In this guide, our social advertising experts explore what social commerce is, how it’s different from ecommerce, the available opportunities and features brands should leverage across social platforms, and key things to consider when future-proofing your social commerce strategy.
What is social commerce?
Social commerce is the process whereby brands and retailers sell their products directly through social media platforms. This includes an end-to-end shopping experience from product discovery and research to checkout. So users are now able to scroll through a social platform to discover a brand, explore its products, and make a purchase without ever leaving the social media platform.
Ecommerce vs. social commerce – what is the difference?
Social commerce essentially stems from ecommerce and possesses many of the same features and functionalities; both channels allow for the buying and selling of goods through a digital platform. Ecommerce typically refers to shopping experiences across a website or app, whereas social commerce refers to shopping experiences that take place within social media platforms like Facebook, Instagram, and Pinterest. However, in recent years, many marketers have been leveraging the power of social commerce as it has opened up more opportunities for brands to drive revenue. With an annual growth rate of 31.4%, the global social commerce market is expected to grow to $604.5 billion USD by 2027.
An obvious benefit of social commerce over ecommerce is the ‘social’ aspect of the channel. Social commerce allows for a more open avenue of engagement between brands and consumers. Not only does the very nature of social platforms allow for greater interaction, but it also helps provide customers with a more seamless shopping experience. Oftentimes shoppers discover new products of interest through social media posts – whether it be organic or sponsored – and then are redirected to the company’s website for purchase. Social commerce, however, offers users a more efficient way to shop by allowing users to experience the entire purchasing journey within the app.
The rise of social commerce
Accelerated by the global pandemic, social commerce is quickly becoming a popular channel for brands looking to increase their online sales. Research suggests that 30% of online shoppers are likely to make a purchase from a social media network like Facebook, Pinterest, Instagram, Twitter or Snapchat. And according to ClickZ, 45% of retailers are planning to spend more on social media advertising in 2021, with a large part of this attributed towards content for social commerce.
With over 84% of shoppers likely to review at least one social media platform before making a purchase, social commerce holds great promise for brands looking to drive their ecommerce initiatives. What started in 2007 with the introduction of Facebook’s marketplace – allowing users to sell items to users within their network – has quickly grown into the development of shoppable pages, buttons, product tags, and as of 2021, almost every social media platform has social commerce options available to brands.
Aside from the ability to create a seamless consumer purchase experience, there are a vast number of benefits for brands looking to adopt social commerce channels.
Accelerated consumer growth
For starters, the ability to drive consistent audience growth. There are currently 4.2 billion monthly active users on social media across the globe. Utilising social commerce channels allows brands to reach their target audiences more effectively. In return, this allows brands to drive their brand presence, thus increasing their accessibility to a wider audience.
Increase rankings in search
Research shows that increased engagement on social media has a direct impact on your website traffic. Social signals such as likes, shares, followers and brand mentions have proven to improve a brand’s organic search rankings. Additionally, driving engagement on social media can drive new links to your website increasing your overall brand presence and online visibility.
Drive authentic engagement & brand loyalty
In recent years, consumer purchasing habits have continued to shift, with 56% of Gen Z consumers preferring brands to communicate with them via social media platforms. In addition, research also suggests that over 50% of Gen Z and Millennials are more open to switching to new brands than other generations. So brand loyalty and engagement continues to be a key challenge for businesses.
Social commerce initiatives not only allow businesses to sell and promote products/services to new consumers but also provides a platform to build better relationships with new audiences. Businesses can leverage the new openness of key target audiences to drive awareness and build new loyalty for their products/services. It is also an opportunity for brands to use their social platforms to personalise and enhance customer service experiences.
Tips and insights for social commerce success
Engage with your audience where they are
Social commerce is the perfect tool for brands to have genuine interactions with consumers in real-time via organic distribution, or at the customers convenience via paid. Customers want to feel like they’re more than just people who buy your products; they’re looking to engage with brands who truly care about their audience, share similar values and offer them a voice within their company. They should be leveraging social commerce features to create a sense of community for their audience. This gives brands the opportunity to directly respond to any queries, gain audience insights, and receive direct feedback, while also giving other users the opportunity to get involved in the conversation.
Leverage audience insights
With the demise of the third-party cookie and growth in concerns over data privacy, it’s more important than ever to carefully consider your approach to utilising audience data. Social media platforms offer a number of tools that offer insights into five key questions about their brand and audience:
- Who is engaging with and mentioning your brand?
- What part of your brand is being highlighted?
- When do audiences seem to engage most?
- Where across your social activities are your audiences engaging?
- How is your target audience participating in these conversations?
