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Social media gained a key role in ecommerce as an engine to discover new products. Increasingly, platforms want to become places where purchases are made, too.
A series of moves being made by social media companies are setting the stage for an expansion of social commerce. The first quarter brought a flurry of announcements about how the platforms where trends are made are becoming more shoppable, and they're continuing into the summer. Consider these announcements from the last week:
- Pinterest acquired THE YES, an AI-powered shopping platform that curates products based on style preferences. Following the acquisition, THE YES CEO Julie Bornstein, who is the former COO of Stitch Fix, will lead a new ecommerce vision at Pinterest, along with the rest of the startup’s team.
- YouTube is making its videos more shoppable. The latest example will come on June 16 at its Beauty Festival, where YouTube is making DTC brand Glossier’s new No. 1 Pencil eyeliner available for purchase through video shorts that roll out at the event.
- TikTok, a fast-emerging marketing channel for brands, is adding commerce integrations. The latest comes through a partnership with Salesforce Commerce Cloud which will make it easier for brands to launch TikTok as a sales channel on Commerce Cloud, and publish products on TikTok.
- Twitter announced that it is rolling out a new feature called Product Drops. This allows brands and merchants to tease new product announcements, and provide a direct path to a product detail page. A "Remind Me" button will also allow users to opt in to notifications once a product is live.
The attention and capital being put toward these efforts speaks to the growing consumer interest in social commerce. As with any emerging behavioral trend, however, it’s necessary to take a step back and consider how much progress is really being made toward widespread adoption, and the factors beyond platform features that could help it grow.
With a recent report, market research firm Mintel is putting data behind these considerations. Here’s a look at three takeaways that outline the state of social commerce at a time of rapid expansion, according to the firm:
Current reality vs. opportunity
While many new capabilities are coming in the near future, there’s evidence that social commerce already has momentum. According to Mintel, 39% of US consumer said they made a purchase on social media and would do so again. The adoption rate is even higher in the age range of 25-34-year-olds, of which 61% shop on social media.
As the platform plans indicate, there are also ample opportunity to increase that number within view.
Social commerce is often dependent on interfacing directly with brands on social media, and 90% of users are aware that these pages and accounts exist.
Of those users, one in 10 say they avoid brand pages on social media – a low number, given that a direct tie-in with a brand overtly seeking to market products may have been considered a turnoff in other eras of media.
Factor in how platforms like TikTok and YouTube are using video to make content from influencers and users shoppable, and there’s even more potential to create opportunities for engagement that don’t require navigating directly to a brand page.
The trust factor
Digital adoption often requires reaching a point of trust with users, especially when it comes to purchase and delivery of items. According to Mintel, current barriers include security and shipping:
- About 38% of consumers say they haven't made a purchase directly on a social media platform due to concerns about the security of payment information.
- Meanwhile, 23% of consumers say they haven’t made a purchase because they are worried they will never receive a product.
This offers a message for brands and platforms: Alongside new technology and great shopper experience, education about social commerce processes are necessary.
"As with any new concept, consumers still need a fair amount of education and reassurance on the process, as they are concerned that their data might not be secure and/or that they'll never receive the item they purchase,” said Katie Hansen, retail and ecommerce analyst at Mintel, in commentary issued with the report. “Brands will need to demonstrate to consumers how shopping on social media is quite similar to shopping via a website or mobile app and how, in fact, social commerce can even further streamline the process.”
Inspiring a purchase goes beyond getting the attention necessary for a like or share. This means brands must also forge a connection with users. One important step toward doing so is to ensure that users see themselves reflected on social media. That means reflecting the diversity of audiences present on these platforms, Hansen said.
Growing alongside ecommerce
Change can take time. Ecommerce grew steadily over 20 years as platforms like Amazon and Shopify built, with rapid acceleration in the last two years.
When judging the adoption curve of this area, consider that many of the tools for social commerce are just being put in place now. The factor that will push them into wide use may have yet to arrive.
When it comes to decisions about investing time and energy toward social commerce, it’s also worth remembering that shopping is likely to take place across multiple channels. Shoppers want options to buy an item easily and have it delivered to them wherever they are. Social platforms are where many potential customers are gathering, so they stand to be a viable option for shoppers. Yet it's worth pointing out that this is one of a growing number of choices consumers have about where to shop. They're also seeking out ecommerce marketplaces, Shopify sites, delivery services and brick-and-mortar stores, as well. And all of those channels are making digital upgrades to work together more seamlessly, as well.
“As with the adoption of online shopping, it will take time for consumers to become comfortable purchasing items via social media, and even more time for them to do so on any kind of regular basis, but the category will see a boost as a result of increasing engagement from younger consumers as they grow into adulthood and earn more money,” Hansen said. “That said, social commerce will in no way replace traditional ecommerce or in-store shopping, but it will become a key part of their shopping repertoire.”
