Social commerce Social commerce – a real threat to Amazon?
The lockdown on public life has led to enormous growth rates in digital retail. But this isn’t the only area where business is booming. Find out why now is the time to get involved in social commerce.
True to expectations, Adidas CEO Kaspar Rorstedt had bad news to announce for the second half of the year. As with all retail companies, high-street revenue has fallen through the floor due to the lockdown. But one figure in particular jumped off the page of the financial report: the sportswear company reported a hefty 93% increase (German version) in digital retail.
Adidas is not alone in experiencing a two-digit increase in e-commerce – digital retail has been flourishing across all sectors and segments following the closure of stores.
And now, online networks also want to participate in this growing line of business.
From fancy pictures to hard sales
For around two years, Instagram and Pinterest have increasingly been looking at options for earning more money from their user figures aside from traditional advertising. Managers at the two image sharing networks had evidently had enough of sitting by and watching while others profited from the power of pictures. After all, the platform operators don’t share in any of the occasionally princely sums that influencers receive for product placements.
The networks are gradually integrating more and more shopping options into their platforms and apps. The aim is to make posts “shoppable”. The vision: from the visual impression directly to the purchase of a product. The latest development in this area comes from Facebook, the parent company of Instagram. By operating “Shops”, the network provides retailers with a function that enables them to present products centrally, so that customers can purchase them directly. A direct connection to shop systems, which are predominantly used by smaller retailers (e.g. Shopify), demonstrates the end goal of this approach.
Customers are looking for inspiration
The significance of social commerce has grown enormously in recent years. As is widely known, people don’t just buy items they need. Shopping is a leisure activity: consumers are on the search for inspiration and nice things, whether they’re alone or with friends. And this is no longer the preserve of the high street. The conventional pursuit of window shopping is now shifting to the digital world.
Social commerce always revolves around two aspects. First, customers like to show others what they’re interested in and what they’re buying. They may also want the advice of friends and acquaintances. This explains the trend towards store fittings and digital touchpoints in high-street retail, which US experts like to characterize as “Instagrammable moments”. One example is designing stores in such a way that people want to take selfies, as has been demonstrated by the cosmetics brand Glossier (German version). Other ideas with a similar aim include kiosk systems and interactive digital elements, such as the option to try clothes on virtually, enabling consumers to share images directly on social networks.
The second dimension of social commerce lies in selling via platforms. If you can inspire customers on these platforms, why not encourage them to make a purchase there directly? This is a trend that even Amazon has seen fit to explore in recent years. So far, however, all the company’s social commerce efforts have been fairly unsuccessful. The US group is struggling in this regard. Time will tell whether the new video functions for its Influencer Program (German version) will change this.
It’s quite conceivable that Amazon will face a noteworthy challenger for the first time with social commerce and its platforms.
It’s about customer contact
The major chains have long since discovered Instagram, Pinterest and Facebook for themselves and established a presence there. They use these platforms to let their followers and fans know about new products and promotions, launch competitions and sometimes also offer users exclusive offers. Involvement in these networks makes a brand tangible. And this is exactly the kind of initiative that even small-scale retailers can achieve.
Of course, establishing a notable number of users takes time and money, but the effort does pay off. After all, where else can retailers interact directly with so many customers? Every retail company is capable of providing inspiration, be it a fashion company, bookstore, florist or haberdashery. Social commerce enables you to keep in contact with customers even during difficult times, which is far too important to leave to others.
Even smaller (high-street) retailers who are only just getting started in social commerce have a good chance of standing out from their competitors and making their mark. This avenue shouldn’t be left unexplored.
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