shoes. If they like a particular item, they can purchase it immediately by clicking on the product tag without even leaving the app.

The surge in interest in social commerce occurred during the pandemic, when there was a rapid increase in online shopping demand. Although social commerce is not a new concept and many businesses have long used it to promote products through social media, the final transaction was often completed on the company’s website.

How Social Commerce Works

Today, the entire purchasing process—from presenting a product or service to a potential buyer to final payment—takes place «without leaving the checkout line», directly on the social media platform, thanks to the integration of special built-in functionality. Clicking the «Buy Now» button allows the user to make a purchase without leaving the app. Sellers, through similar social commerce features, can create digital storefronts for their products/services. Additionally, it has become possible to:

Tag products in posts and stories,
Customize product advertisements,
View statistics.

This new toolkit significantly shortens the customer journey to purchase, making many business processes much easier and reducing the overall burden on the seller.

Key Functions of Social Commerce

Thanks to the features of social commerce, companies have gained the ability to engage in individual communication with customers. By using these features, brands can increase their online presence, strengthen trust with customers, and stimulate sales growth through social networks.
Among such key functions is the social commerce marketplace. Some platforms, such as Pinterest and Facebook, have introduced a feature that allows companies to showcase their products directly on the platform. Without leaving the platform, customers can view, compare, and purchase products.

Another function is the chatbot. It is an automated messaging tool that allows brands to engage in more personalized interaction with customers. Through them, brands can provide product recommendations, answer frequently asked questions, and provide support.

What other functions are useful in social commerce

Among the important options successfully used in social commerce are purchase messages. This feature allows organizations to tag their products in messages on social networks. This allows customers to comfortably make purchases by clicking on the corresponding button on the platform’s page. Instagram and Facebook offer Shoppable posts, allowing users, for example, to purchase a dress they liked on Instagram by clicking on the product tag.

How to Conduct Competitive Analysis in Marketing

Another important function is social proof. This powerful functionality uses user-generated content such as product reviews, ratings, and customer photos to create trust and credibility. Displaying social proof on social media helps companies stimulate sales, gain and maintain customer trust.

Target Audience: Who Social Commerce is Aimed At

Research conducted by Accenture indicates that the target audience for social commerce primarily consists of Generation Z and millennial consumers, and its growth will largely depend on them. However, different territories have their own age demographics and social platforms used by consumers, each with its own characteristics.

For example, European millennials and Generation X prefer Facebook and Instagram as sources of inspiration for online shopping. Meanwhile, the youngest and most active age group in the e-commerce segment—Generation Z—most often utilizes the trendy TikTok platform.

In China, the development of social commerce is progressing rapidly, thanks in no small part to the involvement of major brands such as Tencent and Alibaba. Both companies have become leaders in implementing social commerce methods on their platforms, leveraging the already developed e-commerce market in China.

Which Social Networks Can Be Used

Today, all the most well-known social platforms, such as Instagram, Facebook, Pinterest, TikTok, Snapchat, YouTube, WeChat, and many others, offer tools for online commerce. Therefore, there is an opportunity to choose from a large number of offerings that are most convenient and beneficial for one’s own business, taking into account its specificity. Although new social resources are increasing their presence in the online space, pioneers and leaders still set the tone in this direction.

Instagram Opportunities

Instagram Shopping is one of the tools in the Meta Business family, directly linked to the existing Facebook Marketplace. To create a store, users need to link their personal Instagram business account to a business profile on Facebook. After that, they will have the ability to upload an existing product catalog or create a new one. The platform offers a wide range of opportunities for creativity in promoting services and products. For example, companies can stimulate interest in them by using posts and stories, tagging their products with links, and curating product collections.

What Facebook Offers

One of the best ways to increase sales through social commerce is still Facebook Shops. Facebook’s audience is enormous, and the platform offers free and convenient store creation, along with extensive targeting information. The process is extremely simple. Products are placed in a Facebook business profile, and information for cards is uploaded via a spreadsheet or automatically synchronized with the list already available on the e-commerce platform being used, if it has partnership support.

In the Facebook Shops tab, users see products tailored to their preferences. Here, in Messenger, they can ask questions about the product. It can be purchased in the app by saving payment information for quick payment or by manually entering the card number. It is also possible to follow a link to the company’s website.

How to Use Pinterest

Product Pins and Buyable Pins are the main tools of social commerce on Pinterest. Product Pins are regular pins with special fields for information about prices and product availability. They cannot be considered a full-fledged social commerce tool, since users still need to visit the brand’s website. Buyable Pins, on the other hand, are buttons that allow users to make purchases directly from the Pinterest platform.
Sales on Pinterest are comfortable due to the ability for companies to showcase multiple products in a single ad, with up to 25 items marked in each image. By adding a product catalog to their Pinterest business page and subsequently automatically converting their products into shopping tags, brands can utilize tools like Schema.org, Graph, or o Embed. Brands using Shopify can automatically upload an existing catalog with the Pinterest app for Shopify. If pins, for example, represent the best-selling products in their category compared to offerings from other sellers, Pinterest can automatically label them as «Popular» and «Bestseller».

How To Use Bots To Improve Your Marketing Campaigns

Social Commerce Statistics and Forecasts

According to researchers’ estimates, the global social commerce industry will grow three times faster than traditional e-commerce and reach approximately $1.2 trillion by 2025. By 2025, it is estimated that millennials will account for 33% of the social commerce market, with Generation Z spending growing even faster in this area. Their total expenditures in the social commerce sphere are forecasted to make up 62% of global spending. According to specialists’ forecasts, by 2027, social commerce market valuation metrics will significantly increase and reach up to $604 billion.

Trends in Social Commerce: What You Should Know

The potential of social commerce enhances the ways businesses sell products and services as social media usage increases. Like any rapidly evolving field, social commerce has the most current development trends, including:

Personalization. Utilized by businesses to enhance customer service quality, personalized recommendations are created using customer data based on preferences and past behavior. For example, Amazon’s «Customers who bought this also bought» feature provides individualized product recommendations based on purchase history.
Augmented Reality (AR). AR technology facilitates informed purchase decisions by allowing customers to realistically visualize products. For instance, Ikea’s AR app enables customers to virtually place furniture in their homes before purchasing to envision how it will look.
Social Influencers. A potent force in social commerce, many brands collaborate with social influencers to promote their products. “Influencers» have a large number of followers on social media, enabling companies to expand their audience and boost sales.
Social Shopping. Combining the communicative aspects of social media with the convenience of e-commerce, social shopping allows real-time shopping with family and friends, enabling companies to create an enjoyable and engaging shopping experience.

Challenges in Social Commerce: What to Keep in Mind

Despite the rapid development and swift market penetration of social commerce, it’s essential to consider the restraining factors highlighted by experts. The most challenging barrier to entering social commerce remains trust. Half of the surveyed social media users expressed serious concerns that such purchases would not be adequately reimbursed or protected. This same issue was prevalent in the early days of e-commerce. Therefore, experts believe that retailers, brands, and platforms must work to alleviate customer concerns and capitalize on the interest in social media shopping.