08 December 2022
Amazon and Walmart take new steps for social commerce
The top ecommerce platforms debuted visual shopping features that bring social elements to the marketplace.
The top ecommerce platforms debuted visual shopping features that bring social elements to the marketplace.
For years, the developers of social commerce have been focused on bringing the elements of an ecommerce store to social media platforms, and making them more shoppable. But with a pair of releases from the largest ecommerce platforms on Thursday, that’s changing.
With the rise of visual, creator-driven content across the web, ecommerce platforms see an opportunity to bring the elements of social platforms to their marketplaces.
Here’s a look at how Amazon and Walmart are taking steps toward realizing this:
As previously teased via leak, Amazon is launching a new feed within its platform that mimics a social feed.
Amazon Inspire includes a feed of both short-form videos and photos featuring products shared by influencers, brands and other customers. While creators have found wide success marketing the products of others and even their own brands on social platforms, this feature is designed to bring shoppable content into the experience on Amazon’s app.
Accessible via a lightbulb icon on the homescreen of the Amazon app, the feed comes complete with the ability to like a product with a tap, and is scrollable in a similar vein to TikTok or Instagram. But there is something extra for the shopping experience, according to TechCrunch:
When you see something you like, you can tap on small buttons at the bottom of the window which link to the product on Amazon. Initially, a tap on these buttons will pop-up the product in an overlay window on top of the video, but a tap on “See all details” will take you to the item’s product page where you can read more, make a purchase, or add it to a list.
Coming a few months after the Wall Street Journal reported that Amazon was testing such a feature, Thursday’s launch marks a wider launch for Amazon to select US customers. An even broader rollout is set to follow in the coming months.
The Current’s view: This is important for ecommerce. To be clear, this isn’t Amazon’s first foray into social commerce, as it has a livestreaming feature and has had other tests over the years. But this addresses a longstanding issue with how Amazon is built. The shopping experience is known for being highly standardized. Photos, video and inspiration all stand to add more creativity than Amazon typically allows.
In the scope of the internet economy, it stands out for two reasons: TikTok’s rise, and Amazon’s own advertising prowess.
Taking the latter first, Amazon has grown advertising to become a major part of its business, representing $31 billion in 2021 revenue. It has done so because of its advantage as the platform where consumers not only search for products, but also buy them. At the same time, the more difficult attribution on social media platforms that followed Apple’s App Tracking Transparency has put a premium on the desire to access a closed-loop advertising network where brands and retailers can use first-party data to reach customers. With social content that allows sharing and will attribute sales to influencers and brands’ content, that advertising engine is positioned to only get stronger. There’s a lot to learn from the content people like, and inspires them to buy.
Second, TikTok has reordered the web around short-form video content. The platform’s rise over the last few years left all of the social platforms racing to develop their own versions of short-form video, and Google worried about losing search traffic Amazon’s jump into the fold shows TikTok’s primary features stand to not only change how people discover and watch content, but also how they shop. To be sure, shoppable content is also debuting on platforms like Instacart, but make no mistake that TikTok’s influence is felt here, right down to the fact that content will be tailored to a user’s interests, akin to the famed algorithm of the For You feed.
For brands and retailers, Inspire means creators could potentially have a new platform to market on. There is also an opportunity for brands to directly list their products on the feed, which could reorient how people discover items on Amazon. For an ecosystem that is built around search and PPC advertising, that could mean big change. To be sure, the debut is just a test, but it’s one that is worth watching closely.
Walmart's TrendGetter. (Courtesy photo)
In a brief news release, Walmart unveiled its own tool for social shopping Thursday. TrendGetter is designed to provide a connection point between social media content and Walmart.com through a photo.
Users take a screenshot of an image on social media or IRL, and the feature uses image recognition technology to locate those items on Walmart.com. Here’s how the news release describes the steps.
The Current’s View: First of all, this feels like it was rushed out on the same day as Inspire. There’s no way to know for sure, but the brevity of the press release and timing are interesting, indeed.
As a feature, the use of image recognition technology feels original, and it’s clear that the intent is to connect social and ecommerce platforms. More of those bridges are needed, especially as App Tracking Transparency makes it more difficult to attribute particular sales to specific platforms. But there may be challenges in attracting users because it requires directing people to a whole different website outside of Walmart.
More importantly, it is solving what feels like a fairly small problem on the digital commerce side. Many ads and creator posts on social media already have links to a product page. After all, the whole system is constructed to provide payment and credit when a link results in a click or a sale. Shoppable content will only make those links more embedded in our experience of the web. How many people see an item that is truly difficult to access details about?
The ability to take a photo of an IRL item and see it on Walmart could have more value for physical-digital crossover. That feature may also be a response to Google’s multisearch tools, which also allow users to take photos of items they want to find. Walmart is positioning TrendGetter as a way to :find great deals on those products and stay within their holiday budgets,” so perhaps there is a use case for price comparison. But this doesn’t feel very well fleshed out in the news release.
