Social Commerce

Social Commerce

Social commerce is on everyone's lips, because social media is taking up more and more space in our everyday lives. Especially with target groups between 18 and 30, companies can reach a large audience on social media platforms like Instagram, TikTok, and Co. So why not use them for advertising?

Table of contents

  1. What is social commerce? 

  2. Social commerce: Is it the future of online trade?

  3. The best customer journey with social commerce

  4. Why social commerce?

    1. Connecting emotions

    2. Testimonials from customers

    3. User-generated content (UGC)

    4. Influencer Marketing

  5. Popular social media platforms for social commerce

  6. Social Commerce types

    1. Content-driven

    2. Experience-driven

    3. Network-driven

  7. The advantages and disadvantages of social commerce

  8. First steps in social commerce

  9. FAQ

What is Social Commerce?

Selling products and services on social media is popularly known as social commerce (or s-commerce). It's a type of ecommerce, where shopping meets social media. The emphasis is placed on the personal connection between customers, as buying suggestions come from fellow social media users. Live by the motto: see it, click it, buy it!

Social Commerce: Is it the future of online trade?

The ecommerce industry earns annual profits of more than 30 billion dollars. Ecommerce describes the entire electronic trade, while social commerce only refers to purchases within social networks. The forecast for the next few years promises that social commerce will make up the main part of online trade and will grow rapidly in turnover by 2025 (source: Accenture). Both the Chinese and Indian markets are already booming and thus, excellent examples.

The whole thing is based on social proof: Businesses play out customer reviews, testimonials and user-generated content (UGC) on their own website. These support the customer journey and the buying decision of the potential customer. Social ads are also a supplement to attract customers. Accordingly, social commerce is a topic that every company should address.

Social commerce combines numerous marketing strategies under one hat. All of them presuppose a certain level of interaction. Social media is a broad term in this sense, because in addition to the classic social media such as Facebook Shops and TikTok, social commerce also includes the Amazon shop, reviews on websites and the like.

The best customer journey with social commerce

Direct-to-consumer (D2C) sales offer companies a great opportunity to get their products directly to the consumers. The good thing is that online shoppers can do everything via app and don't have to go to an external website to continue their purchase. Integrated "buy now" buttons already exist on Facebook, Pinterest and Instagram. Likewise, livestreams of influencers and creators serve as a basis for social commerce and the increasing demand.

In addition, the online shopping experience is being upgraded. The purchase process no longer runs through the shop operator himself and is supported by attention-grabbing advertising. With the goal to map out the entire shopping experience from discovery to purchase on one social media platform. Thus, the customer does not reach the brand's landing page to purchase the products there.

Why social commerce?

For higher sales figures, companies use the personal relationship between social media users to their advantage. This creates a sense of belonging to the company and builds trust with internet users. As a customer, the social media user feels included and connects with the product on an emotional level. The personal touch is particularly popular on platforms like Instagram, YouTube, Snapchat, etc. The following factors are the focus of shop operators:

  • Satisfied customers

  • Higher conversion rates

  • More shop visitors

  • Free advertising

Connecting emotions

Companies build an emotional connection with their clientele through their respective strategies. Since online retail is otherwise very anonymous, shoppers shy away from buying from brands that seem faceless to them. In comparison, city centre shops perform better because they appear more trustworthy. To counteract this, social commerce hits the nerve of time and ensures that online shops stand out from the crowd through the use of emotion. Hence, engagement rates climb higher.

Testimonials from customers

The goal of social commerce is to offer customers a better shopping experience than ever before. Only if the experience and the products or services purchased completely satisfy the buyer, he or she will shop at the same online store again. The voices of other customers help to strengthen the trust, as they underpin the credibility of a brand and tell from personal experience.

In addition, product reviews on the website of an online shop or on social networks with photo and video material increase the sales figures of the products. If shop operators use promotions such as polls and tricks like posting for example their own recipe suggestions on a food blog, etc., this encourages interaction with customers.

User-generated content (UGC)

With the right social commerce strategy, a brand can expand its awareness while keeping the user firmly in mind at all times. Hashtag campaigns are a good start to play out UGC. For an online shop, tags are also a good way to post ‘shop the look’ content on social networks.

Influencer Marketing

More and more companies are using influencers on social platforms to promote their products. Mostly, these are app users who have reached a certain follower count and appeal to a specific audience. They are attractive partners for brands as they attract exactly the desired target group of consumers.