By exploring the multitude of features across different social channels, including direct messages, hashtags, mentions, and location tags, brands can gain valuable information on audience behaviour and preferences, and seek out areas for improvement.
In-platform analytics tools also provide granular insights into the impressions, reach and engagement of your content, which can ultimately help inform improvements and future campaigns.
Invest in good copy and visual content
As the digital landscape becomes increasingly saturated with content, brands should be maximising their social commerce strategy by investing in effective copy alongside eye-catching visuals. Many social media platforms now allow you to customise much of the shopping experience according to your branding and target audience. With 82% of consumers feeling more positive about a brand after viewing customised content, it’s important for brands to create a cohesive, simple, identifiable visual identity so that users can easily recognise the brand while scrolling through their explore feed; thumb-stopping content will ultimately encourage users to visit your page and potentially make purchases.
Consider promotional prices
Because social commerce is still a fairly new way for consumers to shop, it is still fairly uncommon for users to go directly to social commerce platforms when seeking out a specific product or service. Instead, most purchases made across social platforms are impulse buys following product discovery. Thus, it’s more likely that products at a lower price point will sell better, unless supported by longer-term brand building. Brands should keep this in mind when adding and promoting products to their social platforms, while also considering the makeup of their target audience. It is also worth noting that social media platforms are currently dominated by Millennial and Gen Z audiences, who will naturally be less likely to spend large amounts of money.
Leverage shoppable AR tech
Over the last year, with the growth of platforms such as TikTok and Twitch, there have been considerable new feature launches across social platforms – shoppable augmented reality (AR) technology being one of the most popular.
Immersive technologies have been around for a while, but with the growth of platforms such as TikTok and Snapchat, AR technology has seen a surge in demand. In fact, research suggests that consumer spend attributed to mobile AR applications will reach $15.5bn by 2022.
Platforms such as TikTok, Instagram and Snapchat have all launched the ability to use AR filters across their platforms. And with the global pandemic forcing many businesses to shut their doors, 2021 saw many more brands leveraging AR filters and technology to enhance their digital consumer experience.
UGG x Croud: Fluff Yeah Snapchat AR filter
Following the global coronavirus pandemic, and subsequent lockdown, Croud’s client UGG had to find a unique way to drive brand awareness. Following market and audience research, Croud was able to identify that Snapchat was a crucial platform for UGG’s target consumers, and so we sought to implement an innovative ‘try on’ AR filter to cut through the noise. The AR filter – which was the first foray for the brand – would allow customers to ‘try on’ the Fluff Yeah – one of UGG’s most popular products. The aim was to push the boundaries of what can be done with ‘try on’ AR technology, and provide a truly immersive experience, which would enable potential customers to engage with the product, event whilst stuck at home during lockdown.
This campaign was a huge success resulting in 60% more conversions than the campaign average, as well as driving sales revenue with 90% of engagement coming for new users. Following the back of this campaign, Croud is continuing to work with UGG on innovative social commerce solutions.
Social commerce in China
While social commerce is a fairly new marketing tool in many Western markets, including the UK, US and Australia, countries like China have long been leveraging this channel to power business growth. According to eMarketer, retail social commerce sales accounted for 11.6% of total ecommerce sales across China, with this figure expected to rise to 14.2% by 2023.
With an abundance of all-in-one platforms that already offer a number of functionalities, including in-app shopping, China has already seen a great deal of success with social commerce. This includes the likes of WeChat, Douyin, Pinduoduo, and more. Because so many social platforms in China offer a multitude of features, including search engines, games, payment and in-app shopping, all in one app, users are more likely to spend time within the platform. While users in the UK might head to ecommerce platforms like Amazon which have a singular focus on purchasing a product, users in China can enter an app with the goal of learning or being entertained – and still end up making a purchase by the end of it.
And the constant supply of new innovations in Chinese social media has not stopped in 2021. Many Chinese social media apps now double as payment solutions, so consumers can seamlessly move between their social media streams and make purchases without leaving the app. Fast technology and a strong customer focus have shaped the social landscape in China.
Key social commcerce platforms in China
Launched in 2011 by Tencent, WeChat began as a basic messaging app. Now with over 1.15 billion monthly active users across its platforms, it is commonly known as the ‘super app’ – an all-in-one platform with a variety of functions that encompass every aspect of a user’s daily life.
The release of the WeChat mini program ecosystem has fully escalated social commerce on WeChat to its peak. Imagine there is an app store live within WeChat’s ecosystem which is fully integrated with chats, Official Pages, WeChat Pay – users can experience, browse, consider, speak with customer service and purchase without leaving WeChat or downloading an app in their mobile. Brands like Nike, Zara, Gucci, Burberry have all developed their own WeChat mini programmes to appear to the digitally savvy Chinese customers.