For now, there may be some incremental benefit to TrendGetter, but it doesn’t feel like a game-changer as presented.
Yet it’s significant because we know that Walmart is putting real investment into social commerce. It recently rolled out a marketplace that connects brands and influencers, and debuted tools to serve ads from its Walmart Connect service to platforms like TikTok and Snapchat. Whatever the reason for this release on Thursday, it’s probably a good bet that it will end up being part of something bigger.
The retailer's marketplace is expanding quickly.
When it comes to ecommerce growth, was the pandemic a blip or a new trendsetter?
As we move further from the height of COVID-related closures, it’s a question that will start to be answered through the lens of history.
So far, the narrative of ecommerce growth in the U.S. from 2019-2022 has gone like this: Ecommerce’s share of overall retail saw a huge spike at the height of the pandemic in 2020-21, when goods in general were in demand and online shopping was necessary to preserve health and safety. Experts looked out and saw a permanent exponential change in the penetration of ecommerce as a share of retail that would last beyond the pandemic. Then, in 2022, everyone went back to stores and the trendline came back to 2019 levels. Growth was no longer exponential. There was still growth, but it was not happening as fast as during the pandemic period.
With this in mind, it’s worth pointing out that 2023 is the first year that there likely won’t be a pandemic-influenced swing to influence ecommerce growth. It is also a year where demand has suffered challenges amid inflation and interest rate hikes.
So as we seek to determine the importance of ecommerce to overall retail, it’s worth it to continue taking a close look at what growth trends retailers are seeing now, whether ecommerce is remaining resilient amid consumer pullback and how retailers are preparing for the future.
The latest example arrived this week from Macy’s. It’s a fitting one for the times. Overall, Macy’s is seeing a slowdown as consumers pull back on discretionary purchases, with sales declining 7% in the first quarter versus the same quarter of 2022. Digital sales were down 8%.
Macy’s is particularly susceptible to the macroeconomic headwinds that many brands and retailers are facing, as spending among the middle-income consumers it counts as a primary customer base is particularly softening, said GlobalData Managing Director Neil Saunders.
But while ecommerce is slowing overall, the importance it gained to Macy’s business during the pandemic is remaining in place.
In 2019, ecommerce made up 25% of Macy’s revenue, CEO Jeff Gennette told analysts on the company’s earnings call. That jumped to a high of 44% in 2020. By 2022, digital reached 33% of sales after the pandemic boom. In the first quarter of 2023, it remained at 33%. So, while the trend line dipped after shoppers returned to stores, ecommerce share still settled in at a higher post-lockdown point than it was before the pandemic.
This came in a quarter in which traffic was “relatively good” across both online and in-store, Macy’s CEO Jeff Gennette said. It was “flattish” online, and slightly up in stores.
“We do expect that this is the reset year with the penetration between them,” Gennette said. “But we do expect more aggressive growth in digital in the future versus stores as we think about '24 and beyond. And that's going to be foisted by a lot of ideas and strategies.
Over the last year, the retailer has made investments in boosting ecommerce, even as shoppers returned to stores. In a bid to boost the assortment of goods available online, Macy’s launched a marketplace in September 2022 that welcomes goods from third-party sellers.
The marketplace had an “outstanding” first quarter, said Macy’s President Tony Spring, who is poised to succeed Gennette as CEO next year. Gross merchandise value increased over 50% when compared to the fourth quarter of 2022, while the average order value and units per order for marketplace customers was 50% above those not shopping at the marketplace.
Macy’s is continuing to build the marketplace even as it racks up sales. The retailer added 450 brands, ending the quarter with 950 brands.
This is helping to draw in new customers, as well as younger existing customers who are buying more items, resulting in increased basket size.
“We're very excited as to how marketplace is really attracting the Gen Z customer, particularly in categories where it was not economically feasible for us to carry in the past,” Gennette said.
In the end, Gennette said a strong digital and social presence is key to attracting younger consumers. That's a different type of shopper than other age groups.
“We know the younger customer starts first online,” Gennette said. That behavior will still be in place as the generation gets older, and gains more buying power in the process.
Going forward, Macy’s is seeking to expand the model to other retail banners in its portfolio. Bloomingdale’s will open a marketplace in the early fall.
The Macy’s ecommerce trajectory isn’t that different from the wider U.S. ecommerce narrative detailed above. With one quarter of 2023 data, there is evidence that ecommerce share settled out at a higher point after the pandemic than where it started before COVID arrived. There is flattening now, but the retailer is taking it not as a sign of a slowdown, or a signal to change course. Rather, it sees changing consumer behavior as a reason to build for the future.