The rise of ‘social commerce’: What you need to know about this expanding marketplace
Joris Kroese is the founder and CEO of global omnichannel commerce solutions provider, Hatch. Joris Kroese has been working within the e-commerce sector since 2001, gaining a strong perspective of the future of the industry, as well as expert insights into building a seamless omnichannel buying experience. He speaks to Business Leader about the growth of social commerce.
The rapid growth of social commerce over the past year has solidified its reputation as one of the most crucial and transformative sales channels today.
Defined as the utilisation of social media platforms to promote, sell, and purchase products and services, social commerce is, put simply, the convergence of social media and e-commerce. Since 2020, this intersection has blossomed into an invaluable sales channel, generating approximately $474.8bn (£374.8bn) in revenue last year. For brands and retailers, the buying journey has seen striking transformation as a result.
The COVID-19 pandemic did not invent social commerce, but its role in its meteoric growth is undeniable. When retail was hit hard by lockdown, e-commerce flourished, and social commerce was at the forefront of the trend. The most popular social media apps we all have on our phones, from Facebook and Instagram to Pinterest and Snapchat, have each integrated social commerce into their platforms.
As more people turned to technology to connect with one another, social media also became a popular place for discovering new products, new clothes and other items. As a result, the UK saw a 95% increase in social commerce sales last year. Born at the height of the pandemic, this trend is now set to last long beyond it.
The seamless buying journey offered by social commerce is crucial to its success. According to Instagram, 70% of consumers now use the platform for product discovery. Last year, as many as 59% of shoppers surveyed by Google said that mobile-friendly modes of shopping were essential in deciding which brand or retailer to buy from. Readily available ‘Buy now’ buttons on socials are streamlining the buying journey for consumers, and offer brands a lucrative opportunity to galvanise their social media profiles for increased revenue.
I believe a well-cultivated social presence now offers major sales potential for smaller local businesses. As social media is a personal experience for its users, it grants brands the opportunity to build trust and foster a stronger consumer-brand relationship. In this way, social commerce can rapidly accelerate the buyer’s journey towards brand loyalty and conversion.
However, it is important to recognise that social commerce is driven by younger consumers, with it particularly popular among Generation-Z, i.e. those aged 25 and younger. 61% of Gen-Zers reportedly follow brands they like on social media, while 47% look to social media for inspiration when looking for new purchases. As more young people purchase from their favourite brands in-app rather than in-store, utilising a platform like TikTok could be the key to unlocking new customers outside of the usual contingent of shoppers.
The buying journey now often organically begins on social media, when an influencer introduces brands to new consumers for the first time, successfully converting sales based on the trust their audience has in them. Gen-Zers are more likely to make a purchase via social media if an influencer they trust is promoting it, with 35% of surveyed individuals stating that they trust what their favourite influencers have to say or recommend.
Social commerce has clear advantages, and the quicker that brands act on the trend, the sooner they will experience its benefits. However, for me the golden rule of maintaining future sales remains the same as it always has: don’t forget to diversify. Social commerce is here to stay, but brands and retailers would be wise to remember that customers will not always follow a predefined purchase path. The recovery of in-store traffic can already be seen, with Q2 of 2021 marking the highest sales on record for UK retail. Brick-and-mortar sales continue to be the bread and butter for many brands, and no one channel should be neglected in favour of another. If a brand wants to thrive, all sales channels must work together in harmony, with a seamless flow of information distributed across them equally.
All the same, with an expected compound annual growth rate of 28.4% by 2028, social commerce is a trend set to dominate the decade. For brands looking to take advantage of the social commerce boom, it is worth considering online solutions which can be integrated into social media campaigns and offer invaluable guidance about their media campaign performance. Embracing such tech could be the crucial difference between an effective venture into social commerce and a lacklustre one.