Why social commerce is the future of shopping

Social commerce is the ultimate in effortless shopping. No purveyor of goods or services can afford to ignore it much longer.

At a glance

  • New payment methods and social media’s increased capacity for driving online purchases have led to social and contextual commerce being hailed as the “next big thing” in retail.
  • Mainland China leads the way in social commerce, but the concept is growing in popularity across the US and Australia.
  • Social commerce has the potential to address a great deal of the “friction” associated with online shopping, but ongoing ethics considerations remain a challenge.

By Nigel Bowen

E-commerce has been on the rise for a couple of decades and has become much more popular during the pandemic, but traditional e-commerce still involves some “friction”.

The effort of pre-purchase research, sifting through the myriad options and committing to a purchase means many retailers grapple with cart abandonment in their attempts to boost online sales.

Retailers have always been keen to meet potential customers where they are, and more customers than ever before are on social media platforms.

Social commerce or contextual commerce allows users to see, click and buy instantly thanks to technology such as buy now, pay later schemes and digital wallets.

Mainland China leads the way in social commerce, with an estimated US$363 billion (A$510 billion) worth of purchases in 2021, up by 35.5 per cent from 2020. For the rest of the Asia-Pacific region, the rise of the social media influencer, the emergence of new payment methods and social media platforms’ capacity to provide user-friendly “buy” buttons have all contributed to social and contextual commerce being hailed as the “next big thing”.

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Know your market

It would be a grave error to assume that social commerce is the domain of fashion retailers targeting young female consumers, says Suzie Shaw, managing director of We Are Social’s Australian operations.

“The average Australian spends nearly two hours a day on social media sites, and about a quarter of all adult Australians are now making purchases through social media,” Shaw says.

“Interestingly, Australian men are bigger social media shoppers than women – 47 per cent of male social shoppers shop weekly, compared to only 29 per cent of female social shoppers.”

Shaw concedes that social commerce is in its infancy in Australia and other APAC nations, and that social shoppers continue to skew young. In Australia, young shoppers spend an average of only A$25 a month buying things they see on social media.

“Soon, rather than looking at an image of an influencer wearing a suit on their mobile phone, people will be strapping on VR goggles and seeing what they look like wearing the suit. They will be able to explore products in a much more immersive context.”

— Suzie Shaw, We Are Social

However, the rapid growth of social commerce in China and its growing popularity in the US are a good indication of what is to come in Australia and elsewhere in the world, Shaw says, particularly as social media takes tentative steps into the “metaverse”.

“Soon, rather than looking at an image of an influencer wearing a suit on their mobile phone, people will be strapping on VR goggles and seeing what they look like wearing the suit,” Shaw says. “They will be able to explore products in a much more immersive context.”

In the meantime, consumers can expect brands to start offering more engaging 2D experiences, such as “live commerce” – a livestreamed blend of entertainment and shopping that “combines instant purchasing of a featured product and audience participation through a chat function or reaction buttons”.

Live commerce is already hugely popular in China, and Shaw expects it will take off elsewhere. That’s because “live commerce events allow brands and influencers to immediately answer any questions that may be a barrier to purchase”, she says.

Caveat emptor

“Consumers have wants and needs, and, in a capitalist economy, it’s the job of marketers to address those needs,” Shaw says.

“Morally, I don’t see much difference between supermarkets putting candy at the counter knowing it will tempt shoppers, as well as any children they have in tow, and brands leveraging Facebook, Instagram or Pinterest to encourage people to impulse buy a pair of sunglasses.”

However, Shaw concludes that regardless of their prerogative to use social channels to push sales, businesses must still think carefully about how they market to consumers, especially younger ones, and that consumers too must take responsibility for their own decisions, regardless of whether they shop in a bricks and mortar store or in cyberspace.

However, Shaw concludes that regardless of their prerogative to use social channels to push sales, businesses must still think carefully about how they market to consumers, especially younger ones, and that consumers too must take responsibility for their own decisions, regardless of whether they shop in a bricks and mortar store or in cyberspace.STRATEGY

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