Social Commerce: Features, Benefits, and Challenges
Social commerce combines online shopping with a social component. We show you advantages, challenges and which platforms and apps offer corresponding functions.
Social Commerce: Inspiration and short shopping routes
Shopping online is a must for a large proportion of consumers because it is easy and convenient, it is quick and it can be done at any time. In addition to classic online shops and marketplaces, other players have increasingly stepped onto the e-commerce stage in the past year: social media channels. While the platforms have long been used extensively as marketing and communication channels, they are now also integrating more and more shopping functions.
Social shopping: advantages for merchants
Retailers use social commerce to open up additional sales channels and expand their brand presence. What makes it special is that the shopping options meet the social interaction. So retailers are embracing what social media thrives on — sharing, personal recommendations, ratings, and sharing — and creating a digital shopping spree among “friends.” This is where the concept of social proof comes into play: Something that has already proven itself to others cannot be bad.
Social commerce is also a logical step towards a seamless customer journey, because retailers can reach customers where most of them are already. And that makes the shopping experience even more convenient. According to Statista, 89 percent of 16 to 24 year olds in Germany use social networks, compared to 71 percent of 25 to 44 year olds. The average length of stay in this country is 64 minutes a day — that's a remarkable number.
Another advantage: Users look for inspiration and ideas on Instagram, Pinterest and Co. and are generally open to new things in this environment. The chances of successfully addressing customers here and generating sales are therefore good. All the more so since most platforms allow target group-specific targeting of the advertisements. Added to this is the potential of influencers. In the USA, for example, Instagram has already made the shop functions accessible to selected influencers. If the social networks also follow this path in this country, influencers should continue to drive social commerce. Trends such as augmented reality (AR) and virtual reality (VR) could also serve as a driving force in the future.
Social shopping: advantages for merchants
Retailers use social commerce to open up additional sales channels and expand their brand presence. What makes it special is that the shopping options meet the social interaction. So retailers are embracing what social media thrives on — sharing, personal recommendations, ratings, and sharing — and creating a digital shopping spree among “friends.” This is where the concept of social proof comes into play: Something that has already proven itself to others cannot be bad.
Social commerce is also a logical step towards a seamless customer journey, because retailers can reach customers where most of them are already. And that makes the shopping experience even more convenient. According to Statista, 89 percent of 16 to 24 year olds in Germany use social networks, compared to 71 percent of 25 to 44 year olds. The average length of stay in this country is 64 minutes a day — that's a remarkable number.
Another advantage: Users look for inspiration and ideas on Instagram, Pinterest and Co. and are generally open to new things in this environment. The chances of successfully addressing customers here and generating sales are therefore good. All the more so since most platforms allow target group-specific targeting of the advertisements. Added to this is the potential of influencers. In the USA, for example, Instagram has already made the shop functions accessible to selected influencers. If the social networks also follow this path in this country, influencers should continue to drive social commerce. Trends such as augmented reality (AR) and virtual reality (VR) could also serve as a driving force in the future.
Challenges of Social Commerce
Users are in the networks to be inspired and entertained, to be informed, to share, comment and rate content and to exchange ideas with friends. The target groups, content formats, user behavior and also the shopping functions differ. Social commerce therefore requires retailers to have a strategy that takes these points into account - "one size fits all" is not expedient for the channels.
In addition, the integration of each platform and its various shopping functions must be implemented technically. In this context, the adaptation of the product data and content on the respective platforms is extremely important. For example, there are different requirements for image formats. Only if you take this into account can you achieve a coherent and, above all, error-free appearance.
One danger that social media generally harbors is that negative ratings, criticism and defects that buyers express there become immediately apparent. Conversely, however, positive comments and the communication of goodwill and good service should contribute to the public perception of the retailer.
Social commerce platforms at a glance
The social media channels are diverse and the shopping functions also differ from platform to platform. Here you will find a brief overview of the most well-known networks.
Sell on Instagram
To sell products on Instagram, merchants need a business profile, which in turn needs to be linked to a product catalog on Facebook. The profile then has to be activated on Instagram, which usually takes a few days.
All products from the Facebook catalog can then also be accessed via Instagram. Merchants can now select the individual photos and edit them as a post. The so-called shoppable posts are marked with a small shopping bag. Products are marked in the same way that is also possible with "normal" postings with people - up to 5 products are allowed, carousels are also possible, then up to 20 products can be displayed. A product sticker can also be integrated into the stories. By clicking on this sticker, the user is forwarded to the web shop. The rather bumpy detour via a single link in the bio is no longer necessary. In the USA, Instagram Shopping is even one step further: Instagram users can already order and pay directly in the app.
Who do you reach here? Instagram has over 1 billion users worldwide, over 15 million in Germany. Instagram is mainly used by younger people up to the age of 25 and they like to use it for personal self-portrayal. The shared images are often snapshots, but over time, high-quality recordings have also become increasingly popular. The interaction here is more personal and closer than on Pinterest. Instagram is about all kinds of lifestyle topics such as fashion, sports, travel and nutrition.
