Marius Costin, Head of EMEA High Velocity Sales, PayU
It is now widely recognised that the pandemic acted as a digital catalyst, pushing consumers online in order to support many aspects of daily life, from shopping and entertainment to keeping in touch with loved ones and accessing the news. Indeed, a study that surveyed over 25,000 global consumers revealed that social media engagement increased by 61% in April 2020, with brands like Facebook seeing its overall usage increase by more than 40% among the 18-34 age group. So how does this social media engagement translate into social commerce?
Social commerce can be an effective way for merchants to not only understand what their customers want at an early stage in the purchasing cycle, but notably complete a purchase without leaving the platform. Through the advent of solutions like Facebook Shop, and Tik Tok partnering with Shopify, experts predict that by 2024, the social shopping market is poised to reach $2 trillion and shows little signs of slowing down.
For SMEs in particular, this presents an enormous opportunity to compete with bigger brands, by providing a more tailored and personalised shopping experience to prospective customers on social channels which they are already highly engaged in. A social commerce approach is promising not only for small businesses but also for big brands, enabling them to re-invent the offline experience and bring back the ‘human touch’ element, as part of a seamless, simplified social shopping journey for their customers.
The platforms facilitating the rise in social commerce
TikTok, which to date has 689 million monthly active users worldwide, revealed that 67% of users say they use the platform to get ideas about new products and businesses. Not only this, but nearly 75% of 18-34 year-olds and 65% of 35-44 year-olds indicated that they were inspired to buy something they’d seen on the platform. Furthermore, 15% claimed that they are more likely to buy from an SME compared to other social networks.
With social channels proving so influential in purchasing decisions, it was only a matter of time before these same channels would facilitate these purchases within their platforms eliminating the need for users to leave the channel at all.
The roll out of Shops in 2020 is a perfect illustration of this. Shops is a service that allows users to buy products and services right from a business’ Facebook or Instagram profile. According to Facebook CEO Mark Zuckerberg, Shops has been “a way to help businesses suffering in the wake of COVID-19.” In fact, Facebook continues to encourage social commerce through innovative solutions like the recent messenger QR code for P2P payments.
Additionally, TikTok has also partnered with Shopify, helping more than a million merchants to create and run advertising campaigns directly targeted towards TikTok users using live-streaming services. With new innovations being introduced to the market, it is becoming increasingly clear that the new model of e-commerce will revolve around digitising the customer experience.
Tapping into social commerce
For SMEs, the opportunity to leverage social platforms like Facebook Shops and Tik Tok to increase revenue with highly engaged consumers should not be underestimated. That said, it’s important to note both the similarities and differences between social commerce and more traditional e-commerce sales.
In order to tap into the potential of social commerce, merchants must consider three key factors. Firstly, engaging with their followers and target audience. To guarantee customer loyalty through social media, merchants must create an appealing social commerce experience. In order to stand out against bigger competitors, a business’ social media presence must be authentic, human-centric and interesting – an important factor for SMEs in particular to leverage.
Secondly, it is important to remove friction and make the purchase process as seamless as possible. For example, merchants can make sure that the product description includes all details of the product they are selling to guarantee that there is a higher chance of conversion. For those that can offer a smooth and accessible shopping experience, social commerce will be theirs for the taking.
Finally, while social commerce does well in attracting customers from around the world, merchants must ensure that they are equipped to effectively complete the payments cycle. Navigating local regulations and payment preferences for international customers can present a significant challenge for merchants of all sizes. Therefore, there is a strong case for partnering with a payments provider that has a single multinational API integration that eliminates the process of individually integrating each local payment method.
Engaging with an increasingly digital consumer base
Social media is already proven to be an effective tool for businesses to not only build brand awareness but also nurture customer relationships. For SMEs that can seamlessly integrate a cohesive social media presence alongside an integrated payment offering, social commerce will arguably be the way forward.