The Rise of Social Commerce: Definition, Strategies, and Trends 2022 [Web 3.0]
Although social commerce has been around for a few years (steadily gaining traction since 2015), it’s still a relatively new phenomenon, especially for B2B ecommerce. Greatly accelerated by the pandemic, social commerce generated as much as $585 billion in revenue in 2021, almost double the surge in sales since 2019. With an annual growth rate (CAGR) of 24.8% from 2021 to 2028, social commerce revenues are expected to reach $3.37 trillion by 2028 (see Fig. 1).
While more brands adopt social commerce as part of their ecommerce strategy, and social platforms continue to invest in commerce technology, it’s safe to say that social commerce is more than just a passing fad. As everyone is racing to get a piece of the pie, let’s take a deeper look at the social commerce phenomenon and try to understand what it means for business, marketing, and consumers.
Social Commerce Definition
Social commerce is a subset of ecommerce that uses social platforms for sales and purchase of products or services. Whether Facebook or TikTok, social platforms have become lucrative sales channels, especially so for B2C and D2C brands, but also increasingly for B2B companies.
Common implementations of social commerce range from smaller shops directly on the platform to marketplaces and in-app location-finder campaigns that drive traffic to a brand’s website or any other channel.
Part of the social commerce charm is that it significantly reduces friction in a customer journey allowing brands to interact with prospective buyers within their favorite apps. Since all those platforms track users’ activity, brands can harness the power of the platform’s AI and ML, harvest real-time data on buyer behavior, and turn it into actionable insights. For example, if a user has shown to be typically influenced by celebrity opinions before buying new clothes, then a company can show the user a personalized ad for a new season collection endorsed by a celebrity.
Social commerce examples
Below are a few social commerce examples:
- Shoppable ads are paid posts that target specific demographics
- Organic shoppable posts are the posts that allow users to purchase something directly from a social media feed
- Shoppable influencer-endorsed content are posts promoted with the help of an influencer who is paid to endorse a product
- Shoppable content such as video or any other media on ecommerce websites
Social commerce channels: social sites & platforms
Below are the top social commerce platforms that can be used as another sales channel:
- Google Shopping and Shoploop
Although neither Twitter nor Linkedin has obvious ‘Buy’ buttons, both platforms can be leveraged for social shopping by providing links to purchasable content.
Social Commerce Data: Social Commerce Growth Rate
It’s perfectly clear that younger generations are shaping social media and shopping trends. This way, 97% of Gen-Z consumers say that social media is their top source of shopping inspiration; 72% of millennials admit that if the brand engages with them on social media, they are more likely to buy from it; 62% of both Gen-Z and millennials don’t mind and are, in fact, interested in shopping directly from their social media feeds; and 35% trust influencers and are likely to buy a product if it’s endorsed by a celebrity.
With that said, social commerce is not an exclusive prerogative of Gen-Zs and millennials. In fact, both Gen-X and Baby Boomers are avid online shoppers.
While numbers vary slightly from generation to generation, the trend is quite clear: the above-mentioned projection of the social commerce market reaching $3.5 billion by 2028 is more than feasible.
Social Commerce Advantages and Disadvantages
Just as anything, social commerce has its pros and cons. On the one hand, it allows for direct contact between sellers and customers and gives plenty of opportunities for brands to ‘relate’ to their buyers rather than simply sell. If a sale is successful, it’s easier for a business to obtain favorable, trustworthy reviews from verified buyers, ask customers to refer their friends and family, and share the review for a discount, thereby broadening the customer reach in an organic fashion.
Expected market growth, continuous innovation, global reach, a large pool of prospective customers – it seems hard to find a disadvantage, yet there are a few. Firstly, social commerce might be a time-consuming endeavor, after all – it takes time and effort to come up with an engaging and interactive campaign that your potential buyers will appreciate. Secondly, it’s easy to get a negative review that can backfire, stain the brand, and bring curious onlookers who are ready to leave a disreputable comment out of sheer spite. And finally, social commerce has its limitations, which are quite obvious – its main prerogative is social platforms, which means it can never become a sustainable sales channel on its own, but rather an additional source of customers and revenue.
Social Commerce Strategy
If you’re ready to jump on the social bandwagon, then this section will introduce you to a few common strategies to advance in the social commerce domain.
Before we dive in any further, it’s worth reiterating that social commerce is not a competitor to ecommerce but rather its subset or extension, meaning it should not exist in a vacuum but interlink with other sales channels. After all, buyers might choose to go in-store for the product they’ve seen on social media or purchase it from the company’s website.
However, the easier and smoother the checkout process on a social platform, the more likely the consumer is to complete the buying process entirely on social media. This way, a readily available ‘Buy Now’ button can significantly contribute to a successful sale via a social commerce channel. At the very least, location finders and ‘Where to buy’ suggestions can prompt hesitant buyers to pop in-store to complete the purchase.
With that said, the social commerce core must be mobile, meaning that brands who create online storefronts for desktops are significantly missing out and risk losing customers before they even reach checkout.
