The Social Commerce paradox

Social commerce is the result of an ever-closening relationship between direct-to-consumer (D2C) e-commerce and social media. Nowadays, social commerce customers can buy products and services on timelines and in stories, without ever having to leave Instagram/TikTok/Snapchat etc. However social commerce is nothing new. Facebook first launched their Buy button back in 2014, with Twitter and Instagram launching similar features soon after. 

Since then, we’ve had shoppable Facebook ads, shopping cart possibilities on every channel from Pinterest to Twitch, and Shopify integrations with all major social channels, most recently Youtube.

Like all of e-commerce, social commerce went through a boom-period during the global lockdown days of the pandemic. With the outside world forced to close, there were surges of both visitors and sales as we all scrolled our way through lockdown. 

Perhaps understandably, this purple patch led to numerous predictions that social commerce would soon take over as the major sales channel for all e-commerce businesses around the world. But whilst the rise has remained quite remarkable, this prophecy hasn’t quite manifested.

Today, China is the undisputed major force in social commerce. Since the Covid-boost they haven’t looked back and in 2022 reported $350 billion in social commerce sales. These figures left North American and European D2C e-commerce brands scrambling to get their social commerce in order, however their home customers haven’t taken to the channels with quite the same vigour.

So much so, in fact, that both Meta and TikTok have recently announced that they will be scaling back their social commerce features across North America and Europe. They’re not abandoning the idea completely, but the wave of enthusiasm they were previously riding has subsided somewhat.

And there are many reasons for this. Some say it’s Apple’s iOS14 update that’s prevented social commerce hitting the same figures as the Far East. The update’s data-hole has brought an unwelcomed drop in brands’ performance across Meta’s apps, causing many to reassess their social commerce strategies.

Another theory is that social commerce has not built sufficient trust with North American and European customers. Whether consciously or not, we’re all very picky about the digital stores we trust, and it takes a lot of groundwork for businesses to build that trust.

There are big barriers in the shape of data protection, refunds and return policies that all e-commerce stores must overcome, and social commerce simply doesn’t have the features in place yet to hurdle them. Most of the accreditations and pointers that we all look for when navigating a new website are missing on social commerce channels, making it more difficult to convince people to buy. And that’s before we even consider the fact that a lot of people simply don’t trust the social media companies.

The outcome is simple: people are generally more suspicious of entering payment information on social media apps than on websites, leading to more difficult conversions on social commerce channels.

Having said that, social commerce sales are still on the rise worldwide and e-commerce businesses should take note. Just like any other business model, it’s good to have a strategy and understand how things work. Here we’ll cover some tips and trends to look out for that can help you make the most of social commerce in 2023.

Know your target audience

Generally speaking, the younger generations - i.e. 16-30 year olds - are more open to purchase goods and services via social commerce. Having lived their entire lives alongside social media, they’re less sceptical of the phenomenon and instead find it a normal part of life. They’re also active on the platforms far more frequently, and they’re more attuned to the latest updates and trends.

So if your key customer personas fall into this age bracket, it’s much more likely they’ll be open to social commerce options. We’d still recommend thorough market research, but if you’re in the fashion, lifestyle and beauty industries in particular, you’re more than likely onto a winner.

Influencers

Influencers are nothing new, however with the development of social commerce their role has shifted from a solely marketing outlet to a potential sales channel. Your customers now buy products directly from influencer posts and livestreams, in a seamless shopping experience that doesn’t take them away from the content feed.

Again this is industry-dependent, but if influencers are active and successful in your field, they can be major boosts to social commerce sales. Not only because they help promote your brand and products to a wider audience, but they also add heaps of social proof to your business. People trust influencers a lot more than (faceless) brands and businesses, so if they see their favourite vlogger promoting your products, they’re more likely to buy.

The right channel

Not all social media platforms are equal. Depending on your industry, your products, your customer base and numerous other factors, your brand will be better suited to some platforms than others.

Facebook is the world’s most popular channel, for instance, however its demographic has dramatically shifted in the past 5-10 years, particularly across North America and Europe. The older generations of social media users - i.e. around 40+ - still use Facebook as their main (and often, only) social media channel. However the number of younger users is dwindling. So whilst Facebook does have the highest number of users worldwide, it’s only the best platform to invest time into if it serves your core audience.

TikTok is some way off being the most used platform, however it is indisputably the fastest growing. Estimated at between 130-145% growth since 2021, the platform is shifting from exclusively a place for early teens recording dance videos, to a much broader appeal. Brands and businesses around the world are investing in TikTok experts to promote and sell their products, and we believe it’s time to start taking the platform very seriously.

Youtube is another channel that has shapeshifted very rapidly in the last few years. Youtube personalities and celebrities are much more common these days, and they’re using the platform for everything from selling products to collaborating with brands and promoting boxing fights (yes, seriously).

Whatsapp and SMS platforms also fall under the social commerce bracket, and with tools like Yotpo tying all your communication channels neatly together, they should be high on your list of considerations.

Social search

Social search is perhaps the biggest ever challenge to Google’s dominance as the number one search engine. The fact is, younger people are using social media platforms to find the information they want. Everything from what to cook for dinner tonight, where to buy that sweater they saw, and instant news updates from around the world is all available through social search.

Up to 40% of 18-24 year olds are using social media as their primary search engine, and whilst this doesn’t necessarily mean the death of Google, it does mean the way we use social media is shifting. Whilst search engines still reign supreme for discovery, (young) people are much more likely to conduct brand research through social media.

What does this mean? Even if you’re not selling products directly through social commerce, social media platforms remain a fundamental part of selling your brand. People use social search to investigate brands and often find brand features that they strongly identify with, subsequently becoming loyal and returning customers.