The coronavirus pandemic has accelerated the growth of e-commerce over the past year. According to the Retail Sales Index from Great Britain’s Office for National Statistics (ONS), in 2020 online sales grew by 46.1 percent compared to 2019, the largest annual increase since 2008.
Whilst e-commerce as a whole has seen rapid exponential growth, there is one particular aspect that is attracting attention from retailers and consumers alike: social commerce.
Jim Herbert, vice president and general manager EMEA at BigCommerce, shares his predictions on the future of social commerce and digital sales, and how companies can find the right balance using social commerce and other marketplaces to optimize their e-commerce strategies.
The future of social commerce and digital sales
Social commerce involves selling products directly through social media platforms and has become an increasingly popular tool in the arsenal of digital retail strategists. Brands all around the world are tapping into its potential to redefine the shopping experience and meet new customer expectations with convenience and simplicity.
According to eMarketer, up to 51 percent of US social media users had considerably increased their social media use by mid-2020. The rise in the amount of time spent on social media coupled with increased reliance on online shopping has likely contributed to the rapid rise of social commerce. As many traditionally brick-and-mortar stores build out an omnichannel presence to address the limitations created by the coronavirus pandemic, social commerce offers an innovative way for brands to engage and connect with customers whilst driving sales.
It is forecasted that by 2021, the US social commerce market will grow by around 35 percent. There are many indicators that demonstrate how social commerce will play a key role in the future of digital sales. One major sign is how all major social media platforms continue to enhance their e-commerce capabilities. The Facebook and Instagram shops and TikTok as well as the Pinterest catalogs have all been put in place to deliver an in-app e-commerce experience for users. According to a 2019 letter to investors, Deutsche Bank believes the check-out functionality on Instagram could add $10 billion worth of revenue to Facebook in 2021.
As social media use continues to grow and evolve, social commerce will naturally do the same, giving consumers more choices and ways to shop, across all of the platforms they regularly access. Social commerce looks poised to have a significant impact on the way we browse and shop through its ability to create a more streamlined and personalized shopping experience. According to research from Stackla, 67 percent of consumers say it is important for brands to provide them with personalized experiences.
Nature of brands that enjoy success using social commerce
Numerous businesses have already started practicing social commerce using different social media platforms. However, whilst social commerce can be an excellent offering for certain kinds of brands, it might not be the right fit for everyone.
According to Statista, over two-thirds of Instagram’s one billion active users are aged 34 and younger. The rise of social commerce has very much been driven by younger consumers as it provides an opportunity to connect with the brand on a more personalized level.
As the demand for rich visual content is high on these platforms, brands that have products they can showcase using these visual elements are more likely to enjoy success. More than 55 percent of Gen Z US internet users, who do half their shopping online, said their most recent fashion purchases were inspired by social media browsing and nearly as many millennials said the same. According to a Facebook-developed case study, country fashion brand Barbour has seen Instagram sales increase by 42 percent since implementing the “shop on Instagram feature”.
Research from Initials indicates that, based on data from UK shoppers, brands within the fashion, beauty, wellbeing and grocery sectors are the most liked categories for consumers to shop on social. The price of items also seems to be a determining factor, as the research suggests that big-ticket items such as travel and luxury are less popular than more affordable items. In order to understand when and where to implement a social commerce strategy, brands must fully understand their target markets and the patterns of consumer behavior.
Finding the right balance
Taking an omnichannel approach, which integrates the in-store and social commerce experience, enhances customer satisfaction as retailers are able to mitigate some of the limitations of traditional brick-and-mortar stores. Examples include the surge in buy online/pick up in-store over the course of the last year. One example is Kingfisher, the parent company of multichannel retailer B&Q, which saw its click-and-collect alone grow by 216 percent and account for 77 percent of online sales in the three months to 31 October, compared to the previous year. Research suggests that 46 percent of retail executives say they’ll increase investment in omnichannel compared to their investment plans before the global pandemic.
According to McKinsey a high number of customers around the world have experimented with new shopping behaviors since Covid-19. As the customer journey continues to become more dynamic, there is an increased need for brands to identify what combination of marketplaces and platforms make the most sense for their specific business and audience. Retailers today must deliver a more resonant brand and better shopping experience to stay ahead of the competition. In order to do this, an in-depth understanding of the target market is required.
The pandemic-driven e-commerce boom has helped accelerate the growth of social commerce. However, retailers should look towards adopting an all-encompassing omnichannel approach, as marketplaces continue to evolve. This strategy not only provides more channels for customer purchase but crucially improves the overall shopping experience for consumers, supporting them in every platform they frequent.
Jim Herbert, Vice President EMEA, BigCommerce