Facebook shop
If you want to set up a Facebook shop, you'll need an account and a business page, which most businesses already have. As a Business Page admin, by default you see the store in the navigation on the left side of the page. When you click on the link for the first time, you will be asked for various information, such as which country you are in and what type of products you sell. As soon as the shop is set up, you can upload products, i.e. either create postings manually or, if you have an appropriate e-commerce solution, upload your complete product catalogue. In the individual postings, you can change the product name, the description, the price and some other information at any time.
While the products could not be bought directly via Facebook for a long time, but customers were forwarded to the online shop to order and pay, retailers have been able to use a real Facebook shop since May 2020 and present their products via it. You can also check out directly there.
Who do you reach here? Facebook has 32 million active users in Germany. Facebook is no longer popular with the younger generation, with the 25 to 34 year olds making up the largest group.
You can find more information about the Facebook shop here.
Pinterest: shop with Product Pins
To use Pinterest, you need a business account that gives you access to various features. Pinterest still needs to approve your account before you can start. Since the end of March 2020, retailers have also been able to be verified on the platform and then qualify for conversion reporting. These provide insights into website visitors, sales and payments and record both organic and paid conversions.
Merchants can upload entire product catalogs to Pinterest, create product pins from them and convert them into shopping ads. You can store the link to the product page and keywords for each pin, which are important for the search, similar to Amazon and Google. The users are then forwarded to the online shop via the stored link, where the ordering process and payment are processed.
Pinterest already offers exciting functions when it comes to advertising: With dynamic retargeting, retailers can reach pinners who have already dealt with the brand or products. For this purpose, the relevant pins or similar are displayed as suggestions in the feed. Since October 2020, Pinterest has been offering companies the opportunity to optimize campaigns using automatic bidding. In addition, bids for an ad can be dynamically adjusted without having to intervene manually. According to Pinterest, advertisers were able to achieve 30 percent more clicks and conversions with the same budget. The new update also offers a conversion analysis.
By the way: At the beginning of 2020, Pinterest introduced “Try On”, an augmented reality feature for users in the USA that customers can use to try out the color of lipstick. This feature will soon be available worldwide. This paves the way for a broader use of AR.
Who do you reach here? According to Statista, there are 335 million users worldwide, in Germany there should be 6 to 7 million. The majority of them are women. The users are older than Instagram, but 67 percent of users worldwide are younger than 40 years. Like Instagram, Pinterest is very image-heavy, but thrives on very high-quality, often professional photos (there are no videos here). User behavior here is also different: Pinterest is all about curated content and discovering topics; the thing is in focus, not the person. Pins are collected and can be put together again and again on boards. The interests of users are primarily in the areas of furnishing, decorating and DIY.
TikTok introduces shopping features
On TikTok, users can upload short videos of a maximum of 15 seconds and edit them in the app with various filters and effects. If the video is liked, the users distribute hearts.
Over the past year, TikTok has been testing the ability to link videos directly to the website for purchase in some countries, similar to Instagram's shoppable posts. Since October 2020, TikTok has been cooperating with Shopify in the USA. After downloading the TikTok app from the Shopify App Store, merchants can create marketing campaigns directly from the Shopify dashboard and transfer them to native TikTok ads to promote their products. Targeting goals can be selected. Sellers can track which activities on TikTok lead to purchases in their online shop. Direct sales via TikTok should also be made possible in the future. The global rollout of the cooperation is planned for early 2021.
Who do you reach here? TikTok has 5.5 million users in Germany. The short video app is particularly popular with Generation Z. Starting with music videos, the uploads in the app are now more diverse: dance, comedy, fashion and other topics can be found here.
YouTube is still experimenting
It's still officially just an experiment: YouTube has been testing Shopify integration and tagging products since October 2020 in order to build a product catalogue. Unboxing and how-to videos could soon become a modern version of teleshopping and give the company a share in e-commerce, which has recently grown rapidly.
Who do you reach here? YouTube has around 2 billion registered and active users worldwide. It is the second largest search engine in the world after Google. According to Statista, 77 percent of Germans at least rarely use YouTube. The ARD/ZDF online study 2019 shows that 40 percent use the video platform at least once a week. The 14 to 29 year olds are most active - 82 percent use YouTube at least once a week. In general, YouTube is used more frequently on the go than on the desktop.
WhatsApp introduces shopping button
In October 2020, WhatsApp also opened the door to social commerce and added a shopping button to the chat function. Users who are in contact with brands or retailers via WhatsApp can buy products directly in the feed. WhatsApp is also working on customer service tools to help companies communicate with customers. Shortly before Christmas, "Carts" was rolled out worldwide, a kind of product catalog with a shopping cart. Customers can look at several products, place them in the shopping cart and then send this to the company as a message.
Companies that want to use the function must use Whats App Business and have stored their products as a catalogue.
Who do you reach here? According to Statista, 79 percent of Germans use WhatsApp. Among 18 to 29 year olds, the proportion is even 97 percent, but overall the app is popular in all age groups. This penetration is what makes the app so attractive to businesses.
