Trade new battlefield for social media
Social media firms are banking on the wave of interest in social commerce, where their respective platforms essentially become storefronts where users can discover and buy all kinds of products.
It was a recurring topic this week as platforms like Facebook Inc., Alphabet Inc.’s YouTube, and Pinterest Inc. released their second quarter results.
Social commerce refers to discovering and buying products directly through social media apps. It’s a burgeoning niche that’s expected to reach $ 363 billion in sales this year, eMarketer said.
One of the reasons social commerce is so successful is data. Social media giants have tons of information about their users and can easily target ads to user interests.
The dealers quickly seized the opportunity. With COVID-19 continuing to stifle brick and mortar retail, many have turned to online retail instead.
Fashion goods retailer Express LLC announced this week a new community commerce program for influencers that offers them coaching, education, and mentoring, as well as a range of tools to help them sell their products online. And Verishop Inc. partnered with Snap Inc. last week to create a new social commerce experience within the SnapChat app. This allows consumers to see fashion and beauty products from brands such as Bebe, Fifth & Nine, Kosas and Blume, while Snapchat’s Augmented Reality (AR) feature enables shoppers to try products and accessories virtually.
The leading e-commerce player Shopify Inc. has also got on the bus and provides its Shop Pay “one-click checkout” for every company that sells on Facebook and Google.
Pinterest was a little late in the social commerce game, but on this week’s conference call, Pinterest reiterated its plans to expand its ecommerce ecosystem and the changing role it plays in consumer lives. The company increasingly sees itself as a place where people can buy what they see. One way to do this is to help influencers use their platform to sell products using new shoppable pins. Users simply tap the pin when they see a product they are interested in and they can buy it.
“While we’re just beginning to fully monetize our shopping engagement, we believe we have the right model for sales coverage and delivering conversions for advertisers, advertisers looking to sell on the platform,” Pinterest chief executive said Ben Silbermann this week.
In terms of the revenue it generates, social commerce is just a drop in the bucket for bigger players like Facebook, but that doesn’t matter. The real gain is even more data, this time generated from users’ shopping habits, which can then be used to refine their targeted advertising.
Due to the COVID-19 pandemic, there is a risk that interest in social commerce will wane. A recent study by eMarketer found that the proportion of Instagram users who are expected to make at least one purchase on Facebook will stagnate at around 30 percent between 2022 and 2025.
The biggest players on the internet are still trying to gain traction. In the UK, TikTok has started testing live streaming shopping with a number of select brands. This way influencers can model different products in real time and users can click to buy what they want.
“TikTok’s monetization plans are the ones to watch out for,” said Constellation Research analyst Ray Wang. “They find out the payment for social commerce and will get there before Facebook.”
Even more competition is coming from Twitter, which this week launched a pilot project for a new in-app shopping tool. The so-called shop module enables users to click and buy products without leaving the Twitter app.
For its part, the social media king Facebook has announced that it will not let up its foray into retail. On the contrary, this week it was announced that it was expanding its shops service to the Facebook marketplace and WhatsApp. The expansion means brands in dozens of supported countries can highlight their store from WhatsApp. In the US, businesses can also sell their stores’ goods through the marketplace, bringing thousands of new eyeballs to life.
“We believe the move to online shopping with a social focus is not just temporary,” the company said in a statement. “One in three buyers worldwide says that they plan to spend less time in the store even after the end of the pandemic, and almost three quarters say that they get shopping ideas from Facebook, Instagram, Messenger or WhatsApp.”
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