Social Commerce: What It Is, What It Isn’t and Why You Should Care

June 16, 2016

Seth Godin once said, “You can use social media to turn strangers into friends, friends into customers and customers into salespeople.”

Strangers into friends? Of course. Friends into customers? Yep, it’s relatively easy to promote your site (where followers and friends can make a purchase) on social media. Customers into salespeople? Sure, read up on NPS.

But with the introduction of social commerce, which allows friends to become customers on social media sites (without making the trip to your site), we’re taking Seth’s thoughts to a whole new level.

What Is Social Commerce?

In this article, social commerce is defined as the ability to make a product purchase from a third-party company within the native social media experience.

For example, you can browse and compare products on Facebook and then make the purchase on Facebook itself vs. going to the company’s site to make the purchase. Or you can learn about a product in a tweet and make the purchase on Twitter itself.

Right now, there are three social media sites that are owning the social commerce space: Facebook, Twitter and Pinterest.

1. Facebook

Recently, Facebook has doubled down on social commerce. Companies can create entire “Shop Now” stores. and even Messenger is being used by companies to interact with consumers (both pre- and post-sale).

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With a Facebook store, you can…

• Upload products and product information.
  
• Curate and customize your shop’s product catalog.
  
• Sell directly from your Page.
  
• Manage orders.
  
• Run a Facebook ad to promote one of your products.
  
• Get insights.

You’ll start off with something like this…

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And build it out however you like. A word of advice…? Select the right products for the audience and be aware of product order. You don’t need to put your entire inventory in your Facebook shop. Try releasing products to Facebook first to see how they go over, rerelease old products on Facebook, focus on your top sellers, etc.

Experiment to see what works for you, but remember that Facebook is a social network and not everyone is sold on this social commerce concept, yet. Don’t overwhelm your audience with choice… narrow it down for them.

Case Study: MVMT Watches via Shopify

Shopify released a case study of MVMT Watches, who wanted to simplify their path to purchase as their social media presence grew…

Spencer Stumbaugh, MVMT Watches:

“It’s really important to cut out steps in the purchasing process. It’s almost like having a new landing page, but one customers can purchase from instantly.” (via Shopify)

So, Spencer and his team launched their Facebook store. The results…?

• Approximately 1,500 people visited MVMT’s Facebook store in a 7-day period.
  
• Approximately 60,000 users visited the store in a 90-day period.
  
• The .5% conversion rate resulted in more than $ 15,000 in revenue.

Now, those numbers were released back in March, so it’s safe to assume revenue has increased since. In addition, it’s worth noting that MVMT Watches did have a Facebook ad budget, which would have assisted with this traction.

Spencer believes this is just the beginning of social commerce, and not just for MVMT Watches…

 

“I think this is what everyone is going to be doing in the future. Getting in on this early and cutting the number of steps in the conversion process improves the customer experience and helps us grow in new ways.” (via Shopify)

2. Twitter

You can also sell to customers directly via Twitter now, as well. Essentially, any product that you’ve tweeted will include a buy button, which means your audience can buy from you without leaving Twitter.

Here’s an example…

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Twitter has teamed up with a number of eCommerce partners to make it all possible (and seamless).

Of course, promoted tweets, like Facebook ads, are an added benefit. They make it easier to expand your audience and get your products in front of more like-minded buyers. You can run Twitter-only sales, host flash sales, product releases, etc. all from Twitter.

Like Facebook, Twitter stores payment information so that it doesn’t need to be entered repeatedly, making the mobile shopping experience smoother.

3. Pinterest

Buyable pins were released in June 2015. At the time, there were 30 million on the site, but just three months later, Pinterest reported that the number had doubled to 60 million. According to Shopify, the average order value of sales from Pinterest is $ 50, which is higher than any other social media site.

Here’s a look at the Pinterest commerce flow…

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You can then select “Buy It” and make a purchase right then and there with either Apple Pay or credit card.

