The phrase ‘new normal’ has been overused and thrown around this year like never before, but let’s face it, this year was a turning point for several industries and will likely change how business is done for years to come. As weaknesses were exposed in business models due to the pandemic, it became clear that the investment in digitization was necessary and could help save businesses in the long run.
While the global economy took a hit during the pandemic, one industry that continued to flourish was eCommerce, as online shopping is one of the most popular online activities worldwide. In fact, in 2020, retail eCommerce sales worldwide amounted to about 4 trillion USD, a number projected to exceed $6.54 trillion by 2023.
In the case of eCommerce, it seemed as if the COVID-19 crisis accelerated the growth of the already expanding sector as new firms, customers, and types of products hit the market. With more people at home, another form of eCommerce was on the rise, social commerce, the use of social media to drive eCommerce transactions.
In the past social commerce meant paid, owned, and earned media on social platforms to build visibility and drive traffic to an eCommerce store. However, in recent years social media platforms have added extensions that allow users to buy directly from the app.
Instagram and its parent company Facebook are leaders in the social commerce landscape, honing in on shopping extensions recognizing eCommerce as a pivotal part of each platform’s overarching growth strategy.
This year, as a part of the updated app features, the companies released shopping extensions that allow users to have a tailored and intuitive buying experience. This move resulted in a whopping 81% of consumers searching for products they need to buy on Instagram and Facebook, making the two channels a massive reference hub and marketplace for goods of all kinds.
As consumers spent more time indoors, shopping trends leaned towards online platforms, especially via mobile devices. This prompted brands to invest in social channels with convenient eCommerce offerings to target their consumers along their buying journey.
The power of social commerce lies in its ability to showcase highly visual and aspirational ad content, that stimulates the passive desires of users before their functional needs arise. For example, if I am looking for a new watch, the platform will utilize my browsing data and other data points to identify my wants, and then it will funnel inspiring ads to me that may satisfy my needs. But what does this mean for traditional eCommerce platforms?
Traditional eCommerce platforms such as Google Shopping and Amazon are not as intuitive as Instagram and Facebook, as they cater to solving immediate problems and not presumptive desires. For example, if I search for a new watch, it will show me several watches; however, unless I am specific with my product or brand name, I am likely to be presented with generic ads that are less aspirational and tailored.
While it is too soon to say that the buyers will forgo traditional eCommerce platforms altogether, we can see that there is real value for the businesses to utilize social eCommerce to attract and build loyalty amongst a target audience.
Social commerce will close gaps in the online shopping experience and provide the customers with a smooth end-to-end buying experience. With new buying habits and preference onset by the pandemic, we foresee that social commerce will remain a large part of the eCommerce industry worldwide.
Social commerce will also attract micro-businesses and craft shops, as the simplicity of the social commerce setup will likely persuade small business owners to skip more complex standalone e-commerce storefronts models. While this may mean more competition among brands and platforms, it also means competitive prices and more consumer choice, which is sure to enhance the buying experience for online shoppers.