Since the beginning of the 2000s, the pop­ular­ity of social commerce has rocketed. At first, only a few companies used social networks for customer en­gage­ment and product ad­vert­ising. Today, social media is a hugely popular platform among both customers and brands. Facebook, Instagram, YouTube and others enable smaller and medium-sized busi­nesses to directly sell their products to consumers.

What is social commerce?

The term “social commerce” was coined by tech­no­logy blogger Steve Rubel and venture cap­it­al­ist David Beisel back in 2005/2006. It refers to digital commerce that has a social component. With social commerce, companies can attract potential customers on social media platforms. The basic defin­i­tion of social commerce is a form of modern re­com­mend­a­tion marketing. As Beisel said:

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“What better way to advertise a product than to have a friend recommend it to you?”

David Beisel, Source: https://genuinevc.com/2005/12/06/the-be­gin­nings-of-social-commerce/

The following aspects play an important role in social selling:

  • Active par­ti­cip­a­tion of the customer (for example, through comments, likes, shares, etc.)
  • Direct in­teg­ra­tion of the customer in the design and de­vel­op­ment of products
  • A personal con­nec­tion and good com­mu­nic­a­tion among customers – word of mouth via the internet, mes­sen­gers, or apps is par­tic­u­larly important, as it helps brands boost sales and customer en­gage­ment through offers or com­pet­i­tions
  • Personal and emotional long-term con­nec­tion between the customer and the brand

Social commerce harnesses these factors to advertise products or a brand. By tying a product to a target audience, entire com­munit­ies can be built and fostered by a single brand. At the same time, social commerce is all about sharing product and brand in­form­a­tion with customers. Busi­nesses can even recruit brand am­bas­sad­ors for events and campaigns. With social media usage on the rise, customer con­ver­sion has become an important task for retailers. But how can you turn a targeted (and in­ter­ested) in­di­vidu­al into a potential customer? Brands that succeed in turning a target audience into customers are said to have high con­ver­sion rates.

As social media became in­creas­ingly dif­fer­en­ti­ated, marketing methods evolved. With the success of Instagram, for example, the con­nec­tion between creators and fans has moved into the fore­ground. That’s where in­flu­en­cers come in. In­flu­en­cers and creators are often treated like idols across popular social media apps. This has created an entirely new arm within marketing – in­flu­en­cer marketing – which utilises the en­dorse­ment of branded or sponsored products by in­flu­en­cers. It’s a more organic way of achieving con­ver­sions than adverts, which may be dis­rupt­ive.

These strategies are useful because they boost the ac­cept­ance of sponsored posts and intensify the con­nec­tion between the customer and a product. Customer will­ing­ness to engage with a product and their desire to own it increase. The emotional in­volve­ment and direct link to a product (for example, via a web shop link) make the pur­chas­ing ex­per­i­ence much more efficient.

But trust remains the most important factor in turning potential customers into buyers. By using social media, brands can establish a more personal con­nec­tion with their customer base.

Social proof is another important aspect of social commerce. Customers tend to trust popular opinion: if other users in a community purchased and liked a product, it cannot be a bad product. That makes product likes, comments and positive customer reviews all the more important as part of a suc­cess­ful social commerce strategy. If a product has positive reviews, other customers are more easily convinced to purchase it. This psy­cho­lo­gic­al and social phe­nomen­on is par­tic­u­larly evident on Amazon: products with few or pre­dom­in­antly negative reviews rank lower in search results and are rarely bought. Sellers with positive reviews tend to make more sales.

Selling on social media – what are the options and tech­niques?

Small and medium-sized busi­nesses can choose from a wide range of social networks for ad­vert­ising and selling their products. The most important platforms for social shopping include Facebook (founded in 2004), Twitter (founded in 2006), Instagram (founded in 2010), and Pinterest (founded in 2010).

