Social commerce is a subset of e-commerce that is enabled by a social media platform; whereas traditional e-commerce happens through a retailer’s direct website. Social commerce (at least as it stands now) is a flexible term that includes a breadth of purchase enablements from socially shared affiliate links, ecommerce integrations, to native in-app purchases.
The intention of social commerce is to streamline a user’s buying experience by allowing them to easily purchase a product through a social media channel. In its most basic form, this could mean a consumer buying a product by clicking an affiliate link in their favorite YouTube influencers’ video. In its most recent form, this means giving the consumer the option to funnel from a social platform to a website via an ecommerce integration (e.g. Shopify) or buy directly on a social platform, therefore eliminating the need to ever visit a brand’s website. The ultimate goal is to reduce abandoned carts and increase impulse purchases. In fact, TikTok has already reported that it set new records for unplanned and impulse purchases during the 2020 holiday shopping season - in large part due to its social commerce features.
Pinterest is known as the app for finding inspiration, and marketers are well aware of how important the app is for driving website traffic. So it’s unsurprising that they’ve implemented social commerce into their platform. Now Pinterest gives you the option to “explore” or “shop” the search terms you’re looking for. Though the checkout process is still mostly outside of the app, the experience is easier than finding inspiration on Pinterest and then having to do the legwork yourself.
Snapchat is banking on their augmented reality capabilities to stand out in the landscape of social commerce. They made AR mainstream with their introduction of filters into society, and now they’re the first to do virtual try-ons with sneakers, sunglasses and, most recently, make up (in partnership with Estée Lauder). They also have a shop option that is connected to Amazon.
It’s unsurprising that TikTok, with its young user base, is already hard at work developing its social commerce play. Unlike Snapchat and Pinterest, TikTok decided to partner with ecommerce powerhouse, Shopify, last fall. Using this ecommerce integration TikTok tested out live shopping capabilities with both Walmart and Levis (more on live shopping later). According to Adweek, 83% of users have been inspired to purchase something they discovered on TikTok, positioning them to do quite well when shop opportunities fully launch.
Twitter is the latest app to dip their toes into the opportunities presented by social commerce, with a potential collaboration with Shopify meant to help highlight organic shopping suggestions. Twitter has also acquired other services, such as Revue, a newsletter platform, to enable its users to monetize their content which could lead to interesting revenue streams for creators. As of right now, there hasn’t been any talk of in-app purchases.
With the launch of Instagram Shop, the platform was one of the first to produce an in-app purchase experience. There’s a nice flexibility to the in-app shopping options - brands and influencers can opt to tag their photos with built-in product tags, which allows users to see prices, navigate over to the in-app shop, or even click over to the brand’s own website. Given that an estimated 70% of shopping enthusiasts use Instagram for inspiration these features have the potential to be incredibly powerful for product discovery and purchasing. Note: Instagram monetizes this feature by charging a 5% processing fee from Instagram when customers make an in-app purchase.
Instagram has also announced in this live-stream chat that it has more features coming down the pipeline. The new features are specifically designed to help influencers make more money on the app - one is a product recommendation affiliate program, and the other is a “marketplace” that helps connect brands with relevant influencers.
According to CNN Business, live shopping is not only estimated to be a 66 billion dollar business in China, it currently represents 9% of the country’s total e-commerce market. For context, Business Insider has estimated that the U.S. influencer marketing industry is projected to be valued at a mere 15 billion dollars by 2022.
One striking example of live shopping’s potential is Alibaba’s Singles Day, which occurs on November 11th each year. The holiday (originally called Bachelor’s Day) celebrates single people and is the biggest day for online shopping in China, attracting global talent like Taylor Swift as promoters. The event is similar in spirit to Amazon Prime Day, but on a whole different level. To compare, Singles Day produced 20 times more sales than Prime Day in 2020.
It’s clear that there is a lot of potential in live shopping, so when will it come to the U.S. and Europe?
Our recent data findings indicate that the interest likely already exists amongst American and European consumers. According to our State of Influence 2020, live video formats were a hot topic - Instagram Live saw a 716% increase in mentions and a 508% increase in the number of influencers posting about it (comparing H1 2019 to H1 2020). Furthermore, we aren’t just seeing conversational buzz around live shopping increase, multiple tech companies are working on live shopping capabilities, including:
Legacy social and ecommerce platforms are definitely diving into live stream shopping, but it doesn’t necessarily mean they’ll dominate. For example, there are new platforms like Newness that are super specialized (this one is focused on beauty) and centered around values that consumers care about like authenticity and kindness.
The term “shoppertainment” has recently become a bit of a buzzword, but essentially it's just a twist on an old concept - offer value to your audience. Employing shoppertainment means offering an experience that draws folks in and keeps them returning to your brand’s space, even when they don’t necessarily need products. If this is done well, it theoretically has the potential to increase impulse and unplanned buys.
In digital spaces, shoppertainment is even more important because there are so many people, brands and things competing for your target audience’s attention. We’ve found that there are two key pieces to building the virtual space your audience loves being in:
Bonus: when you find those partners, give them creative power. They know what’s best!
Influencers have historically been great partners for building brand awareness, but now their impact is moving on down the marketing funnel. In fact, 87% of Instagram users claim to have made a purchase based on an Influencer’s suggestion.
“Instagram is widely regarded as a critical component of e-commerce and even bricks-and-mortar buyer journeys. It is a powerful store-front that supersedes every mall, shopping district or fashion magazine. A user’s ability to buy natively through Instagram radically shortens the buyer journey allowing businesses to easily find, inspire and convert a window shopper into a customer.” — Anthony Svirskis, Forbes contributor
With the advent of social commerce, an influencer’s impact on the marketing funnel could move even further down. It’s possible that we’ll see influencers take on the role as the “new storefront”. Concretely, this means that influencers could hold the key to your audience’s journey from discovery to conversion.
For brands, this means that it is even more important to have good, long-term relationships with influencers who have the right audiences, creative content with high engagement, and strong brand affinity. When it comes down to it, people follow influencers, not platforms. In this sense, influencers are the ones with true staying power in a world of changing social and social commerce platforms.
Here are a few things to keep in mind when building winning influencer partnerships:
The rapidly growing social commerce ecosystem is exciting, but it brings new complications that require a thoughtful approach to technology selection, integrations and implementations to empower you to understand ROI.
A few questions to ask yourself when building your marketing stack:
Bonus: Check out the beauty brands who have the best influencer marketing programs this month, based on influencer generated content, engagement, and other performance metrics.