Pinterest has worked with a number of major retailers, like…

• Macy’s
  
• Nordstrom
  
• Bloomingdale’s
  
• Wayfair

What’s unique about Pinterest is that a small portion of the site’s content is original. According to one source, 80% of Pinterest content is repins. This is a major benefit for you, an original content creator.

Be sure to feature your products in various colors. I don’t need to tell you that the visual representation of your product is clutch, so spend the time (and money) to perfect your product images.

Why Is It So Popular?

Shopping offline is, inherently, a social experience. You’ll ask your friends and family for their opinion on products, you’ll buy the same brand of household items that your parents do, or you’ll simply go shopping as a pair / group.

But eCommerce? Not so social by nature.

Heidi Cohen of ActionableMarketingGuide.com agrees that that could be a major reason everyone is talking about the concept of social commerce…

Heidi Cohen, ActionableMarketingGuide.com:

“While shopping is essentially a social experience, think girls shopping at the local mall, online shopping is distinctly not social. Yet, regardless of where the purchase is made, many shopping decisions involve more than one individual’s input, be it a couple, parent and child, or friends.

With evolving technology, notably increased use of smartphones, and social media platforms, online shopping is changing and becoming more social. Roughly three out of four consumers rely on social networks to guide their purchase decisions according to Gartner, July 2010. As a result, it’s a no brainer to sell where your customers are rather than trying to lure them to your site.

Social commerce is a nascent market that encompasses a broad array of options including group buying, social shopping, mobile apps, retailers adding social features, and shopping integrated into social media. Social commerce has taken off recently and is a growing trend as reported by Google.” (via HeidiCohen.com)

She goes on to offer some reasons you might want to add social commerce to your repertoire. Here are five of those ten reasons, in summary…

1. Make smarter inventory and product development choices by asking customers to vote on the products they’d like to purchase.
   
2. Increase the number of conversations taking place about your products / company.
   
3. Increase the market for your products, reach new customers you might not have otherwise.
   
4. Improve product discovery and awareness, personalize the customer experience based on known preferences. (Social media sites have a lot of data, right?)
   
5. Encourage peer recommendations and reviews.

The benefits are clear, but one major question remains…

Does It Actually Work?

In an article about the rise of native social commerce, HubSpot made some bold statements: “Remember when ecommerce was the go-to tactic for increasing brand awareness, finding new customers, and boosting sales?” and “Newsflash: The golden era has come to an end.”

But is that really true? Is social commerce about to dwarf traditional eCommerce?

The truth is simple: more people are turning to social media for product recommendations and reviews. So, naturally, the concept of native social commerce sprouted up. But are people turning to social commerce in droves yet? Not exactly.

Yes, the industry is growing. Statista released a prognosis for worldwide social commerce revenue from 2011 to 2015…

According to MarketingWeek, 56% of those surveyed are liking and following brands on social media to see products. Another 35% are doing so to get ideas for when they go shopping next. But do they actually want to shop on social media? Not really, according to this particular study.

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Note that this “social commerce boom” is driven heavily by the younger generation, according to the same study. 33% of 18- to 24-year-olds say they would like to purchase items directly on Facebook, 27% on Instagram and 20% on Twitter. 25- to 34-year-olds decline a bit; 30% on Facebook. People 54- to 65-years-old? A disappointing 10%.

Another study, conducted on social media users worldwide ages 16 to 64 in November 2015, found that only 9% of respondents have an interest in using Facebook’s buy buttons…

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Another study still, found that only 35% of millennials, typically a tech-friendly crowd, are likely to use a buy button on Facebook. Only 24% said they’d be interested in a Twitter buy button.

According to Time Magazine, both Twitter and Facebook have claimed that approximately half of their users come to their sites to seek out products for purchase.

Yet the rate of eCommerce growth from social shopping is exceeding the overall growth rate for eCommerce in the U.S. by about 10%, according to the latest Internet Retail Social Media 500 Report.