Douyin (Bytedance)
Launched in 2016 in China, and in other global markets in 2017 – where it is known as TikTok – Douyin is a social media platform used for creating and sharing short-form user-generated video content. The app has quickly taken over the Chinese social media sector and is now the second-largest app for social commerce with over 679 million monthly active users.
From 2020, Bytedance has established an ecommerce division to accelerate ecommerce monetisation on its portfolio. Following its launch, Douyin Mini Shop has quickly become a key monetisation function within Douyin for brands and influencers. The Douyin Mini Shopfront is fully integrated with video content and in-feed streaming, which seamlessly connects a user’s social and shopping experience without any disruption. This makes Douyin well suited for social commerce strategies in China.
Pinduoduo
Pinduoduo’s name loosely translates to ‘join together more’, and is a group buying app where shoppers can secure deals by purchasing items in groups. In recent years, Pinduoduo has gone from being an up-and-coming disruptor to being the third-largest social commerce platform used in China, with 349.2 million monthly active users. Nearly all Pinduoduo transactions are completed using team purchase – this is a group-purchasing process whereby users can initiate a product purchase in-app and invite friends and family to join them via social media channels. This collective purchasing process means sellers are able to offer discounted prices; both buyers and sellers benefit from this increased demand.
For this reason, Pinduoduo has quickly become a popular platform for industries including Food & Drink, Fashion and Household items.
Mogu
Founded in 2011, Mogu has been named the number-one high-tech fashion startup in China and built its credibility by excelling in live video broadcasting and short-form fashion videos for younger consumers between the ages of 15-30 years. In recent years, luxury brands, as well as smaller retailers, have begun leveraging Mogu to boost sales and increase engagement with consumers online. Mogu’s all-in-one live streaming business ecosystem has contributed to 30% of the platform’s commerce revenue, and Mogu is one of the top five social commerce platforms in China – with over 13.5 million monthly active users.
The future of social commerce
Final thoughts from our social advertising team
The key challenge for platforms, brands and consumers alike will be the transition from ‘ecommerce’ to ‘social commerce’ as defined at the top of this guide.
Technical & legal logistics
For the social platforms, while integrations with commerce platforms such as Shopify and product feed capabilities are becoming more commonplace, the technical & legal logistics of payment and fulfilment are more challenging and costly to build into their offerings.
Consider payment controls
Brands will need to consider the potential loss of control over elements of payment, and more importantly, valuable first-party data from both purchases and site visits. As first-party data becomes more key in fueling advertising, understanding the cost-benefit here is important.
Convenience versus cost
Consumers have quickly adapted to buying online, buying via mobile devices, and buying through social platform discovery. So it seems natural that buying directly via Instagram shouldn’t be an issue, but with consumer privacy being a real focus at the moment, will there be a degree of conflict between convenience versus cost?
With a chicken or egg scenario emerging, will consumer demand necessitate brand action? Or will platform data loss through privacy regulations force the hand of the platforms and brands in turn? Either way, the success of customer to customer platform sales via Facebook Marketplace and Depop gives brands a lot to consider.
Predictions for the future
AR/VR will fulfil its promise, led by Snap and Facebook
Snap recently bought FitAnalytics, a company that helps online shoppers find their right size. An indication of where AR is going – imagine being able to leverage 3D full-body tracking at home and then land on-site with your size already selected.
Facebook and Mark Zuckerberg in particular have been bullish on VR for years, since their purchase of Oculus in 2014. Zuckerberg recently stated: "We want to get as many people as possible to be able to experience virtual reality and be able to jump into the metaverse and … to have these social experiences within that."
This clearly highlights their ambition, and we also know that Facebook isn’t against monetising their investments, which naturally lends itself to commerce.
The power of the algorithm
TikTok has been the big winner over the last couple of years, in part due to its smart use of algorithms in surfacing relevant content to its users. If recent partnerships and advertising efforts can leverage this smart machine learning, then TikTok could be a real force in social commerce.
Creative and creators in driving performance
As basic commerce capabilities become more accessible, standing out through elevated creativity, or partnering with the growing creator ecosystem will be a key driver for performance. It is no longer enough for brands to use product images from feeds to drive their product-based marketing strategies across social. To that end, brands will need to start being more clever with or investing heavier in their creative assets.
How to prepare for the future of social commerce
- Be agile and open to change: Historically, there has been a honeymoon period for performance across social platform-based incentives for first-movers. Whilst this is not always possible, moving quickly when the opportunity presents itself can have a large upside.
- Understand the implications of each opportunity: Particularly with regards to measurement, data loss/gain and profit, it’s crucial to consider the implications. Each of these elements will require a different approach to regular on-site ecommerce campaigns and will need to be judged as such.
