Just like certain e-commerce businesses give you the option for ‘one-click buy’, social media has followed suit, and now you can purchase as you scroll, without having to leave the social app.

Traditionally, e-commerce has had three models: B2B (manufacturers and distributors), B2C or D2C, and Marketplaces (such as Amazon). Now we have seen the emergence of the fourth model which is centred on selling directly through social media channels with a condensed purchase journey, with product discovery, research, and check-out all in one place.

Let’s explore the key driving forces behind social commerce, its benefits, and pitfalls for brands.

Driving forces behind social commerce

Even as brick-and-mortar stores reopen fully, it’s become clear that e-commerce is not just a phase. Traditional e-commerce was enticing for consumers during the pandemic because of its ease, convenience, accessibility and price. Social commerce takes these benefits even further.

The additional unique advantage of social commerce is its low barrier to entry. Previously, to start selling online the process was more complex, and sellers would either have to register with the marketplace to list their products or build their own site. In the social commerce model, brands can start selling easily from day one using even the newest social media platforms, like TikTok. Essentially, anyone with an internet connection can log in and start buying and selling.

For small retailers and individual sellers, this is a particularly strong proposition as there is little technology investment required, so they can reach new customers and grow sales online with relative ease.

We can expect the social commerce model to evolve over the next two to three years, especially in terms of ever more streamlined processes.

Tapping into new and younger networks

Social commerce presents an important channel for brands to reach a younger audience. It can capitalise on products going viral, and trends being promoted by social media nano and micro-influencers.

It was found that 50% of the time spent on mobile devices was done using social media apps in 2020, so it’s crucial for businesses to include social media in their omnichannel strategy. More than a third of consumers have been purchasing through social media and that number will continue to rise. Social has also encouraged impulse purchasing with more than three-quarters of consumers admitting the ease of use has led them to make purchases they didn’t set out to make.

Many millennials have grown up as digital natives under the ubiquitous influence of the internet, with popular social media platforms easily accessible to them. It’s natural for them to communicate, browse and shop at the click of a button. It’s also much more common for them to buy something they find attractive that’s been recommended by someone in their network.

The social commerce phenomenon is so successful because of the power of social recommendations – we are much more inclined to make purchases when we’ve seen something recommended to us via our network of friends and connections.

What are the common pitfalls of social commerce?

For already well-established brands, social commerce can have the downside of diluting their brand value. In e-commerce, value is typically lost when a product does not meet the expectations customers have. This can happen when a brand creates something that doesn’t sync well with a previous product line, or they spread themselves too thin by entering new markets or industries that they don’t usually sell in.

In social commerce, this dilution can happen when a brand starts appearing in channels the consumer would not expect them to, or in channels that do not align with the core brand values — for instance on a TikTok user’s ‘For You’ page being promoted by a TikTok celebrity.

Another challenge with social commerce concerns order fulfillment. Inventory management, fulfillment, and delivery are often handled by individual sellers, which can be a cumbersome and complex process. Selling via social media platforms is relatively easy, and anyone can pick it up, but significant challenges may also arise when a customer tries to return a product.

Typically, there is no standard process of returns in social commerce, unlike in traditional e-commerce. Instead, each individual seller has their own policy, and it can be time-consuming for resolving customer issues if a product is faulty or damaged, handling the fees associated with product returns, and reimbursing buyers without the benefit of an Order Management System (OMS).

The bottom line

By incorporating social commerce, brands can tap into the growing trend of one-click-shop convenience and reach a new group of customers that they might not have been able to before. They can also leverage the power of social recommendations and start selling without a costly upfront investment in technology. Ultimately, they can deliver an excellent experience in a convenient and cost-efficient way.

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