The acceleration of the digital change that Europe’s economy has experienced in 2020 has led to a strong increase in e-commerce activities. Social commerce, in particular, is attracting increasing attention due to a record-breaking use of social media platforms – especially during the first lockdown in spring. Social commerce has what it takes to become the dominant trend for online business in the coming year. Jimmy Jakobsson, CEO, and co-founder of Ingager, explains why.
1. Huge target group
What kind of buyers does social commerce target? Quite simply: potentially every individual that is active in social media. And that is a continuously increasing number of people, both in large markets such as the UK and on a global level. The reach for social commerce content is considered huge. And it is constantly growing.
A look at user demographics also shows that social commerce has gained in popularity since the peak phase of the Coronavirus crisis, especially among older population groups: both the boomers (born between 1945 and 1960) and Generation X (born between 1961 and 1980) have discovered social commerce for themselves.
43% of UK consumers over 65, for example, have increased their online shopping, compared to before the pandemic. Social commerce is indeed a great way to reach these new e-commerce consumers via platforms with which they are familiar.
2. Existing infrastructures
Looking at the channels that are predestined as social commerce platforms, there is no way around Facebook due to the high number of active users. Instagram follows with, on average, a slightly younger age. And currently, of course, every brand wants to be present on TikTok anyway, with Snapchat and Tiktok having suitable functions for social commerce as well.
A trend that is clearly emerging in markets such as France is live-streaming shopping, which is now becoming an extremely popular consumer format, especially in Asia. Even high-end brands such as the French brand Louis Vuitton have started live streaming formats to sell their products directly to consumers.
If this form of content is taken as a yardstick, Twitter and LinkedIn should not be ignored as possible platforms for social commerce. Both networks have recently been equipped with a story function, which enables the easy creation and distribution of moving image content.
3. Diverse fields of application
When we talk about LinkedIn, we should be aware that social commerce is not just a B2C issue. Despite the clumsy contact requests from fitness and sales coaches, which flutter into our digital mailboxes en masse every week, it would be fatal to ignore or underestimate the potential reach of LinkedIn with more than 163 million users in Europe alone.
As far as products and their categories are concerned, the formula for success is quite simple: everything that has already proven itself in classic e-commerce has a very good chance of becoming a box-office hit in social commerce as well. This includes physical goods such as clothing, furniture and mobile phone accessories as well as digital products and services on a subscription basis. Experience shows that once buyers have become accustomed to the new sales channels, this paves the way for new product categories.
5. Unstoppable growth
Social networks have become the central digital infrastructure for many users, acting as a gateway and filter for an endless amount of digital content. As the time spent by users on digital channels continues to be concentrated on a few channels, it is becoming increasingly logical for consumers to buy products on their preferred social media channel.
Similar to WeChat in China, Western platforms – especially Facebook – now offer shopping solutions that simplify both customer journeys and communication between brands and consumers. The barrier to entry is therefore extremely low, so that small, independent retailers, for example, can also find access to social commerce without major detours.
Due to Covid-19, many of the product launches Facebook had originally planned for 2020 were put on hold. This means that we can expect several new shopping solutions for early 2021 to cater to the enhanced user behaviour in the European market.
6. Pioneer market Asia
Asia, in general, and China in particular, is considered a pioneer in social commerce. In 2019, for example, almost 9% of all estimated e-commerce sales in China were made via live streaming formats – a trend that spilled over to us during the initial lockdown in March, when live streaming e-commerce was first used by a wider range of brands and retailers.
It would be presumptuous to consider progressive markets such as China, Japan or Korea as a benchmark for Europe. But the willingness to get inspired by key developments in the Far East is a step in the right direction. The Coronavirus crisis has undoubtedly led to a sustained increase in the relevance of digitisation for companies from a wide range of industries – an aspect that the European Union has also emphasised in their Digital Strategy.
Additional resources – more content?
In fact, more than four out of ten UK B2B companies have transitioned their field sales into digital operations. Hence the digital presence of their companies will increase as a result of Covid-19. European B2C companies display a similar, but perhaps stronger, trend in the shift of channels for consumer interactions.
A large number of consumers in Europe spend more and more time on social media, which means that companies must allocate more resources to meet customers in these channels. Also, thanks to digital technologies, the number of physical meetings and interactions can be reduced. This development leads to additional resources for digital communication – and thus for more content from brands and companies in social networks.