Why so much inconsistency? We’re still unclear on what social commerce is and is not. Is it native social selling? Is it encouraging social interaction during the traditional eCommerce flow? Is it buy buttons that take you from social media to the eCommerce site?

Nora Barnes, Director of University of Massachusetts Dartmouth’s Center for Marketing Research, says…

We really know very little about these buy buttons. As a consumer behavior specialist, I’m looking at this and saying, ‘Who wants or needs this? Who’s going to use it?’ I think Millennials are saying the same thing.

A July 2015 study by Boston Retail Partners found that retailers are only cautiously optimistic about social commerce…

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Andy Atkinson of Morrison Supermarkets shares Nora’s skepticism…

Andy Atkinson, Morrison Supermarkets:

“We were a bit late to digital and social, it’s only been a focus for the last 18 months. But what we’ve noticed is using social channels purely to sell products will result in failure and most companies are making that mistake.

Social media isn’t a platform for selling. It is about reaching out and building a relationship. We want to adopt that progressive mentality.” (via Marketing Week)

Here’s what even the toughest critics can’t deny…

1. Native social commerce will extend your reach and help you reach audiences who might never have found you otherwise.
   
2. If done correctly, native social commerce removes the friction of having to browse on social media and then convert on another site.

What Does It Mean For eCommerce Companies?

That’s the big question here. Should you make changes to accommodate this new interest in social commerce? If so, what can you do today?

The truth is that no one can tell you whether or not to experiment with social commerce because, well, it’s an experiment.

If you’re killing it right now without social commerce and have higher priority hypotheses to test, focus on that. But keep an eye on this “social commerce revolution”.

Take note of how it’s evolving (it’s still very much in its infancy), keep up with the latest features, maybe even play around with an account. But do you absolutely need to be on this bandwagon today? No.

Let’s say you do decide to experiment with social commerce, though. The first thing you need to do is your research. If you haven’t done any qualitative or quantitative research lately, it’s time to. You need to understand who your audience is, what they like and dislike, how they prefer to buy, where they’re spending their free time, etc.

The older your audience is, for example, the less likely they are to be responsive to social commerce, as we discovered earlier.

Once you have your demographic data, cross-reference it with the demographic data of the three social media sites. Here’s a look at Facebook’s…

While Facebook is fairly well-used across all demographics, it is especially popular with women and those under 50.

And Twitter’s…

Like Facebook, Twitter is well-used by those under 50, but especially so for those living in urban areas.

And finally, Pinterest’s…

Pinterest continues to be dominated by women, but men are slowly but surely closing the gap year after year.

Choose one social media site to start. Don’t try to conquer all three right out of the gate.

Finally, optimize endlessly. If you choose the social commerce route, you’ve effectively doubled your optimization work. Two stores, two user experiences, two sets of product pages, two checkout flows, etc. Be prepared for the amount of work you’ll need to put in to get this right, especially because it is still relatively uncharted territory.

If you want to see the results you’ve been reading about from big brands, you’ll likely need at least a small social advertising budget to expand your audience, as well.

Conclusion

2016 has been dubbed the year of social commerce. But is it a hostile takeover as HubSpot predicts or simply a natural, slow-moving progression?

I’d argue it’s the latter, especially since experts aren’t even sure if it’s something consumers understand / are ready for.

In any case, here’s what you should know and do next about social commerce…

1. Not everyone is sold on the concept of social commerce yet. The evidence (and definition) is conflicting.
   
2. Decide whether your other hypotheses are a higher priority. There’s no rule that says you need to be involved in social commerce (yet).
   
3. Keep an eye on how the trend develops, maintain an understanding of the features and possibilities.
   
4. If you do decide to start with social commerce, conduct qualitative research to better understand your audience, what they like, how they like to buy, etc.
   
5. Cross-reference your audience data with demographic info from the three social media sites. Choose one site that is the best fit.
   
6. Optimize, optimize, optimize. You’ve just doubled your workload.
   
7. Consider paid social ads to give you that little traction boost.

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