This way, your social commerce strategy must be aimed at creating seamless mobile shopping experiences from browsing to checkout. For B2B, though, it might be a little different: while the social commerce focus must be still kept on mobile, desktop experiences could not be entirely disregarded.
Overall, investing in social commerce requires an agile strategy that targets several components:
- Content and creative assets
- Media strategy
- Audience expansion
- Measurement strategy
The following steps, which target each of the above components, can guide you in developing your own strategy:
- Consider how and where your content will be created, published, and promoted.
- Ensure you have a solid media strategy that focuses on your target audience across social platforms.
- Strategize and amplify your message, while ensuring it reaches your target audience.
- Use data to target a specific portion of your customer base.
- Choose conversion strategy, test, and continuously improve it.
- Build a measurement strategy that would allow you to learn from your customers.
Since the measurement is particularly critical, we’ll cover a few basic social commerce key performance indicators in the next section to help you understand whether your social strategy is working or needs adjustments.
Social commerce KPIs
Social media metrics can give important clues about the state of your social commerce strategy, if not about your ecommerce business as a whole. From general consumer perception to behavioral patterns of the target audience – measuring and monitoring social media data can help you better understand your prospective buyer and adjust your marketing campaigns to reach more customers and increase sales. Below are a few metrics to look out for. Thankfully, social media built-in analytics tools allow you to keep track of those critical numbers with ease.
- Follower count, including active follower count, new followers, and annual follower growth;
- Engagement numbers (shares, likes, hashtags, mentions, link clicks) and impressions;
- Shoppable feed statistics, which measure how often users buy directly from your online profile;
- Average rating, usually on a five-star scale;
- Social media story analytics, including views and reach, exit rate, and interactions;
- Traffic data from social media to your site;
- Conversion rates, which is especially important for paid social media postings.
Social commerce tactics: ways to deliver value
The key to getting ahead is always getting started. Below are a few tactics on how to succeed on social media amongst fierce competition and deliver maximum value to prospective buyers:
- Optimize your content. Since people typically turn to social media to consume content, your content strategy must make sure you have enough educational, inspirational, or entertaining content on offer.
- Engage through messengers. Since messaging is a great way to humanize your brand, use several messaging platforms, such as Facebook Messenger, Whatsapp, and Telegram, to support and interact with your customers.
- Build a tailored shopping experience with a visual social storefront. Thankfully, social platforms enable you to customize a shopping experience so that it corresponds with your brand image, suits your business needs, and rings a bell with your customers.
- Collect and leverage UGC, which stands for user-generated content and includes reviews, customer support feedback, endorsements, and so on. One of the ways to leverage UGC is to ask and encourage your buyers to post pictures of bought items and share their experiences in stories while tagging your brand and social pages.
- Invest in automated and intelligent bot technology. While human interaction is still the best way to provide adequate support services to your buyers, having a chatbot when outside working hours ensures you can answer simple requests or collect necessary data like a telephone number or email to get to your customer as soon as you can.
- Integrate social commerce with your ecommerce platform. To provide cohesive and consistent experiences (as well as up-to-date information like inventory in stock), your social media has to be integrated with your ecommerce platform.
- Leverage shoppable links, tags, stickers. Platforms like Instagram allow you to create shoppable links and tag products on social posts to help people find, click, and buy your products. Make sure you don't miss out on this technology.
- Team up with influencers. Collaborating with influencers is a powerful way to promote your product. With an influencer, you can co-create giveaways, discounts, and promotion coupons, all the while piggybacking on that influencer's credibility.
- Collect and analyze data. Collect as much information as you can to create actionable insights and learn more about your target audience. Test new concepts on that data, and make sure to continuously adjust your social strategy to stay relevant to your buyers.
Social Commerce Future: Social Commerce and Web 3.0
What if you thumbed through a social media feed, noticed a neat little gadget you always wanted, offered exclusively at half a price, and clicked on ‘Buy now’ without any inhibitions over privacy? If you think you’ve been doing precisely that for a few years, you’re not wrong – social commerce is not entirely a new concept. However, the second technology from the example, the one which promises complete privacy if not anonymity, commonly referred to as web 3.0, or simply web3, is rather a novel concept.
Web3 has recently become a subject of multiple heated debates across the internet among both laypeople and heavy players from Silicon Valley. The results of those debates were somewhat inconclusive with either party (or both!) retracting before the conversation even started. This way, Vitalik Buterin passionately defended Web3 on Reddit, Andreessen blocked Jack Dorsey on Twitter, while whoever is responsible for Coinbase social media menacingly tweeted ‘Google’s days are numbered.’ If none of those debates helped you to understand what’s the big deal behind web3, we’re here to help.