- Be where your customers are, or where new ones might be: The removal of website traffic friction could be the ideal opportunity to launch a new platform that you haven’t been able to justify to date or reach a whole new audience altogether.
- Get your house in order: The biggest hurdle with social commerce is often the internal logistics. So read up on all the information available, speak to your agency and partners, and get organised internally. Be in a position where you are ready and confident to take the leap.
How to kickstart a social commerce strategy
It’s only been in recent years that social commerce has gained popularity, so it can be a fairly daunting task to know where to start. There are so many different platforms that marketers can leverage, but how do you know which one is suitable for your brand’s business goals?
It’s ultimately up to marketers to examine the different features, capabilities and audiences of each platform to determine where and how to get started.
Key platforms to consider
Facebook & Instagram
Facebook and Instagram have been taking great strides to encourage shopping across their platforms and arguably have the broadest range of functionalities available for marketers.
In May of 2020, Facebook officially announced the launch of Facebook Shops, which not only offered brands a great number of marketing tools, but the ability for users to make purchases within the app. Up until last year, Facebook did not offer this key functionality, even within Facebook Marketplace. While Facebook Marketplace allowed for the listing, discovery and advertising of products, it did not allow brands to make direct sales; this was more of a product listing feature, as opposed to a social commerce feature. With the launch of Facebook Shops, the popular tech giant was able to expand its shopping features across the platform.
As Facebook owns Instagram, similar functions were added to the popular photo and video-sharing social networking app. The Shop tab on Instagram also launched in the middle of last year, giving brands the ability to create a digital storefront that allows users to explore their products and shop their brand directly through the app.
Both platforms offer a number of shopping features, including:
TikTok
TikTok has seen exponential growth, particularly since the beginning of 2020, with nearly 700 million active monthly users globally. The platform boasts great popularity especially among younger demographics and allows users to create engaging short-form video content. While TikTok’s current social commerce capabilities are somewhat limited, the app has been following in the footsteps of predecessors such as Facebook and Instagram to implement more shopping features.
Following the expansion of Shopify and TikTok’s social commerce partnership in February 2021, marketers are now offered more opportunities to create an easier shopping experience for their audience. Shopify merchants can now connect their TikTok For Business accounts to their Shopify profiles to sell products on TikTok via in-feed shoppable video ads. This allows marketers the ability to set everything up, from ad creation and targeting to optimisation and tracking, all in one place – the Shopify dashboard.
Recent research suggests that almost half (49%) of TikTok users have previously made a purchase after seeing a product or service advertised on the popular social app. Additionally, 36% of Gen Z audiences on TikTok have admitted to making purchases based on recommendations made in a video. This spells good news for advertisers looking to target younger generations in particular.
Pinterest
Pinterest is one of many notable platforms that brands can incorporate into their social commerce strategy. However, similarly to TikTok, Pinterest doesn’t offer nearly as many shopping features as some of the other platforms discussed in this guide. But there are several features that marketers can use to their advantage.
Pinterest’s features include buyable pins, which are marked with a blue price tag, and an ‘Add to bag’ button, which allows users to directly purchase the product featured in the pin. Users can easily spot these across Pinterest, which gives brands the ability to not only sell a product, but promote a lifestyle. Off the back of a customer’s first purchase via buyable pins, Pinterest stores the user’s purchase information to create more seamless shopping experiences. This not only helps with streamlining the shopping experience, but it also creates more opportunity for brands to grow sales.
Pinterest continue to grow their commerce options, over the last year they launched new features which allow brands to better connect with their customers:
Twitch
While live streaming has long been a significant part of social commerce in countries like China, it has only been in recent years that its popularity has extended to other parts of the world. Video live streaming platforms like Twitch have seen immense growth over the last few years.
Although Twitch originally began as a streaming service primarily for gamers, its range of creators has widely expanded to cater to different audience groups. There are now 140 million monthly active users on Twitch, with its annual revenue amounting to $1.54bn. Following its partnership with ecommerce solutions provider Spring (then known as Teespring) in 2019, Twitch streamers have been able to sell merchandise on the platform while live streaming.
By downloading the Spring extension, streamers are given access to a number of tools that enables them to further engage with their communities and monetise their channel. With an integrated checkout experience, audience members can easily purchase products without having to leave the stream or platform. Plus, animated in-stream alerts notify streamers every time someone makes a purchase, allowing them to engage with their audience and acknowledge their support. It’s also easy for streamers to grow and cater to their specific audience, as users can create and sell products exclusively to their subscribers – this builds a sense of community and loyalty between streamers and their followers.