Social Media & E-Commerce – What is Social Commerce?

Revenue generated through social commerce has grown rapidly in recent years. How people and businesses buy products and services has changed a lot, and companies need to adapt to continue doing business successfully. More and more companies are beginning to add social platforms to their portfolio of sales channels and generate sales directly through platforms like Facebook, Instagram and TikTok.

The Covid-19 pandemic increased this trend even more. One of the main advantages of selling through social media is that customers can be targeted directly, and the target audience is clearly defined.

This model is becoming increasingly important because only if companies are represented on established social media platforms can they reach their customers directly.

This topic is also part of gominga’s study “The Marketplace World 2022“.

What is Social Commerce?

Social commerce is a retail ecommerce strategy that uses social media platforms to generate sales. The model is not just about potential customers seeing and buying a product. Rather, it is about the entire consumer buying experience taking place directly within social networks.

Social commerce is also referred to as the “future of commerce.” In this social media and e-commerce model, there is a merging of social media and commerce. It allows companies to market their products to potential customers via social media content.

By having a presence on various platforms brands, products or services can be discovered and explored by customers. In doing so, there is no need to leave the social network to complete an order transaction. In doing so, one can complete an order transaction without leaving the social channel.

Merging Social Media and eCommerce

You might think that social media and classic online marketplace commerce have little in common. While users search for interesting or educational content on social media, marketplaces like Amazon or Ebay are mainly useful for finding and buying things.

However, social media and ecommerce sites also have things in common, such as intelligent and data-driven infrastructure that knows users’ behavior and needs precisely. This has the advantage that products or services can be marketed in a targeted and efficient manner.

In addition, the two models have similar fulfillment processes. Regardless of where products are purchased, various activities and capacities are required to successfully complete the ordering process. These include the provision of goods or fast and secure delivery to the customer.

Top Social Commerce Platforms

A few of the biggest social commerce platforms that are revolutionizing online shopping and social media marketing are listed below:

#1 Facebook Shops

Facebook Shops enables companies to design digital storefronts that may be customized on Facebook and Instagram. Customers may explore merchandise, communicate with brands using Instagram Direct or Messenger, and make purchases all without ever leaving the app. Shops leverages the huge reach of social networking to provide a smooth shopping experience, seamlessly integrated with the greater Facebook ecosystem.

#2 Instagram Shopping

Instagram Shopping leverages the visual dimension of Instagram’s platform by creating a customized social shopping experience through the use of images and videos in its layout. By tapping on images or videos, users can view product tags and make direct purchases via the vendor’s website or an in-app browser. This makes Instagram a great platform for effective social commerce.

#3 Pinterest

Buyable Pins on Pinterest, referred to as Product Pins, Buyable Pins is a shopping feature on Pinterest that let users buy products directly from the app. Since Pinterest is a site that encourages creativity and exploration, users searching for new things to purchase that are represented in the lifestyle photos will likely find it to be a good fit.

#4 TikTok for Business

Thanks to its enticing short-form video content, TikTok has quickly grown to become a major player in social commerce. TikTok for Business is a feature of the platform that allows marketers to make shoppable content. Users can purchase products through links in videos or through a TikTok storefront.

Benefits of Social Commerce – the Power of Social Proof

One of the main advantages of the social commerce model is that it removes many obstacles from the customer’s point of view that can lead to shopping cart abandonment. Customers can learn about and purchase products directly within the social platform, without having to register or fill out lengthy forms. This social selling has the advantage of minimizing the potential customer’s effort to buy something.

Another advantage is that a buying process via social media channels can be made much more interactive and personal. Customers can easily and quickly discuss purchases, share and comment on products, and read reviews from other users. In doing so, they don’t have to leave the social media apps and may decide to buy a product more quickly.

By using social media and e-commerce, it is also possible for companies to receive real and authentic feedback, which can be used to improve products and services. By having people comment with their personal profiles, a lot of trust is placed in the reviews as they can be attributed to real people.

Due to the large amount of data collected from users and customers, advertisements can be optimized and precisely adapted to the target group. This means that the advertising budget can be used better and more efficiently, which can lead to companies having to invest less capital in marketing strategies to achieve the same result from a campaign.

Social commerce can be particularly worthwhile for companies that want to sell products to a young target group. Studies have shown that the majority of all younger users (under 35) use social media networks as their main source of inspiration when they want to make purchases.

Challenges of Social Commerce

While the social commerce model has many advantages, there are also challenges that companies must overcome in order to be successful. For example, it could be argued that users of social media platforms do not have a direct purchase intention when they use social networks. Primarily, users are concerned with consuming content or connecting with others.

However, many potential customers spend a lot of time on social apps, and an advertising post is seen or shared correspondingly often. This can strongly impact a company’s sales because the more people see a product or service, the more likely it is that an action will be taken.

Another argument against using social commerce is that companies lose control over their customers’ data. If customers buy via social media platforms, the data is not stored with the retailer but with the platform. This circumstance makes it difficult for companies to learn more about their customers and the right target group.

However, even in this case, a lot of important data can be obtained when customers buy a company’s products. Through the possibility of direct feedback and on the basis of sales, companies can procure valuable information and thus adapt to customer wishes.

Conclusion About Social Commerce

In conclusion, the integration of social media and eCommerce has given rise to a powerful and transformative sales strategy: social commerce. Companies must refine their social commerce strategies to stay ahead with the clear shift in consumer behaviour towards online shopping directly within social media platforms. Influencer marketing has become an integral part of this ecosystem, with social media users looking to trusted voices for product recommendations within a social context.

Examples of social commerce success are abundant across various social platforms. From Instagram and Facebook to emerging players like TikTok, social commerce involves selling products not only through direct engagement but also by leveraging social media posts that resonate with users and encourage sharing.

The capability to complete purchases without leaving the platform has not only streamlined the buying process but has also amplified the potency of social proof, as users can immediately translate their interest into action.

For more information on e-commerce, check out our Marketplace Study 2022.