How social commerce works today
Some of us see something worthy of purchase on social media then look for the same item at a reliable reseller, say Amazon, where we can safely buy the product without worrying over security or privacy. One reason is that we trust the provider, which more often than not already stores our credit card information. Some people don’t even bother looking at a reseller’s options and buy directly from social media feed accepting all the privacy/security risks on themselves by default. After all, we all know that there’s no such thing as ‘privacy’ anymore as Big Tech companies and anyone else who cares to drop a cookie in our browser already know more about ourselves than we do. Well, Web3 promises to change that narrative and make our shopping a tad bit safer.
What is web 3.0?
Web3 is a radically new form of monetization that would allow users to buy what they want from social media feeds without revealing anything about themselves, their personal tastes, or browsing habits. Instead of relying on Facebook, aka Meta, with all its associated bad vibes, such as censorship, fake news, and so on, we’ll soon be communicating using decentralized services that will make fears of Big Tech a thing of the past.
How is web3 different from web2 or web1?
According to Moxie Marlinspike, the founder of the Signal app, who has recently shared his own critical impressions of web3 on his blog, the difference between the three lies in decentralization vs centralization, he goes on to explain: ‘web1 was decentralized, web2 centralized everything into platforms, and that web3 will decentralize everything again. web3 should give us the richness of web2, but decentralized.’
Etherium’s documentation, in turn, explains the difference in the following manner: ‘Web2 refers to the version of the internet most of us know today. An internet dominated by companies that provide services in exchange for your personal data. Web3, in the context of Ethereum, refers to decentralized apps that run on the blockchain. These are apps that allow anyone to participate without monetizing their personal data.
How does web3 work?
As mentioned, web3 apps are based on cryptocurrencies, or digital tokens, that are tracked on blockchains. These digital tokens are distributed to early investors and can be traded on cryptocurrency exchanges. Theoretically, these tokens can appreciate in value as an app takes off. To believers, web3 offers opportunities to participate in, what Bloomberg calls, a utopian project, while simultaneously profiteering on a crypto boom. To detractors, web3 is yet another branding exercise that is designed to preserve the mania for cryptocurrencies. Moreover, the latter point out that people who back up
web3 are the same people who backed web2 years earlier. Reid Hoffman, for example, the founder of LinkedIn, describes the wild idealism of web2 creators, who essentially wanted the same thing – to create decentralized networks with peer-to-peer interaction. However, as the system reached maturity, the output was, quite predictably, the system’s centralization. Hoffman continues, “You have this pattern, where you get a decentralized platform and then recentralize key features that work better technologically, or as businesses, as infrastructure.”
While business giants were struggling to find the right arguments, Tim O’Reilly published a fantastic essay in December 2021 titled ‘Why it’s too early to get excited about web3’, where he argues that for web3 to become a general-purpose financial system, it needs to develop interfaces with the real world, is operating economy, and legal systems:
‘The failure to think through and build interfaces to existing legal and commercial mechanisms is in stark contrast to previous generations of the web, which quickly became a digital shadow of everything in the physical world—people, objects, locations, businesses—with interconnections that made it easy to create economically valuable new services in the existing economy. As of now, crypto is well-suited for digital-only assets that can be valued and used in a self-contained world, like a computer game or the longed-for metaverse. But we’re a long way from the birth of an entirely new economic system.’
So far, it seems, that the predominant way to participate in web3 is betting on tokens and NFT, but the social networks of the future look like a long shot and are mostly hypothetical.
What’s the difference between social commerce and ecommerce?
eCommerce means selling and buying products and services online. Social commerce is a subset of ecommerce that involves the use of social media and social platforms for the sale and purchase of products and services
What are some prominent social commerce companies?
The most prominent social commerce companies include Facebook, Instagram, Pinterest, Snapchat, TikTok, and WeChat.
What are social commerce benefits?
Social commerce allows merchants to reach a wider audience, expand the customer base, target a specific buyer persona, create organic content, drive traffic to a company’s website, and evaluate performance with social platform’s analytic tools.
What are social commerce pitfalls?
Social commerce is a time-consuming endeavor that requires additional resources to keep up with the content, social trends, and interactions with the audience. It can also backfire in case someone leaves a negative review, which can spread and amplify quickly.
Which social media platforms are best for social commerce?
The social media platforms that are most optimized for the sale or purchase of goods are Facebook and Instagram. However, other, well-known social platforms are becoming increasingly better at commerce.
Which brands and product categories are best suited for social commerce?
Apparel and accessories are, arguably, best suited when it comes to social commerce. However, businesses that deal in products other than apparel have shown fantastic results on social media defying preconceptions about the suitability of particular products for social commerce.
What is a social commerce enabler?
A social commerce enabler is a company that provides end-to-end social commerce solutions for brands, meaning it helps brands develop a social commerce strategy and succeed in selling the brand’s products or services through social platforms.
What are social commerce features?
Social commerce features include ‘Buy Button,’ store location finders, shoppable posts and stories, ads on social networks with CTA.
What are social payments?
Social payments are the use of social media for money transfers from/to individuals or businesses. Examples of social payments include PayPal, SnapCash, Apple Pay, Google Wallet, Venmo.