Personalized Path to Purchase - Social Commerce

Explorations of Social Commerce

One of our most used case studies this year has been about Petco's usage of Social Commerce. We discovered via competitive that no one in the space was tapping into it, and were able to implement shoppable livestreams on Meta featuring Pet Fashion show events. Would love to use this opportunity to explore more about what is going on in the space from different angles. 

One of the more interesting integrations I learned about is the collaboration between Shopify and Tiktok. Its truly remarkable to see how both of these platforms have evolved into powerhouses. My first experience with TikTok was with Musical.ly, which I found entertaining, but never imagined profitable. Shopify, I recall interacting with when it was a simple host for creating websites - which I went to for an entrepreneurial endeavor for its ease and affordability. It is a very valuable integration for Shopify merchants to be able to easily generate video ads and drive TikTok users to their online stores. 

As TikTok continues to evolve, I am blown away by stats like one cited by Kantar, that 83% of consumers are inspired to make purchases by trending content. This little music platform has become an influential powerhouse in a short span of time. 

I think this is driven by the fact that overall, consumers are demanding a more streamlined, omnichannel and personalized path to purchase, and TikTok has evolved to give them just that. I am loving seeing the worlds of entertainment and shopping merge. 

We talked about this briefly in Executive Ethics last semester- some felt it was an invasion of privacy. I don't think of it that way- personalization is a huge benefit to streamlining by busy life, and I respect marketers who are able to do this thoughtfully. 

Sources: https://www.adweek.com/commerce/shopify-tiktok-social-commerce-global/ 

https://www.adweek.com/sponsored/the-secret-to-social-commerce-success/ 

Will Etsy sign on to a Social Media Partnership Next?

 

Will Etsy be the next e-commerce marketplace to partner with a major social media giant?

Shopify signed a major partnership with TikTok in late October 2020. A natural relationship as the e-commerce platform expands services to enable its customers to attract more shoppers in light of increasing customer acquisition costs.  The partnership offers several tools that will allow Shopify customers to advertise on TikTok.  

A similar partnership is arguably more important for Etsy, where sellers heavily rely on listings, search, and showcasing on the marketplace.  The limited visibility has increasingly been a complaint by many that use the platform to sell handmade and personalized items. Perhaps a partnership similar to Shopify-TikTok will allow Etsy to target and segment audiences based on social media preferences, habits, and followings.   

Shoutout to Angela Zhang for inspiring the post. 

Reference: https://techcrunch.com/2020/10/27/tiktok-invests-in-social-commerce-via-new-shopify-partnership/

Is Social Commerce the Next Great Thing?

Social commerce is the e-commerce transactions in realtime, leveraging social media networks and within the apps. Social commerce stems from early features around peer-to-peer platforms, e.g., the early versions of Marketplace by Facebook in early 2000. It has started to gain traction on major social media platforms in recent years. Some notable examples include Instagram's Checkout, Facebook Shop, WhatsApp Catalog, and Pinterest Pins.

Traditionally, social media platforms were mainly leveraged to raise brand awareness, provide shopping ideas, influence purchasing decisions, and direct the traffic to the official websites or third-party platforms (e.g., Amazon.com) for customers to place an order. 

Social commerce makes it possible that customers, when attracted by certain products while browsing their social media feeds, could place an order within the app in real-time. In this way, it saves time for customers to switch apps, sign in, and check out, and customers are more likely to complete the purchase instead of abandoning it on second thoughts during the traditional lengthy process. Social commerce also drives user stickiness and retention for social media platforms.

Challenges exist on its way to become the "next great thing". Customer adoption is a major one. The social commerce boom has been driven heavily by the younger generation, according to a study by MarketingWeek. The percentage of willingness to buy through social commerce is at its peak for younger generations (18- to 24-years-olds) and drops extremely quickly for elder age groups. Such observation is partly a result of the product catalog currently available on social commerce, mainly apparel, accessories, makeup, home, etc. Therefore, how to increase the adoption of social media in other age groups and broaden the product catalog available for social media are key questions to answer in order to make it the next great thing.

The Social Commerce Growth Wave

While still a small contributor to overall e-commerce sales volumes, social commerce is becoming hard to ignore. Social media driven e-commerce revenue grew 26% in 2013 compared with 16% growth in e-commerce overall. With the recent introduction of advertising on Instagram and "Buy" buttons on Pinterest social commerce growth has the potential to grow significantly. Currently Facebook is the primary driver with 50% share of social referrals and 64% of total social revenue but Instagram and Pinterest are likely to start taking share with the introduction of "Sponsored" posts and "Buy" buttons.

Before the introduction of sponsored posts Instagram was primarily used for brand building purposes but with the introduction of call to action tools such as LiketoOwn.it, it is also becoming an e-commerce tool. The visual and mobile-first nature of Instagram drives significantly more engagement than Facebook and Twitter. Brands can now capitalize on the higher engagement and credibility of recommendation factors to drive sales via Instagram. Even the sponsored ads on Instagram are much less disruptive to the user experience than say a Facebook ad or promoted Facebook post.

Pinterest recently introduced shoppable pins. They have the potential to drive significant conversion due to the search engine nature of the site. Consumers usually go to the site to search for things they are already looking to buy. By targeting users with shoppable pins based on past pins they have the potential not only to drive sales for their retail partners but also to increase engagement with their users by providing with what they are looking for. According to initial data shoppable pins are doubling the rate at which searches result in sales.  

Will Yahoo's Polyvore Purchase Pay Off?

Social commerce site Polyvore was purchased by Yahoo back in September for $230 million as part of Marissa Mayer's "MaVeNS," strategy to acquire more mobile, video, native and social assets. The site acts as a visual search engine for fashion products. They generate revenue through advertising real estate and affiliate fees providing Yahoo with another platform on which to leverage their advertising network.At present the company has around 9 million unique visitors per month, significantly below Pinterest's 76 million monthly visitors. The company plans to grow the user base through increased engagement with the fashion community, presumably through partnerships and/or influencers. For Polyvore, the ability to leverage the Yahoo name in order to establish valuable partnerships should accelerate growth but with Pinterest as the ubiquitous visual fashion discovery site it's unclear how Polyvore will ever catch up or compete. Pinterest's recent introduction of "Buy" buttons gives it yet another advantage as users can buy items directly through the site, a function Polyvore has been unable to add for technological reasons. After 8 years of operations Polyvore still has a major uphill battle to fight in the social commerce game. It will be interesting to see if Yahoo is able to monetize the ad real estate enough for the acquisition to have any positive returns.