Where Should Social Commerce Really Sit on the Path to Purchase?

Social commerce might be flavor of the month, but it’s an industry cooking on gas without any real recipe. With only two basic ingredients, social media and ecommerce, it is easy to underestimate the complexity of combining the right quantities of shopping and checkout capabilities with social platforms to drive conversion. It is also tempting to conclude from its current $89.4 billion valuation, not to mention its position on the right side of history as consumers retreat online to shop through the pandemic, that social commerce has finally found its place.

Has it really though? The ecommerce market is worth some $4.9 trillion, so in comparison that’s only about a 4 percent share. Meanwhile more than four billion people use social media around the world, spending roughly 15 percent of their lives on social platforms.
If anything, social commerce is underperforming given its potential to enable interactive, social shopping experiences built on trust and knowledge-sharing.

Right Time, Wrong Place

Much of the hype surrounding social commerce currently comes from the leading social media platforms’ implementations of shopping features. Instagram has made its content as shoppable as possible, enabling users to purchase products from photos and videos across the app. Facebook has long focused on ads and sponsored posts, along with the introduction of features such as Facebook Marketplace and Facebook Shop. Pinterest provides shoppable pins, giving brands the chance to upload product data from their catalogs to add to product groups. TikTok has partnered with Shopify enabling merchants to push video ads to drive users through to their stores to checkout.

All of these are, of course, appealing to brands who are eager to reach consumers on the platforms where they spend the most time. The question is, are they equally as appealing to consumers? Such implementations of commerce features assume that people want shopping pushed into their social activity and miss one essential point: social platforms are first and foremost communities. When people originally joined these social networks, they did so to meet and chat with their friends. They did not knowingly sign up to give away their personal data to be tracked and analyzed by advertisers selling them products, though a more wise, jaded and weary consumer base now know this to be
the case.

Long before social platforms started adding shopping features, there was a sense that social media’s role in commerce started higher up the funnel, platforms were places for people to discover products and find inspiration. This headline from Business Insider back in 2013 perfectly sums up this perception: “Social Commerce Is About Inspiring Shoppers, Not About
Getting Customers To Immediately Click And Buy”. The article pointed to the then failure of Facebook’s Gift Shop to argue that social commerce
should coax consumers down the purchase funnel, but forget about its ambitions to drive direct click-to-buy.

The problem with all of this is that it assumes social commerce means pushing commerce into social-first platforms. In reality social commerce can mean a number of things, but arguably its real value comes from
building ecommerce-first platforms that embed social interactions into their DNA.

Right Place, Right Targeting

When someone visits an ecommerce site they are at a highly targeted moment in the customer journey. They are open to considering products
to buy and those that find what they want may go on to purchase. Those who enjoy the experience may convert into engaged, loyal and hopefully repeat customers.

You need to look further down the funnel at the intent, purchase and engagement phases to find the real sweet spot for social commerce.
These are the moments in the customer journey where a consumer actively wants to be targeted with appropriate products. Social networks provide the power to serve those up, not through data tracking and advertising and any number of invasive psychological tools, but through the most valuable kind of social content that brought people to social platforms in the first place - genuine communication with their peers.

Consumers want to feel good about their purchases and the best environment to nurture those feelings is one with transparency, authenticity and accountability. Young consumers, in particular, are more likely to see ethical issues, such as social responsibility and sustainability,
as key factors when considering which brands and products to buy. They also use social media as their mouthpiece to spread their values and share knowledge and recommendations with one another.

Social media is a medium for spreading something far more powerful than advertising: it’s a medium for organic word of mouth. Some 92% of people trust recommendations from friends and family over any type of advertising, and 74% of consumers identify word of mouth as a key
influencer in their purchasing decisions. Social commerce is a dish served best by sourcing authentic word-of-mouth content from social media and feeding it into ecommerce at the purchase and consideration phases of the customer journey.

From East to West

Asian markets have long been ahead of the curve with word-of-mouth-driven social commerce and apps such as Little Red Book (Xiaohongshu), where users can research, recommend and buy products, and Pinduodou, where consumers can make collective purchases and collaboratively negotiate the best prices, are examples of trusted shopping platforms with successful implementations of social media.

Ecommerce platforms can then pull these recommendation videos through to their product pages to target consumers at exactly the right
moment with valuable user-generated content during the intent and purchase phase. They can also integrate web recorders into their sites to encourage satisfied shoppers to make their own recommendation videos in exchange for rewards that boost ongoing engagement and loyalty.

Judging by the success of such ecommerce-first social platforms in the Asia Pacific region where forecasters predict social commerce sales will
double by 2024 to $4 trillion, social commerce apps, are likely to become the blueprint for western retail innovation over the coming years.

From Push to Pull

Back in 2013 we weren’t sure whether social commerce could really convert to sales, but today we are realizing that social commerce isn’t
about pushing commerce onto social networks. Rather, the real power of social commerce lies in letting consumers pull social content to them when they want it, to make their own choices.