Trending in Shopper Experience
Discounts, BOPIS and an influx of returns shaped the 2022 holiday season, says Salesforce.
What can holiday shopping results tell us about trends for 2023?
It’s a question many brand and retail leaders are mulling as they review the peak season numbers in the first weeks of January. This week, Salesforce shared data for overall ecommerce sales globally and in the U.S. that bring forward several key insights about how to approach the next year.
The top-line: Throughout November and December, consumers spent $1.14 trillion on ecommerce purchases globally, and $270 billion in the U.S., according to Salesforce. That's a 5% increase over 2021. The cloud company analyzes aggregate data from over 1.5 billion global shoppers on sites using Salesforce Customer 360. This dataset includes 24 of the top 30 online retailers.
The comparison: Salesforce said November sales were below both 2020 and 2021, which saw massive growth as demand for goods and the necessity to order online exploded during the pandemic. However, the overall sales came in above the company’s forecasts.
"Retailers closed out the 2022 holiday season with stronger online sales growth than expected – driven in large part by U.S. demand, steeper discounts on peak days, and BOPIS options," said Rob Garf, VP & GM of retail at Salesforce, in a statement.
Here’s a look at Salesforce’s key takeaways on what drove holiday spending, and what it means for 2023:
The trend: Good deals drove sales
This holiday season was expected to be highly promotional, and it ended up playing out that way. Salesforce observed a 21% discount rate, compared with 19% in 2021. Beauty, skincare, and makeup were the most discounted categories at 29%, while general apparel and handbags reached 27%.
What it means for 2023: While the calendar turned, the tougher consumer environment didn’t change. People are still seeking to stretch dollars as the effects of inflation and interest rates filter out across the economy. Discounts will remain a key tool to convert, but it will be a tricky path for brands and retailers to maintain margins, especially after increasing prices to keep up with inflation last year.
The trend: Returns hit record highs
Salesforce predicted a returns “tsunami” and it seems that it arrived. The 1.39 billion items returned amounted to a 63% year-over-year increase in returns from 2021. In the six days after Christmas, 16% of orders were returned, which was a 5% increase over 2021.
What it means for 2023: The “staggering” numbers offer a sign that consumers are “cautious,” Garf said. One of the behaviors that Salesforce identified during Cyber Week was people returning items after finding a better deal. These types of behaviors will only continue as the economic picture remains difficult. Brands and retailers should be mindful of how returns pressure profits and logistics. As Loop Returns has shared with The Current, there’s also customer expectations to consider, as many have grown accustomed to free and easy returns. That’s why retailers are also rolling out new ways to make returns more convenient like box-free and even returns pickup from DoorDash. Remember: returns are a customer touchpoint, just as much as a logistics function.
The trend: In-store pickup delivers growth
Buy Online Pickup in Store, or BOPIS, was one of the modes to get orders to customers that grew in the pandemic. Even with the return to in-store shopping this year, consumers continued to turn to this method out of convenience. Quick data points:
- Nearly one in five of all online orders were fulfilled via BOPIS.
- Adoption peaked at 35% of all orders on the Friday before Christmas.
- After the window for home delivery closed, Salesforce said that companies with BOPIS grew revenue 7x faster than those without in the final week before Christmas.
What it means for 2023: Even with the return to in-store shopping, ecommerce is continuing to be sought out as a means of convenience. But customers often don’t see channel, and are comfortable moving between both to fit their lives. The staying power of BOPIS over the holidays is a manifestation of this physical-digital crossover. Continuing to pay attention to what customers want and improving the experience will be crucial. Another area to consider: How are brands and retailers merchandising in the store around BOPIS? Remember: A pickup is a visit to the store. What are the options to upsell?
The trend: Social media referrals hit an all-time high
More and more of commerce is being mediated through social channels, where shoppers discover products through ads and content, then complete the purchase through links to brand stores. Traffic referrals from social media grew 23% this holiday season, accounting for 12% of all mobile traffic. The U.S., Belgium and Italy had the most social shoppers.
What it means for 2023: Social is still a key investment area for brands and retailers to drive new traffic to their online stores. In 2022, there was plenty of fretting about broken digital marketing playbooks as a result of iOS14.5 changes to tracking and attribution that hampered the growth engines of advertising on platforms like Facebook and Instagram. Brands experimented with other platforms like TikTok, and even brought back catalogs. But the Salesforce data offers a reminder that social media is continuing to be a primary place to meet brands, and power discovery. The tools and even platforms may change, but the medium will remain, and still has room to grow.
The bottom line: Garf put it this way: "In 2023, retailers must double down on efforts to put the customer at the center of their business with data-driven personalization and efficient operations in areas such as fulfillment, service, and returns."