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Social commerce on Facebook

It’s easy to sell your products and services on Facebook. A business or fan page with images, graphics, videos and text is usually enough to get you started. Facebook even rolled out a “shop now” call-to-action button so customers can check out straight away. But there are also plenty of spe­cial­ist e-commerce tools brands can choose from such as dynamic ads. Dynamic banner ads are a great tool to auto­mat­ic­ally adapt ad content and campaigns to specific target audiences. With over 2.4 billion monthly active users globally, the potential reach of these marketing tools is enormous. Activ­it­ies relating spe­cific­ally to selling on Facebook are also referred to as f-commerce.

Image: Bershka example of social commerce on Facebook
Facebook post by fashion brand Bershka: Social Talk campaign (New Year’s Eve) with shop link / Source: https://www.facebook.com/bershka/
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Social commerce on Instagram

According to its own data, the photo and video sharing app Instagram now has over 1 billion users worldwide. The app has evolved to include extended storytelling cap­ab­il­it­ies using Instagram Stories, and it is even possible to live-stream events. The most popular ad­vert­ising tools on Instagram include shopping ads, Stories ads, video ads, and swipeable carousel ads. Instagram is well-known for its in­flu­en­cer marketing which pre­dom­in­antly engages younger people – 60% of its users are aged 18 to 24 years.

Lifestyle brands (e.g. those in en­ter­tain­ment, fashion, beauty, design, and food) are par­tic­u­larly fond of using the app to promote their products. According to Adobe research, Instagram now drives 10.7 percent of social referral to retail sites. Another study found that brands were able to boost their traffic by 1,416% using shoppable posts on Instagram.

Image: Bershka social commerce example on Instagram
Instagram Stories by fashion brand Bershka (Meet our Bershka style creators, quiz on sus­tain­ab­il­ity) addresses users directly and includes shop links / Source: https://www.instagram.com/ber­shka­col­lec­tion
Tip

Learn more about "Live streaming shopping: the future of e-commerce?" in our Digital Guide article on the topic.

Social commerce on Pinterest

As of 2019, Pinterest, the online pin board for graphics and photos, had over 300 million users globally. Pinterest is a great platform for people actively looking for product and shopping in­spir­a­tion. Given its focus on hobbies and DIY, it’s hardly sur­pris­ing that lifestyle and fashion are among its main cat­egor­ies. Brands can now easily link their images (called Pins) to their web shop. And in 2019, Pinterest of­fi­cially unveiled Pinterest Ads across multiple countries. Marketing and sales on Pinterest have since be­ne­fit­ted from the use of carousel and video pins. As part of a social media marketing strategy, Pinterest is primarily used to drive traffic to a website because ads can be connected to an online shop. Women are the key target group on the platform, but the number of male users is growing.

Image: Bershka example of social commerce on Pinterest
Pinterest board by fashion brand Bershka with audience-targeted product present­a­tion / Source: https://www.pinterest.de/bershka/bershka-horror-cinema/
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Social commerce on Twitter

The micro-blogging platform Twitter now has more than 330 million monthly active users. Its USP is that it’s always up to date. Twitter has great potential for retailers and brands whose audiences actively use the platform, including media, local services and service providers. Many user profiles feature links to online shops. Busi­nesses can also embed campaign and product videos. But not all companies use Twitter for commerce. Lots of busi­nesses use it to boost their image, connect with marketers and customers, and promote their brand and products using tweets and hashtags.

Image: Bershka example of using social commerce on Twitter
Twitter tweets by fashion brand Bershka: in­tro­duc­tion to its products combined with social talk (What’s your 2020 song?, Super Bowl) / Source: https://twitter.com/bershka

The six pillars of social commerce

A dedicated strategy is essential for success in social commerce. Retailers need to establish a loyal community that regularly visits their social media profiles and clicks on calls-to-action. Here are the six key pillars of social commerce to focus on:

  1. Relevant content: Companies should provide content that their customers are in­ter­ested in. Content should be high quality, visually engaging, and tailored to your target audience(s). Aim to provide added value to customers with your social commerce content, e.g. by offering advice, tips and tricks. When it comes to cross-channel and multi-channel concepts, content should be created to suit the chosen platform. However, it also needs to work in synergy with posts across other channels.
     
