Why is social commerce important?

Why is social commerce important?

Why is social commerce important?

The consumer path to purchase increasingly involves social platforms, according to recent research from Gartner. In fact, over the next five years, about 60% of younger consumers—Gen Z and Millennials—will choose to make a purchase on a social platform versus more traditional digital commerce destinations (e.g., marketplaces and your online storefront).

Below, we provide an essential guide to social commerce—what it is, why it’s important, and how modern technology can help you deliver a seamless commerce experience across all social platforms.

What is social commerce?

At its core, social commerce is the use of social media to facilitate online transactions. But it’s much more than just a transactional relationship between the consumer and the retail business.

Social commerce encompasses the complete shopping journey from product discovery to consideration to purchase, all of which takes place entirely within the walled garden of the social platform.

TikTok, YouTube, Instagram, and Pinterest have become increasingly popular channels for consumers to discover—and purchase—the items they need or want.  According to Forrester, three industry shifts are contributing to the rising interest of social commerce by both retailers and consumers.

  • Social platforms are adding shopping features: The most popular social media platforms including TikTok, Snapchat, Facebook, and Instagram have intensified investment in social commerce over the past 18 months. For example, Snapchat now offers in-app shopping for some brands, Meta has a native checkout feature for Facebook and Instagram users in the U.S., and Instagram users can shop directly from posts. Even Walmart is stepping up their social commerce game, working with TikTok to create shoppable livestream events starting in December 2020.
  • Retailers are looking for new customer acquisition channels: Social networks help brands reach customers who may not have heard of them. This has been a key strategy of D2C companies who have long used social media to reach new audiences, establish brand trust, and build awareness. It’s also an effective way to reach shoppers on their mobile devices (nearly 100%, or 4.4 billion, social media users access social platforms from their mobile phone).
  • Younger generations are social shoppers: Per Forrester’s State of U.S. Social Commerce report, the younger the shopper, the more social their shopping journey is. Among U.S. shoppers under age 25, over 60% say they’ve bought something from a social network without leaving the network. That’s compared to just 32% of 45-to-54-year-olds who’ve completed a purchase from within a social network.

Why is social commerce important?

Social commerce is still a new phenomenon, but it’s already clear that it has enormous potential to transform the way consumers shop. It does this by taking advantage of a core characteristic of social media. Namely, the inherent ability for businesses and consumers to interact in a way that feels natural and personal.

This is particularly true of millennial and Gen Z consumers who are reshaping the way they do business with companies and brands.

Social platforms are basically co-opting the entire shopping journey from browsing to discovery to purchase. Now, instead of someone clicking on an ad or search engine link and navigating to your website to browse and purchase, everything takes place within the walled garden of Facebook or TikTok.

What are some challenges to social commerce?

Businesses who want to adopt a social commerce strategy face some significant challenges including a lack of consumer trust, a low adoption rate among consumers (overall), and a potentially steep learning curve for retailers and consumers alike.

Let’s unpack some of the issues inherent in social commerce so you can understand how to navigate them.

The social commerce trust problem

For social commerce to work, customers need to trust that the platforms will protect their personal and financial information. As of now, we’re losing that battle. Forrester data reveals most U.S. adults don’t trust social platforms to keep their information secure, with many people reluctant to share payment information.

The social commerce adoption problem

Social commerce, while popular among younger consumers, has yet to achieve mainstream adoption. In the U.S., only 15% of online adults agree that they like to purchase through social platforms. This is across all demographics, so keep in mind that consumers who skew younger (those aged 16 – 34) are much more likely to have made a purchase from within a social platform. Facebook, Instagram, and YouTube are the top platforms for social commerce, per data from Statista.

The following Statista chart shows the percentage of consumers who made purchases on social media platforms as of April 2021, breaking usage down by platform.

Source: Statista

Getting older consumers to adopt social platforms as a shopping destination will be a key challenge, but it also presents a tremendous opportunity for retailers.

The social commerce learning curve

There’s a big learning curve for businesses when it comes to social commerce. Retailers must not only set up and manage social media accounts, but they need to understand how compelling content ultimately drives traffic and sales within each specific platform.

The other issue: social commerce isn’t a standalone solution. To work, it needs to be connected to a comprehensive omnichannel commerce strategy.

Forrester says as much in their State of U.S. Social Commerce report, noting that the goal of every commerce channel—including social—is to get consumers closer to the point of sale. To be successful with social commerce, retailers need a connected commerce ecosystem. That’s where Kibo can help.

How a Unified Commerce Platform facilitates social commerce

A unified commerce platform is a single system that allows businesses to manage their inventory, finances, and customer data in one place. Kibo Unified Commerce Platform is headless, meaning it decouples the front end presentation layer from the back end functionality/data layer.

In the case of social commerce, the social media platform acts as the “head” which can be incorporated into the back end of Kibo’s system including order management, personalization, and analytics.

This unified approach provides a seamless experience for customers, who can purchase products through any channel (online, in-store, on mobile devices, or on social platforms).

The ease of purchasing across multiple touchpoints is critical to delivering a good shopping experience, particularly in the context of social media where customers can easily share positive (or negative) experiences.

Some differentiators of the Kibo Unified Commerce Platform for Social Commerce include:

  • Top core commerce functionality:  Kibo’s eCommerce platform provides retailers with the core functionality they need to power social selling including inventory management, order management, product information management (PIM), point-of-sale (POS) integration, customer relationship management (CRM), and marketing automation.
  • Strong personalization features:  Kibo facilitates robust personalization capabilities. With Kibo, retailers can create targeted social messages and content based on customer behavior, preferences, and past purchases. According to McKinsey, strong personalization has been a key reason consumers consider purchasing and repurchasing from a brand.
  • Order management and commerce in one place: Kibo’s solution has the order management system (OMS) and commerce within one unified platform. This enables you to take orders from social media platforms and fulfill them through the same system as other channels like your website and mobile app.
  • Social commerce across any platform: As a headless platform, Kibo can be used to manage social commerce on any social media platform including Facebook, Instagram, Snapchat, Twitter, and Pinterest.

Social commerce allows businesses to connect with shoppers on the social channels they already use. But it should be as seamless as if they were shopping directly from your website, app, or physical store.

Kibo Unified Commerce Platform makes it possible to achieve this, giving retailers the benefit of leveraging social commerce on any social platform while managing orders seamlessly.

There were 91 million shoppers using social commerce in 2021, so taking advantage of this emerging channel can fuel sales and growth for your business. To learn more about how our unified commerce platform can help kickstart your social commerce strategy, schedule a demo today.

Kibo Blog

Our Most Recent Blog Posts

Prepare yourself with key insights, guides, datapoints, and more. Subscribe to the Kibo Monthly Newsletter.

View all Blog Posts

worker reviewing data on tablet

What Is Unified Commerce—And Why Is It Essential In 2024 and Beyond?

What are the advantages of unified commerce? How does it compare to omnichannel? And how can a unified platform help you succeed in 2021?

woman shopping in store while on her phone

Break Down The Barriers: Common Unified Customer Experience Obstacles

Every interaction customers have with your business throughout the buyer’s journey counts. From the moment they discover your service or products, you have an opportunity to create brand champions that drive meaningful success for your…

young man shopping online

How Retailers are Driving Digital Transformation with Unified Commerce

Retailers have been undergoing, or talking about undergoing, a digital transformation for the past 5-7 years. The continued rise in online sales has heightened consumer expectations around what interacting with a retailer can and should…