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The CQ: Social Commerce Without Social Networks?
Meta and TikTok are taking a step back on shopping. What does that mean for the future of social commerce?
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Buzzing at the Forerunner Office…
Commerce-first social platforms have a timely opportunity
By Kirsten Green, Founder & Managing Partner
Leading up to and during the pandemic, and inspired by China’s $363B of social commerce sales, social networks doubled down on commerce with ambitions. The goal: expand influence among the 150M+ estimated social commerce buyers and $50B estimated annual social commerce sales in the US. In these efforts, native commerce – the ability to purchase directly on a social network – took center stage. Native commerce created a full funnel purchase journey on social networks, from the popular discovery and inspiration behaviors that had emerged to the new ability to purchase.
With a recession looming and a related pull back in advertising dollars expected, the market has pressured social networks (and other companies) to focus on their core business and limit resources to exploratory initiatives.
Two weeks ago, Meta announced it will shut down Facebook’s live commerce shopping program following the announcement that Instagram will shut down its affiliate commerce program. And earlier this summer, Meta informed staffers that it was putting several commerce features on hold including 'creator commerce' within Instagram shopping, its 'Friends & Family Shopping' section, community-driven shopping projects, and visual search. TikTok has also taken a step back on its e-commerce plans, since its live commerce offering received poor response in Europe.
So, what didn’t go as expected and led to these shifts? And what does this mean for founders building social commerce experiences and enablement tools?
Social networks realized and prioritized their commerce potential relatively late. As a result, the platforms were tasked with retrofitting native commerce flows on top of existing content-led experiences while also connecting to a brand’s e-commerce tech stack that was not built with the intention to publish products beyond a website. Retrofitting and meeting brands where they are proved difficult.
For example, while consumers often turn to social networks to discover new products, almost two-thirds prefer to complete the purchase on a brand’s site – consumers are used to seeing a product detail page and the context and credibility that comes from viewing a brand’s site. Furthermore, for those that have checked out on social media and needed to return a product, 66% said they were unlikely to buy again through social media because of the difficulty of returning products or getting refunds. In fact, there’s a lengthy list of basic functionalities that consumers have come to expect when shopping that are keeping them from clicking “Buy Now” on social media platforms.
The nuances of impulse versus intentional purchases is another challenge for social networks to crack. Spurred by the pandemic, 87% of consumers report making impulse purchases. This is where social networks shine – consumers can discover new products and brands in-the-moment and make a fast purchase decision for something they did not plan to purchase. Intentional purchases, on the other hand, have a longer purchase journey – consumers generally like to research similar products, read reviews, and may make several return visits to weigh the pros and cons before purchasing. US consumers have a high bar for trust; they are informed and most often hold the power to buy the same products from a handful of sites. This is where social networks stalled and the behaviors of Chinese consumers have not translated directly to American consumers. Chinese consumers started buying online through WeChat and they are used to not visiting a brand’s site for impulsive and intentional purchases. American consumers are accustomed to visiting brand sites – this funnel has been optimized for best practices for well over a decade.
That said, there is real value in getting social commerce right. Research shows that people who have made (and not returned) a purchase on social media, in comparison to those who have not, are 1.4 times more likely to buy from the same seller again, twice as likely to buy a brand they have not hear of before, and also twice as likely to buy a bundle of products that have been recommended together. As consumers have more positive experiences, they will gain more confidence in this new way of shopping. But when introducing new and inexperienced shoppers to social commerce, it’s important to nail the basics first and follow emergent behaviors.
For social commerce founders, the social networks pulling back from commerce may create a timely opportunity. Live streaming platforms, like ShopShops, Popshop Live, Whatnot, NTWRK, and Loupe, are commerce-first experiences with social elements. Given their “commerce-first” approach they are more likely to be able to solve for intentional shopping and deliver the basics consumers expect. The Yes, which Pinterest recently acquired, also had intentional shopping in mind with social elements. Of the social networks, Pinterest is arguably best positioned for intentional shopping and adding The Yes further bolsters that potential. Likewise, Curated, which offers personalized expert-led shopping for high-intent purchases, can shift the social commerce conversation beyond social networks and towards human-powered commerce experiences.
When consumers open Instagram or TikTok, they are opening with the intent to engage with social content. Added bonus if there’s a compelling in-the-moment purchase to make. When consumers open a live streaming platform or visit Curated, they intend to shop, whether impulsively or intently. A strategic window has opened for social commerce founders to build momentum, capture the intentional shopping social networks have struggled to win, and redefine social commerce outside of the confines of social networks.
This Week’s Top 10 Consumer Insights
In an effort to one-up TikTok, YouTube is introducing new ways to share up to 45% of ad revenue with creators. What’s more, the social media platform is allowing creators to monetize long form videos that license music.
TikTok is Gen Z’s search engine of choice. Young people are trusting its powerful algorithm to discover real people recommendations that are tailored to their tastes over faceless websites.
A survey of 5,000 households shows declining enjoyment from new purchases as we get older. The University of Michigan study found that after the age of 75, people found less joy in buying stuff and experiences, everything from a new car to clothes and trips, even though financially stable.
The secret to going viral on LinkedIn? Be vulnerable. Over the pandemic, users began opening up on the platform about their personal lives—everything from burnout and anxiety struggles to pet loss—leading to big-time engagement.
For the first time, a federal task force is recommending routine anxiety screening for adults 19 to 64. Anxiety, which includes generalized anxiety disorder, social anxiety disorder, and panic disorder, is the most common mental illness in the U.S., afflicting 40 million adults each year.
Instacart is launching smart tech to eliminate pain points of brick-and-mortar grocery shopping. A few features include AI-powered smart carts equipped with a touchscreen, scales, and sensors so that shoppers don’t have to manually scan items as well as digital shelf tabs that help shoppers find items.
Walmart is rolling out a new ultra-realistic, virtual try-on function, Be Your Own Model. Customers can upload full-body pics to the brand’s app “to better visualize how clothing will look on them, and creates a gamification of shopping that we believe will be very compelling to the customer,” says a Walmart exec.
On the heels of Patagonia’s owner giving away his company to fight climate change, Lululemon’s founder donates $76 million to save Canadian wilderness.
On Wednesday, the Federal Reserve raised interest rates, the third consecutive 75-basis-point hike this year, in an attempt to cool inflation. What this means for consumers: increased rates on mortgages and credit cards as well as auto and student loans.
The 98-day stretch of declining gas prices has ended. The national average gas price rose one cent to $3.68 a gallon on Wednesday.
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