An outstanding success of social networks did not remain contained over the years. Industries closely bordering in the same interest to gain traction as platforms like Facebook, Pinterest, Twitter, Instagram and Snapchat have discovered the power of connectivity and word-of-mouth to be highly effective in commerce.
As Rahul Mewawalla, CEO and President of Everfave, recently commented in the exclusive interview with the LTP team, “Social and mobile channels have been tremendously successful – companies like Uber, Airbnb and Dropbox have grown tremulously in recent years using mobile and social referrals. If you are an online or offline commerce company or business, having a referral program today is a no-brainer. However, this represents just the start of the huge market opportunity – $300 billion is spent annually on shopper activation, trade funds and transactions incentives just in the US alone.”
The UK’s government defines social commerce as using social media networks to encourage or make e-commerce transactions. Among the examples of social commerce enablers, the European authority brings up companies like Liketoknow.it and Wearisma – online shopping tools that allow users to shop from their favorite Instagrammers. Depop is another example. It is an app that is described as an eBay/Instagram hybrid, allowing users to shop directly from their favorite blogger, brand or friend’s profile.
In its obsessive race towards commercialization of the platform, Facebook recently gave a huge break to small businesses in emerging markets. As Fortune reported last Wednesday, Facebook enabled small businesses in emerging markets to sell to customers for free directly through their Facebook pages, marking a new effort to build up potential advertisers in its fastest-growing regions.
In fact, Facebook can be considered a mammoth of social commerce as according to some estimations, the platform accounts for 50% of total social referrals and 64% of total social revenue. Pinterest is placed second as a social commerce player despite a relatively small user base – the platform is estimated to drive 16% of social revenue despite having an audience 6.5 times smaller than Twitter.
Luxury brands have recently been getting hands into social commerce. At the end of July, US apparel and accessories label Michael Kors was reported to be improving social shopping with the relaunch of #InstaKors – a shopping program that allows the brand’s enthusiasts to shop directly from its Instagram posts.
It is not just the retailers and social platforms that have been eyeing social commerce, payments companies are also expressing interest in the opportunity. PayPal, for example, has been reported to be focusing on social commerce in Thailand to capitalize on the country's high growth e-commerce market. With its PayPal.me solution launched in Thailand, the company is intended to offer more convenience for both sellers and buyers when conducting transactions.
Last Friday, creators network Ello introduced the Ello Buy Button to allow creatives go beyond making a living and start living through their work and ideas. “Anyone browsing Ello will know that when they see the green $ icon, something awesome is for sale. All it takes is a click on the icon, and they'll be taken to the product listing on the seller's site.”
Although social commerce increasingly attracts attention, some professionals believe that appropriate tools are yet to come. Robert Howard, Partner and Digital Practice Leader at Kurt Salmon Digital, a digital agency, suggests that "consumers seem to be increasingly willing to purchase via social platforms, but retailers have been slow to enable social commerce capabilities that are simple and easy-to-use."
Where is the right market for social commerce to bloom?
With an almost shocking number of industries and niches within industries that may soon be led by Asian countries (China, in particular), social commerce goes to the same pile. Some professionals believe that with social commerce, all eyes should be on China now as in China, shopping is also sharing.
On the way to becoming the world’s largest e-tailing market ($590 billion in 2015), online shopping in China has become a highly social activity, as reported by Alizila. Mobile Taobao, the social commerce ace up Alibaba’s sleeve, is “not only China’s but the world’s largest social commerce platform.”
As Mr. Howard commented recently, "America should look to Asian markets as an indicator of the potential of social commerce. Platforms such as WeChat and XiaoHongShu – or 'Little Red Book' – effectively influence and facilitate millions of daily transactions between consumers and businesses." For your information, purchases initiated from WeChat doubled in 2016 in comparison to 2015.
In lieu with Mr. Howard, Eli Schwartz, the Director of Marketing, APAC for SurveyMonkey, noted that “the major Asian messaging apps of WeChat, QQ, Line, and Kakao Talk are not just growing their user base by leaps and bounds but they are even able to generate in-app revenue in tandem with that growth. Rather than encourage only developers to build onto their platform, the Asian companies build their own engaging and profitable add-ons by themselves.”
There are also some emerging players threatening these giants. Carousell, for example, a four-year-old startup from Singapore behind a listings app that enables P2P selling in Southeast Asia, has recently closed a $35 million Series B round to grow its reach into new countries and increase product development.
In the years to come, social commerce will become more widespread and the level of personalization will improve with advanced AI solutions & chatbots. Although there are thousands of companies trying to gain a strong foothold in social commerce, the players who have a strong footing in their user base at the moment have the upper hand in this game. Those social platforms have already been investing efforts and gradually evolving into full-blown commerce solutions with their ‘Buy’ buttons and other shopping encouragement strategies.