  2. Community: The basis of social commerce is the community that you want to establish a long-term re­la­tion­ship with. Busi­nesses should nurture their audiences and harness the fact that customers talk to one another on social media. A great way to engage your audience is by speaking to in­di­vidu­al customers. This may sound time-consuming but it tends to pay off. Events and special activ­it­ies provide further op­por­tun­it­ies for bonding with customers. In addition, brands and retailers should always be easy to reach, whether a customer is demanding a return or has product questions.
     
  3. Com­mu­nic­a­tion: By en­cour­aging com­mu­nic­a­tion and activ­it­ies in a community, busi­nesses get to know their customers and are able to optimise their products ac­cord­ingly. Likes are an excellent way to measure pref­er­ences and target them sub­sequently. You can even use social commerce to actively include customers in product de­vel­op­ment, ensuring that products are improved.
     
  4. Creating and strength­en­ing con­nec­tions: Busi­nesses should strengthen customer en­gage­ment through dedicated activ­it­ies. In other words, it’s helpful to become an active player on social media and create a firm found­a­tion for social commerce. The basis of a multi-channel concept can occur on three levels: pro­fes­sion­al (Xing, LinkedIn), social (Facebook, Instagram), and in­form­a­tion­al (Twitter).
     
  5. Context through data: The success of a social commerce strategy can be assessed through data. This helps to put results into context and uncover customer habits. Defining the audience you want to reach is referred to as targeting. Data on potential customers’ search and shopping be­ha­viours and their social media usage can help brands target them. With mobile end devices, brands can now track a customer’s geo­graph­ic­al location – also referred to as geo-targeting. One of the big ad­vant­ages of social commerce’s data focus is that in contrast to classic ad­vert­ising (TV, print), a company can target customers who are more likely to purchase their products. In the long term, this saves busi­nesses money. But customer needs should be at the heart of any data-based approach.
     
  6. In­nov­at­ive commerce through di­git­al­isa­tion: Social commerce forms part of an internet-based sales strategy and can make a vast range of products and services available. Customers are no longer re­stric­ted to shop opening times. Similarly, brands can send emails and post on social media at the weekend. The rise of social commerce has increased flex­ib­il­ity across many sectors, including business-to-business (B2B) and business-to-consumer (B2C) com­mu­nic­a­tion. Amazon is a great example because the e-commerce group regularly expands access to its product portfolio using digital tools (e.g. voice assistant Alexa), going far beyond tra­di­tion­al retail ap­proaches.
Image: Bershka example of a multi-channel concept for social commerce
A multi-channel concept by fashion brand Bershka in which all channels link to its shop

10 re­com­mend­a­tions for a suc­cess­ful social commerce strategy

Here are our top tips for creating a suc­cess­ful and sus­tain­able social commerce strategy:

  1. Explore the needs and desires of your target audience(s) and cater for them.
     
  2. Engage with social media and find out which platforms suit your brands and/or products the best; match your brand’s goals to the right social media channel.
     
  3. When de­vel­op­ing a social commerce concept, consider cross-channel strategies.
     
  4. Nurture the dialogue with your customers and potential customers, and pay attention to the com­mu­nic­a­tion methods you use.
     
  5. Com­mu­nic­ate with your customers regularly and au­then­tic­ally. Be trans­par­ent.
     
  6. Invest in the quality and added value of your content.
     
  7. Aim for con­ver­sion, but not by any means necessary. Maintain a balance between “social” and “commerce”.
     
  8. Make a long-term plan for your efforts and in­vest­ments (e.g. channel and community main­ten­ance, content de­vel­op­ment, planning of multi-channel campaigns, etc.).
     
  9. Prepare a de-es­cal­a­tion strategy to address com­mu­nic­a­tion or customer service issues. Be prepared for criticism of your products or your entire company/brand.
     
  10. Pursue a data-based eval­u­ation of your social media success by studying your customers’ shopping and community be­ha­viours. Use the results to optimise your brand’s en­gage­ment on social channels and develop audience-centred products and services.
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