Social Shopping Struggles With The Burden Of Potential

2020 just might be the year that the long-awaited social shopping business actually shows up.

Ever since Facebook and Google put their muscle behind connecting content to commerce three years ago, the potential for social shopping has been rich – but the results have fallen short of expectations.

Ask Amazon, which had to shutter its social shopping entry, Spark, after two years in July 2019. According to Adobe, on Cyber Monday, around $9.2 billion was spent on eCommerce orders, yet just 2.6 percent of online sales came from social channels. However, 8 percent of Cyber Monday visits did originate from social media, an increase of 17.5 percent from the prior year.

At least one recent survey shows that the potential is awakening in 2020. It comes from WBR Insights, which credits customer engagement via social media. Brand advertisers, it says, need to justify social media ROI.

Per the report findings, 75 percent of the surveyed firms plan to either maintain or boost their investment in social media marketing within the next year. Nearly 90 percent of the companies that responded are either using social commerce now or have plans to implement it within the next two years.

The report also states that half of the respondents are working to integrate social media advertising with their broader eCommerce strategy. Instagram is a preferred platform for 92 percent of retailers engaged in social commerce, followed by Facebook (77 percent), Twitter (57 percent), and Pinterest (47 percent).

“Developing a meaningful customer engagement strategy that has internal approval is a challenge that 44 percent of the companies struggle with the most,” the report noted. “As these companies and their brands have already forged an emotional bond with their customers, they are hard at work at finding ways to expand this engagement using the most effective tool: social media. At the same time, 38 percent of these organizations are seeking to build a reputation that consumers recognize and trust.”

Another group of respondents (35 percent) said they were challenged to identify the customer segments most likely to engage. Consumer brand experience is key to creating levels of experience targeted to specific segments, and social media still works for that. Given that social media enables messaging that can be closely targeted, it can establish customer connections that can be used for further segmentation.

Outside of the numbers, there are several market dynamics that could drive double-digit growth for social shopping this year. We’ve identified three.

Desperate Networks

Facebook needs a scalable revenue source. It can no longer rely on display ads or user spikes, especially in the face of the content and security hassles it has encountered. The platform’s big push into shopping on Instagram may be the key, as many users visit Instagram to discover new products. Forty-two percent of daily Instagram users have made an influencer-based purchase, according to a CivicScience survey. That’s up from 34 percent in 2018.

There was a noticeable increase in respondents shopping directly on social media after Facebook introduced checkout on Instagram, which enables users to buy items without navigating to a merchant’s website. The product is still limited to select retailers, which means there’s a lot of potential for growth as the number of participating merchants expands.

Savvy Brands

If one retail brand has been synonymous with innovation, it’s Sephora, which has consistently built new shopping experiences both in-store and offline. Amy Eschliman, SVP of client engagement at Sephora, said that online followings allow them to establish a greater sense of authenticity and loyalty, which can help encourage social media visitors to make a purchase.

“In that regard, authentic connection to clients does not preclude us from being more commerce-oriented in our social posts,” Eschliman said. “We actually make a concerted effort to make it really easy to shop – trying to make that transition from inspiration to actually pressing a checkout button as easy as possible when the content is in that vein.”

Amazon

The behemoth shut down its pure-play social shopping network, Spark, in mid-2019. But the issue may be more semantic than tactical. If you go to the musical instruments category on Amazon and click on the Shure ad, you go to Amazon’s Shure microphone page. It may not be strictly social selling, but it sure sounds like it.

Brands like Amazon for that very reason. Amazon earned $3.5 billion in advertising revenue for Q3 2019. By comparison, Meredith, whose very existence counts on ad revenue, booked less than one-third that amount, at $743 million.

It’s clear that social commerce has become an ad decision on the brand side. “Social media has always been an important gateway to making purchase decisions,” Liz Cole, group director for social strategy at Digitas, told the eCommerce Times. “Research has shown that more than half of consumers have purchased a product after seeing it recommended by someone they follow on social channels, and nearly 75 percent have purchased a product after first seeing it in a brand’s own social post.”