Popular social media platforms for social commerce

Whether Facebook, Instagram, Pinterest or Twitter – these and many other platforms offer the possibility of selling directly through an app. Depending on what products someone is selling, it varies which app is the best for one's purposes:

Facebook Marketplace: Facebook has offered members the option to sell goods among themselves for many years. Since 2014, with the help of the “buy button”, it is not necessary to leave the platform when making a purchase.

Instagram: Here, pictures and videos promote the products and there are exciting stories behind them to attract potential buyers. With the shop function, it is possible for companies to create their own business profile.

Pinterest: As with Instagram, the visual factor plays a big role. Everything can be collected on pinboards, so Pinterest is a particularly suitable platform for fashion and art and internet users that love visual charms.

Twitter: Here, companies use text posts, hashtags and retweets to promote their products and thus increase their visibility.

Social Commerce Types

Whether through brands, influencers or individual creators, social commerce is ubiquitous in the online sector. The different types differ elementarily from each other and extend beyond geographical borders.

Content-driven

Unique content (e.g. through storytelling) stimulates an authentic discovery of products and leads to more interactions as well as actions by app users. For example, through shoppable posts or in-app purchases (on YouTube, TikTok, etc.). In addition, some companies give website visitors the opportunity to create their own lists of products and then share them with others. Examples of this are Pinterest and The Fancy.

Experience-driven

This concept mainly includes livestreaming, AR (augmented-reality) experiences and gaming that offer app users a fully immersive shopping experience. An example of this: At live shopping events on Facebook or Instagram, potential shoppers can digitally test products before buying them with the help of shoppable AR filters. This involves a group of people being treated to live broadcasts of product launches or interviews with influencers. In some countries, this it is already a successful, progressive trend, bringing in big sale increases. Displaying a countdown to an upcoming event to tease the target group days or weeks in advance is also clever marketing strategy.

Network-driven

Here, individuals use their existing social networks to buy or sell. In addition, there are, for example, discounted prices for groups (group buying) that join together online and buy a specific product in large quantities from one supplier. Influencer marketing also falls into this category, as individuals use their reach to drive sales and earn money themselves in the process.

The advantages and disadvantages of social commerce

A large intersection of e-commerce customers scroll through social networks every day, offering many benefits for selling products and services. Like any concept, social commerce has advantages and disadvantages that affect the buying experience of online users. The following factors play a key role:

Advantages

Disadvantages

Addressing large target groups

Dependence on social media

Social media serves the purpose of entertainment, which makes app users happy to spend time on the platform.

App users are not there to buy, but to be entertained.

10% of all spending through social commerce

Transaction fees

Competitive advantage on the social platforms, as there are many online shops

Shitstorm possible → misunderstandings unpredictable

Customers become advertising ambassadors with a good concept.

Purchases not sufficiently protected so far

Free advertising: app users communicate with each other on the internet.

Refunds sometimes complicated

Young customers use social media as a main source of inspiration.

Lack of trust in credibility of companies

Use of paid influencers as advertising ambassadors → Opinion leaders

Fear of app users that apps store data about them

Conversational commerce (for example through chatbots, use of messaging services in online sales)

Fraud possible

Good visibility and opportunities for small businesses

Delivery problems due to poorly maintained feeds

First steps in social commerce

To make a name for yourself as a brand on social media, it doesn't always have to be big changes right away. Baby steps in the right direction also help to increase brand awareness. The following implementation options are suitable for as social commerce tools for beginners:

Storytelling: Very few people find advertising interesting, but stories draw them in. Personal experiences, posts with photos etc. increase authenticity.

Develop slowly: Which groups and apps does a company already use? First, use channels that are already in your own repertoire. More support, through followers who already know the company.

Maintain channels: Without commitment, social media brings little profit. That is why it is important to post at regular intervals and keep the feed up to date. Topics should be chosen according to the interests of the followers.

Backlinks: On Pinterest, a brand links its own shop, but not the other way around on the social media channels? This needs to change as backlinks increase the number of clicks.

FAQ

What is social commerce?

In simple terms, social commerce describes the process of a sale via social media platforms.

What are the advantages and disadvantages of social commerce?

The main advantages of social commerce are that a large target group is reached and high revenues are generated. The disadvantages are that the basis of trust on online platforms is not always given and misunderstandings can quickly occur.

What types of social commerce are there?

The most common types of social commerce include: online marketplaces, curated shopping lists, live shopping events and group buying.