Buying and selling products on social media is becoming increasingly popular. In China, social commerce is already part of everyday life. Will it become just as popular here? How far along are Facebook, Pinterest, and Co. in this area? And does a shop on social media make sense for your business?
On WeChat, the largest Chinese social media platform, people communicate with friends, interact with brands, and put their favorite products from different manufacturers directly into their shopping basket. Our SEA consultant Shiyu Piao Stocker is an active WeChat user and also places advertisements on the platform for Webrepublic customers interested in the Chinese market. She explains the recipe for success: "The app completely covers the customer journey—from inspiration to the shopping basket to the purchase with the platform-specific payment method WeChat Pay." This type of shopping is a matter of course in China.
And what about the largest social network in the West? Facebook's e-commerce options are still in their infancy; the shop function was only launched in mid-May. Mark Zuckerberg offered small- and medium-sized companies without an online sales channel a simple solution to sell products at a low price during the coronavirus lockdown, which was an optimal time for the shop launch.
Facebook has the infrastructure to enable the smooth implementation of social commerce services on its platforms, including Instagram. In addition, the media conglomerate has its own payment methods: Facebook Pay and WhatsApp Pay.
News sales channels, new challenges
The aim of Facebook’s new shop function is to cover the entire customer journey within the platform. They round off the journey with the check-out function, which allows users to process payments via Facebook or Instagram.
The soon-to-be-launched check-out function will present a game changer for all digital marketers and sales analysts: the traceability of which purchases were generated via the social media platforms and concluded there will increase enormously. For campaign managers, the option of optimizing for in-app or website sales presents a new challenge. We will soon see how users deal with the in-app payment option and how quickly they adapt to it.
Example for an Instagram Shop, in Switzerland currently still without the checkout function which should be implemented soon.
Social commerce on Pinterest and TikTok
The increasingly popular platform Pinterest—a mixture of search channel and social media—is adapting to the social commerce trend by launching Pinterest Shopping Ads in Switzerland in June.
TikTok is another important channel we will hear a lot about, also in the shopping sector. Currently, TikTok's ads can only be booked through a third party provider, but a self-booking tool will soon be introduced, which will also add more ad opportunities. Our first experiences with paid ads on TikTok were very positive; we recorded a wide reach and high interaction rates.
Example for a shopping ad on Pinterest. Source: Pinterest
Live shopping with influencers
Besides "traditional" online shopping, so-called "live shopping" is on the rise: influencers film and stream their shopping experiences, which are often linked to a limited product range. Facebook also picks up on this trend with established tools: The live function in Instagram Stories links to the shopping feed. This enables the direct linking of products in the story. This function is also ready, and Facebook should be launching it here soon.
Does social commerce make sense for your company?
Introducing the shop function on social media not only enables interested users to buy the product directly, but also enables online merchants to assign purchases and revenues directly to a platform.
- We see great potential for online retailers who already have a strong social media presence or who want to invest more in expanding it. The same applies to companies that want to measure the success of their social media presence with meaningful metrics, such as return on ad spend (ROAS) or profit, and do not want to optimize on indicators such as follower growth or engagement.
- Our experience show dynamic retargeting ads also work beyond the Instagrammable sectors of beauty, lifestyle, and fashion. If users are already interested in the product, it makes sense to address them with an individualized ad via their most-used platforms. We have achieved good results with this approach.
- Open targeting, on the other hand, is exciting for e-commerce players who have exhausted the Google search ad volume and are looking for greater reach. In this area, we achieved above-average ROAS with video ads for the sales promotion of a well-known luxury fashion brand on Facebook and Instagram.
We assume that the efficiency values will continue to improve due to the new shopping opportunities and that users will also regularly order products directly from Instagram and Co. in the future.