Social commerce or livestream shopping is forecast to transform social media into one big shopping channel. The whole buying experience, from initial product discovery to check-out, will take place on social media, with the consumer never stepping out of the app.
A lot of serious players agree this will happen. TikTok has launched its shopping facility in the UK, stating, "E-commerce is a big opportunity for TikTok, and it's something we're investing in significantly. We think it's a really significant moment." It also stated that its internal data shows that one in four TikTokers either research a product or make a purchase after watching a video mentioning a product.
More consumers are shopping on social media platforms like Facebook, benefiting smaller brands. Accenture predicts social commerce will be worth $1.2 trillion by 2025, growing three times faster than traditional e-commerce. It also claims that by 2025, Gen Z will be the second-largest set of social commerce users (29% of all expenditure), followed by Gen X, which will account for 28%. As a result, social will comprise no less than 17% of all e-commerce sales by then, too.
Predictions that social media will drive the next major shift in retail are proving wide of the mark, according to e-commerce entrepreneur Alexander Graf.
The social and shopping gap
Yet, these predictions may not reflect the development of social purchasing that will actually occur. In the mid-2000s, it was perfectly conceivable that Maria and Anna, friends on Facebook, would interact after Anna posted 'I think these products are cool' on her profile. Maria is then influenced to buy a product on Anna's recommendation.
Even back then, all this sounded very promising, but it just wasn't happening. A few years later, social media users were potentially very much at the center of an online purchasing chain, either helping generate a buying impulse with a Facebook status update or supporting the brand by writing SEO-helpful product reviews.
Social commerce is still about selling, but now it is no longer the product that is the beginning, but the human being [and] the user is much more in the foreground as a producer or at the beginning of the process. Providers are not within reach or transaction competition but in competition for the user's attention. So for Amazon, someone is a buyer, whereas for Etsy and Polyvore, a producer.
At that time, potential consumers needed to be lured into the retailer's environment online/offline, and then they purchased the product. But the purchase only happened after a participation process involving the consumer searching on the website, asking friends, sharing ratings, etc. We were all going to share, 'like' things, then leave social signals on the web, and people would participate in the online transaction both before the purchase, during the purchase, and after it. There were many moving parts and a lot of free work by the consumer to help the brand.
None of these services, sites, or ideas made it work. Not one survived the Amazon wave or the ASOS wave. Though people were there to buy, payment facilities were there if they wanted them. Still, people went to Amazon or even - at the time, less so now - the Sears or Walmart online shop.
Pockets of potential
Have things changed enough to make this latest wave of social commerce viable? There is potential for change with Instagram. Within Instagram, there are influencers and brands that were solely built within the social ecosystem. So it's not a brand manufacturer using a network as an advertising channel, but a brand built within the channel. If there's some exclusivity of the product and an easy way to check out, the two worlds may be merging in that specific instance.
Social commerce could well be huge in China or India. WeChat is already a prominent force in social commerce. For various historical and social reasons, Chinese consumers did not experience 'Retail 1.0' (bricks) as much as Western consumers. So social commerce doesn't have so many gaps to bridge. Another key difference with Chinese social is that it often supports a network system where 10 other friends can agree on buying a product and then get a discount together, which is a behavior we have not really seen scaling in Western markets yet.
A new generation is emerging that may not feel so strongly about buying from Amazon rather than social channels. But as it stands, advertising on Facebook and other social media environments drives consumers to businesses but does not facilitate the sale. Where I see social commerce, though, is on Amazon, in a qualified way - using dark patterns in marketing. So a consumer might see on Amazon that 100 other people are looking at the same product, and 20 people bought it in the last hour. There are only 40 available, so buy now to get your 5% discount.
This is used a lot on travel sites. The sites claim that thousands of people are looking at a vacation, with the implication being that the person searching should book now or risk losing their holiday. This probably isn't true but is a neat conversion trick and something we will likely see more of in other e-commerce environments.
People expect to connect to share ideas, share pictures from their prom night, or something else entirely on social media. On Amazon, they buy stuff. The gap between those two orientations has always been so broad that it has just never been possible for even the biggest social networks to become relevant players in the e-commerce space. There may be some opportunity for e-commerce embedded within people's social media experience, but it is far more likely that social commerce applied to trusted sales platforms will be the future of retail.
Co-Founder & Co-CEO of e-commerce B2B software leader Spryker and co-author of The E-Commerce Book
The author is Alexander Graf, Co-Founder & Co-CEO of commerce B2B software leader Spryker and co-author of The E-Commerce Book.
