Originally published on AW360.
Mobile shopping, influencer marketing, and peer-to-peer eCommerce continue to converge at a new intersection — social commerce. This isn’t a passing trend; social commerce is beginning to dictate a new framework for retail strategy.
The term social commerce was coined over 15 years ago, but it’s taken time to establish itself as the next wave of retail. It’s a product of pervasive technology and the unique behaviors of Generation Z, the first generation to grow up in a completely connected world. The separations between social interactions and commerce continue to dissolve. Emerging and established social media and messaging apps are developing hybrid experiences where users interact to share trends, browse products and ultimately purchase goods — all in one location. With these dynamic shifts in play, there are strategies that can help marketers and brands play to their customers’ new needs and behaviors.
GenZ – New Behaviors in the Digital World
Gen Z includes people born between 1995 and 2015 (nearly 74 million people in the United States) and represents an estimated $143 billion in spending power. These digital-savvy youngsters derive influence between brands and their social networks almost seamlessly and there is no shortage of evidence tracking how they make their purchasing decisions. As reported by Criteo, over 50% of Gen Z survey respondents indicated that retail websites and apps are more influential in the purchasing process than search, TV ads or online banner ads.
Another survey, this one conducted by ViSenze, found that six in 10 Gen Z shoppers said they often discover products through social media platforms. “Social media acts as an influencer or driver to go into the store,” said Farla Efros, president of HRC Retail Advisory. “It also acts as an acceptance device. Prior to Gen Z making the purchase, they are looking for social acceptance from their peers.”
Established and Emerging Platforms
While established platforms are rolling out new functionality to support social commerce, emerging players are developing concepts that are ahead of the curve. Collectively they tell the story of where social commerce is headed.
Messaging and social media apps have matured to let brands advertise and sell products directly to users. WhatsApp Business lets its users track packages, deliveries, and flights and is rolling out product catalogs that’ll let brands feature products inside the WhatsApp experience. WeChat, the Chinese messaging behemoth, now employs mini-programs to let brands directly explore and implement social commerce. (Mini-programs function similarly to standalone apps but require no extra downloads or sign-ins, lowering users’ barrier to entry.)
WeChat is in some ways demonstrating full omnichannel potential — users can, for example, order food in a restaurant by scanning a barcode and then paying their bill directly through the WeChat app. Instagram’s Shoppable Media, released last year, lets you add items to a brand catalog’s shopping cart while toggling between Instagram and the brand site. It has also introduced an in-app check-out feature — the limited launch covers 23 brands including Adidas, Burberry, Dior and MAC.
Pinduodudo is a great example of an eCommerce WeChat mini program in action. Their innovative business model has captured a projected 7% of all retail commerce sales in China and built its success on the back of a vibrant consumer-to-consumer marketplace. Pinduoduo also employs gamification techniques including flash sales and leaderboards for customers who have gotten the most kickbacks for recruiting friends to make a purchase.
Dote is, according to Founder & CEO Lauren Farleigh, keeping up with emerging behaviors and is staking a claim to being “Gen Z’s Dream Mall.” She goes on to explain: “We see these retailers who haven’t fully identified or caught up with that shift [to social commerce], they really are trying to use old marketing techniques for this new generation, but not authentically engaging these social creators and their Gen Z followers.”
Dote has introduced a series of features to provide new selling channels for laggard brands and to authentically engage social creators. The Dote user profile is home for content creation, like polls, videos, quizzes, giveaways and lists of favorited items. Dote users can – similar to Amazon shoppers – add items to their cart and place orders with multiple retailers. All of their interactions are used to create personalized recommendations specific to their taste and preferences.
With even more emphasis on the role of the micro-influencer, H&M has launched its very own online fashion advice platform called Itsapark. The fashion-forward forum is a collection of responses to a variety of questions like, “How to Elevate Tie-dye from Hippie to Chic,” or “How do I Plan my Vacation Look This Summer?” Each response includes both fashion advice and shopping suggestions and are often formatted as video or outfit photos. The products featured on the site are from H&M as well as several other retailers.
Insights and Takeaways
A fully executed social commerce experience is a literal one-stop-shop for social interactions, product research, check-out, and reviews. As described, successful social commerce programs will ultimately shorten the sales funnel and, in turn, increase conversion rates, AOV and repeat purchases. Mapping these developments with Gen Z’s behaviors and preferences can position brands to fully engage their customers as this next wave of retail evolves. A phased approach will allow for address immediate and planned capabilities while also positioning initiatives for quick wins as well as new functionalities and future improvements. Examples of these methods include:
- Using existing social networks as an advertising tool to draw customers to your store.
- Leveraging customers as content creators.
- Setting up full-fledged stores within the appropriate social platforms.