Fintech Insights

The acceleration of social commerce

Maria Prados | Vice president of Vertical Growth

June 07, 2021

The use of social media platforms surged during COVID-19 as did shopping on those platforms. Is social commerce becoming the mall of the future?

As COVID-19 drove consumers to shop online by the billions in 2020, social commerce matured into the viable channel it was long predicted to become. Brands are looking to understand what’s working in social commerce in order to build out social strategies for a future of commerce that’s arriving faster than anyone could have predicted.

Social media was already important, but now it’s essential for virtually every type of business. The numbers tell the story withrecent research projecting that social commerce will experience 34.1% compound annual growth through 2027, growing from $89 billion in 2020 to $605 billion in 2027.

That makes a strong social selling strategy a must-have for brands of every size to integrate into their multi-channel selling solution. Social media has become a fixture in the everyday lives of a large share of your customers – and not only the younger ones. Connecting with those customers at every touchpoint along their journey simply can’t be ignored.

Social selling strategies

Whenever a new technology or channel starts to grow, one of the primary challenges becomes payment execution. Today, there are two ways to convert social media users into buyers: you can redirect to your e-commerce platform or take payments directly within the social media platform. Tighter integrations are more seamless for the shopper and keep users closer to the social experience. However, the downside to taking payments within the platform is that brands have less control of the total experience. Either approach needs payments to be straightforward, seamless and simple.

Tracking is another important consideration. In the early days of e-commerce, merchants developed siloed channel structures for online versus in-store. That channel-based approach worked well initially but didn’t account for the evolution of channel convergence and the need of a shopper to start a purchase in one channel, leave it and then pick it up in another.

Today’s consumers are sophisticated and have high expectations for service; they are too savvy to tolerate disjointed customer experiences for long. The tactical considerations for social selling flow from strategic decisions to make the customer’s experience the guiding light for all development decisions.

Investing in single customer view

Today, successful merchants are breaking through the channel mindset and developing holistic omnichannel strategies. Understanding your customer is vital to creating a shopping experience that serves them throughout their complex interactions across channels.

A single customer view approach allows merchants to track customers across every touchpoint, providing seamless experiences even as a customer journey may drop and resume at any time across any channel. Decisions around optimizing selling within social media experiences versus redirects to a merchant’s website or mobile app are guided toward the best interest of the customer experience.

A decade ago, everything was about data. Retailers had insatiable appetites for data about customer behavior. However, many merchants faced challenges with the amount and types of data they received. A lot of resources went into getting the data, but the actionable insights were much slower to appear on the other end.

Retailers are asking tougher questions of their providers, seeking insights to narrate the raw data. A single customer view approach takes payment data to the next level by improving customer experiences with actionable data insights. That’s difficult work, and top-tier payment providers are helping retailers put these strategies into action, helping to improve everything from conversion to payment acceptance rates.

Offering various social commerce payment methods

Accepting digital wallets and other alternative payment methods can be difficult operationally since incorporating digital wallets into the checkout experience requires integration efforts. Before proceeding, merchants want to better understand how those investments will produce returns.

Merchants can look to the “80/20 rule” with payment methods. There’s no need to start with dozens of new options. Keep it simple with the half-dozen payment methods that address upwards of 80% of global consumers. Merchants mastering that level of complexity can progress to cover the long tail of payment acceptance, developing payment infrastructure that anticipates virtually every possible payment method a customer may want to use.

Either way, it’s critical that merchants look to simplify and consolidate providers. We see companies that work with upwards of 30 or even 40 payment providers. That creates a level of complexity that is costly, intricate and almost impossible to scale. Consolidating with a single provider allows for standardization of data to properly measure, compare and improve KPIs like acceptance and conversion rates.

Successful tactics from social selling

The pandemic expanded the importance of influencers across verticals. Influencers are generally associated with fashion, but in 2020, we started seeing successful influencer campaigns with other verticals like fast food brands. Gen Z gets product advice as much from influencers (28%) as they do directly from brands (33%), so you have to consider the right influencers to successfully reach this audience on social platforms.

Influencers are succeeding outside the box of fashion and beauty, and that opens the doors for more brands to break through to social selling. The right influencers can tip the scales, which goes back to actionable data, using social to zero in on customer needs.

A few tactics are working really well, starting with embedded “buy” options directly in social media posts. Buy buttons connect products appearing in posts directly to a retailer’s website or mobile experience. As an early success story in social selling, buy buttons should minimize clicks, promoting simplicity and immersion in the social experience.

Another social selling strategy is livestreams. Influencers appear on livestream showcases of products, a modern interactive twist on cable’s legacy of home shopping networks. Today’s social selling is quite the upgrade on the disconnected experiences of the past with having to pick up a telephone, remember a number, have your credit card available and perhaps even waiting on hold. Livestreams allow instant, seamless purchasing within an immersive social experience. Keeping the customer in the moment means payments need to be perfect – instant, secure and simple.

The bottom line of driving incremental sales

The pandemic highlighted the importance of social aspects to commerce. People naturally turned to social media when the face-to-face commerce they’d relied on their entire lives was put on hold. More than ever, social media platforms provided a public square where brands could still be part of the conversation and social connection even when physical commerce wasn’t happening.

Brands making the most of social commerce consistently get the most out of user-generated content. Especially younger generations, but increasingly consumers of all ages look to the grassroots engagement of friends and colleagues more reliably than information marketed directly to them via brands. Genuine peer-to-peer influence on purchasing decisions has long been central to social shopping in the physical world. Brands and merchants are standing out from the crowd by truly listening to the customer speak directly via social media and curating a community where their brand is an active community member.

Brands are trying to find the right balance among conflicting impulses to tightly control their brand experiences while encouraging genuine engagement with influencers and customers. Pre-pandemic, the impulse to control content was more widely practiced. The pandemic seems to have changed that to some extent as consumers look for authenticity with brands. Brands that embrace the connection between authenticity and customer loyalty can likely benefit from more successful social selling tactics.

The future of social selling

Looking ahead to the next five or 10 years, it’s not just social commerce but the whole fabric of the omnichannel experience that’s going to be completely different. The explosion of touchpoints means that your customers are going to want to interact with you in new ways all the time. To succeed in the future, retailers and brands need to be ready for the persistence, diversity and scale of those interactions.

How do we convert all of those interactions and all of this technology into sales? Payments need to be tightly aligned to every aspect of future shopping design. Brands need to make it incredibly simple, safe and seamless for customers to pay wherever and however they shop with the payment method they prefer at that time and place.