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The rise of social commerce


Even as a global pandemic necessitates social distancing, we’ve never been more digitally connected via social media. A massive 3.8 billion people use social media, that’s around half the internet users worldwide on average.

However, averages hide a lot and social media usage differs between countries. It’s near ubiquitous in Kuwait, Qatar and the United Arab Emirates at 99% of the total online population. Those chatting, liking and sharing via social media in China and the US stand at 72% and 70% respectively. Whereas in Kenya and Nigeria, it’s only 17% and 13%, social media agency We Are Social figures show.

One thing that’s consistent worldwide is that the majority of social media users access their favorite sites via mobile phone. Indeed, the launch of the iPhone in 2007 and the smartphone clones that followed did much to turbo-charge social media adoption rates, and vice versa.

The figures speak for themselves. It took around 38 years for the telephone to reach 50 million users, the television 13 years and the internet four. Facebook and the iPhone reached 50 million users in around two years.

The power of the platform or network effect continues today. Annual growth in social media users is up around 9% and unique mobile users up nearly 2.5% year on year. As at the end of July 2020, the number of active Facebook users stood at around 2.6 billion. Weixin – the Chinese name for WeChat – and Instagram users numbered more than 1.2 billion and 1 billion respectively. Meanwhile, the number of smartphone users worldwide surpassed 3 billion in February of this year, according to Statista data.

Say hello to social commerce

Take a digitally connected consumer, add smart data and several social networks – the average internet user aged 16-24 has 8.6 social accounts – and you have a very powerful proposition.

It’s no surprise that the social media giants are looking for new ways to monetize their userbases and data. Frequently, this means facilitating social commerce, namely allowing users to buy and sell directly on their sites.

For businesses, social commerce could mean potentially better conversion, bigger basket sizes and fewer lost sales. There’s no need for customers to leave the social media platform to visit a business’ site, which is an extra step – an unwelcome interruption. If the customer finds a better deal, gets distracted or decides not to return, this could result in a lost sale.

Then there’s making it easier to browse, choose, check out and pay. Smartphones have small screens. Autofill fields and saved payment details, especially if the customer is already logged into the social media site, can mean fewer ‘fat finger’ errors and a better checkout experience.

Facebook, Instagram and Pinterest have had ‘buy buttons’ on their mobile apps from 2014-15 and continue to develop their social commerce offering. For example:

  • Facebook launched Facebook Shops in May 2020. This turnkey solution allows businesses to set up a single online store for customers to access across both Facebook and Instagram. Customers can place an order on the business’ website or without leaving the app, if the business has enabled checkout in the US.
  • Instagram introduced a checkout feature within its mobile app in 2019. Currently available only in the US, users can store payment information with Instagram to make purchases more quickly. Items eligible for in-app checkout have a ‘Checkout on Instagram’ button below them. Users simply click it, enter their email address, delivery and payment method to place an order.
  • Pinterest introduced ‘Buyable Pins’ in 2016, where users could buy products without being redirected to a seller’s site. And a shopping cart feature that allowed users to buy from multiple merchants with one cart. 

The shape of things to come…

Science-fiction writer William Gibson famously said “the future is already here, it’s just not evenly distributed”. That’s certainly the case with social commerce. Anyone wanting to understand how social media platforms can revolutionize e/m/s-commerce, or better said just ‘commerce’, should look to China.

The future arrived in China 12 years ago when Alipay launched its mobile wallet. By 2013, its biggest rival, Tencent, had integrated its online payments brand (Tenpay) into its social messaging app to create WeChat Pay. Users could then send each other money directly through the messaging platform. Social commerce backed by mobile payment processing took off.

Alipay and WeChat Pay dominate mobile payments in China with more than 90% market share between them. They link users’ bank accounts to wallets within their lifestyle super-apps. Anyone looking to shop online, save, invest, buy insurance, order a taxi or takeout can do so from the platform.

Smartphones have also become the entry point to what is known in China as O2O, or online-to-offline sellers. This connects people with the growing real-world service economy, where everything from manicures to dog walking, food delivery to car washes is sold online. Payment is either in-app or via quick response (QR) code at point of sale.

$17 trillion worth of mobile payments were made in China in 2017, nearly 40% more than the whole of the previous year. For reference around $100 billion worth of mobile payments are made in the US per year. Mobile payments have become so prevalent in China that the central bank issued a clarification in July 2018 that cash was legal tender and refusing it was illegal.

Learn more: What is contextual commerce?

The connected consumer

The internet changed shopping. It also changed service. 25 years ago, retail was driven by availability and proximity. Consumers had to find, access and shop for the items they wanted. Now, goods and services are  available on-demand 24/7 via the internet and a mobile device. As such, the digitally connected customer has become an increasingly demanding one. Shopping has become a leisure activity where the experience is critical as well as digital.

Consumers read online blogs or watch user-generated content online. They follow brands on social media, talk to friends and shop virtually, before posting images of their new purchases online. This has changed customer journeys. By 2021, €1 trillion of EU retail sales will be digitally impacted, says research firm Forrester. 55% of European retail sales will either take place online or be digitally influenced offline sales, as an increasing number of customers research online before they buy. 

Retailers cannot force the customer journey. Digital means respecting people’s payments habits, which may all be different. Age and gender play a significant role in how people pay. And what they buy, and increasingly where they buy it, influences the payment types they use. This means adopting a payments solution which allows any customer, anywhere in the world, to pay how they want to pay. 

Discover how we can help you with your digital payments.